Background information for balance sheet template

1. Mapple Limited
Background Information
In April 2009 Steve Gates and Bill Jobs started up an IT consultancy business together. Due to the
contract terms and conditions required by the customers they were dealing with they had to form a
limited company and Mapple Limited was born. The company has a year end of 31 March 2010.
To form the company they both agreed that they should each have 50 £1 shares. To get the
business going both Bill and Steve put in some of their own money. At the year end the directors
were owed £900 by the company.
In addition to this they agreed with their bank to borrow £10,000 to be paid back over 5 years. At
the year end they owed the bank £8,000 and the bank manager has asked that they show on the
balance sheet the split between what is owed in the next 12 months (£2,000) and the remaining
balance (£6,000).
With the money invested Steve and Bill bought computer equipment totalling £9,000. From
discussions with their accountant they think the equipment will need replacing in 3 years and their
accountant said that the equipment should be depreciated over the 3 years.
Luckily for the new entrepreneurs a friend had spare room in his offices for them to get the
business up and running. As part of the deal they have to pay 1 month rent in advance totalling
£175. It also costs them £125 a month for insurance and this is paid on direct debit 1 month in
advance.
In January 2010, the company had finished its most recent project and raised a bill for £14,800.
The customer had negotiated payment terms of 90 days when the contract was signed and is not
expected to pay until April.
In February 2010, Mapple won a new contract. Under the terms of the contract the company can
not raise invoices until it has met key milestones. The first milestone is due in April 2010. At the
year end the company had spent £1,500 on contract related purchases and the time spent by its
employees on the contract amounted to £3,500.
At the year end the company owed £1,000 of VAT and £610 for PAYE and National Insurance on
wages.
Just prior to the year end the directors managed to negotiate with a major supplier credit terms of
30 days rather than having to pay for invoices up front. In March the company bought goods worth
£330 from this supplier and the directors expect to pay for the goods in April.
The company’s accountant has told them that for advice with setting up the company and help
preparing the accounts, payroll and tax returns will cost £1,500.
At the year end the company had £3,840 in the bank.
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