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Ken Garrett.
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siti-yussof
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Maria set up a new business as a sole trader .
on 1st january , Maria puts $3000 of cash to buy the opening inventory of 1200 and as cash on hand. She takes out a bank loan for $5000 (of which $1000 is payable within 12 months ), and buys a new laptop computer for $500.What is the net current asset position in the statement of financial position at 31st January ?
answer is $6500
[W] from kit 3000 + 5000 -1200-500 + 1200(inventory) – 1000(bank due within 1 year)
i can manage until half the formula but i dont understand why i need to add back the inventory and minus the 1000
Ken Garrett
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Current assets = cash plus receivables plus inventory
Cash: 3000 – 1200 (for inventory, assumed to be a cash purchase) +5000 (loan) – 1000 (loan repayment 31/12)) – 500 (laptop) = 5,300
Receivables = 0
Inventory = 1200 (it hasn’t been sold so is still a current asset)
CA = 5,300 + 0 + 1,200 = 6,500
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