Fakari had the following asset at the ending of the year 2013 having started the business at the beginning of the same year.
Ksh.000
Account payable 15,800
equipment 46,000
motor vehicles 25,160
Account receivable 23,080
cash at bank 29,120
cash in hand 160,000
during that financial year the following transaction took place.
bought extra equipment on credit for Ksh 5,520,000
bought extra inventory by cheque Ksh 2,280,000
paid creditors by cheque Ksh 3,160,000
received payment from debtors Ksh 3,360,000 by cheque and Ksh 240 by cash
prepare a statement of financial position
To prepare a statement of financial position, also known as a balance sheet, we need to calculate the total assets and liabilities of Fakari at the end of the year 2013.
Assets:
1. Account payable: 15,800 Ksh
2. Equipment: 46,000 Ksh
3. Motor vehicles: 25,160 Ksh
4. Account receivable: 23,080 Ksh
5. Cash at bank: 29,120 Ksh
6. Cash in hand: 160,000 Ksh
Total assets = Sum of all assets
Total assets = 15,800 + 46,000 + 25,160 + 23,080 + 29,120 + 160,000
Total assets = 299,160 Ksh
Liabilities:
1. Bought extra equipment on credit: 5,520,000 Ksh
2. Bought extra inventory by cheque: 2,280,000 Ksh
3. Paid creditors by cheque: 3,160,000 Ksh
Total liabilities = Sum of all liabilities
Total liabilities = 5,520,000 + 2,280,000 + 3,160,000
Total liabilities = 10,960,000 Ksh
Now, we can prepare the statement of financial position:
Statement of Financial Position (as at the end of the year 2013)
Assets:
- Account payable 15,800 Ksh
- Equipment 46,000 Ksh
- Motor vehicles 25,160 Ksh
- Account receivable 23,080 Ksh
- Cash at bank 29,120 Ksh
- Cash in hand 160,000 Ksh
Total Assets: 299,160 Ksh
Liabilities:
- Bought extra equipment on credit: 5,520,000 Ksh
- Bought extra inventory by cheque: 2,280,000 Ksh
- Paid creditors by cheque: 3,160,000 Ksh
Total Liabilities: 10,960,000 Ksh
The statement of financial position shows that Fakari's total assets are valued at 299,160 Ksh, while its total liabilities amount to 10,960,000 Ksh.
To prepare a statement of financial position for Fakari at the end of the year 2013, we need to calculate the balances of each asset and liability category after taking into account the transactions that took place during the financial year.
Let's calculate the balances in each category step by step:
1. Start with the initial assets provided:
- Account receivable: Ksh 23,080
- Cash at bank: Ksh 29,120
- Cash in hand: Ksh 160,000
- Equipment: Ksh 46,000
- Motor vehicles: Ksh 25,160
2. Add the transactions during the financial year:
a) Bought extra equipment on credit for Ksh 5,520,000:
- Add the equipment purchased on credit: Ksh 5,520,000 to the equipment category.
b) Bought extra inventory by cheque for Ksh 2,280,000:
- Add the inventory purchased by check: Ksh 2,280,000 to the relevant asset category.
c) Paid creditors by cheque for Ksh 3,160,000:
- Subtract the amount paid to creditors by check: Ksh 3,160,000 from the account payable category.
d) Received payment from debtors for Ksh 3,360,000 by check and Ksh 240 by cash:
- Add the amount received from debtors by check: Ksh 3,360,000 to the account receivable category.
- Add the amount received from debtors in cash: Ksh 240 to the cash in hand category.
Now, let's calculate the final balances for each category:
- Account payable: Ksh 15,800 - Ksh 3,160,000 = -Ksh 3,144,200 (negative balance indicates overpayment)
- Equipment: Ksh 46,000 + Ksh 5,520,000 = Ksh 5,566,000
- Motor vehicles: Ksh 25,160
- Account receivable: Ksh 23,080 + Ksh 3,360,000 = Ksh 3,383,080
- Cash at bank: Ksh 29,120
- Cash in hand: Ksh 160,000 + Ksh 240 = Ksh 160,240
Finally, we can prepare the statement of financial position as follows:
Statement of Financial Position (at the end of the year 2013)
Assets:
Account Receivable: Ksh 3,383,080
Cash at Bank: Ksh 29,120
Cash in Hand: Ksh 160,240
Equipment: Ksh 5,566,000
Motor Vehicles: Ksh 25,160
Liabilities:
Account Payable: -Ksh 3,144,200 (overpayment)
Please note that this statement only includes the given categories of assets and liabilities. Other financial elements like capital, retained earnings, etc., have not been provided, so they are not included in this statement.