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2.10 Cost of Sales

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VCE Accounting - Michael Allison
VCE Accounting - Michael Allison

VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

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2.10 COST OF SALES
Video of this presentation at… YouTube Channel for VCE Accounting
© Michael Allison. Author’s permission required for external use.  A sports store sells a pair of runners for cash for $200…  But how much Profit has the business made? Business Customer Assets Liabilities Owner’s Equity= +  Cash $200  $200 $0  $200  Capital $200 2.10 COST OF SALES
© Michael Allison. Author’s permission required for external use.  Why isn’t the firm’s Profit the full $200?  Because, before the firm sold the shoes, the firm bought the shoes for $50  The $50 the firm paid for the shoes is an Expense called “Cost of Sales” Business CustomerSupplier Assets Liabilities Owner’s Equity= +  Cash $200  $150 $0  $150  Capital $200  Inventory $50  Capital $50 2.10 COST OF SALES
© Michael Allison. Author’s permission required for external use.  Recording sales of stock requires two items to be entered – a firm sold stock for $1,000 plus GST of $100 which originally cost $400  First item – the sale: the business is earning revenue and collecting GST. Cash sale Credit sale 2.10 COST OF SALES Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000
© Michael Allison. Author’s permission required for external use.  Recording sales of stock requires two items to be entered – a firm sold stock for $1,000 plus GST of $100 which originally cost $400  Second item – the cost of sale: stock is being sacrificed to make a sale. This is an expense it is called cost of sales Cost of sale 2.10 COST OF SALES Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400
© Michael Allison. Author’s permission required for external use.  What is Cost of Sales?  When stock is sold, it decreases the Stock [Asset] balance  This amount is effectively transferred into the Cost of Sales [E] account  E.g. A firm makes a sale of $800 plus $80 GST (cost price of the stock sold was $300) Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 1. Before sale – firm has $900 worth of Stock [Asset]in its backroom 2. Firm sells $300 worth of stock 3. Value of the stock sold is transferred into an Expense account called Cost of Sales Cost of Sales [Expense] 4. Value of Stock [Asset] is now $600 4. Value of Cost of Sales [Expense] is $300 2.10 COST OF SALES
© Michael Allison. Author’s permission required for external use.  Transaction #5: sold goods for cash $20,000 plus $2,000 GST (the cost price of the goods sold was $9,000)... 2.10 COST OF SALES A L OE= + 13,000  2,000  11,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500
© Michael Allison. Author’s permission required for external use.  Transaction #6: paid wages of $500... 2.10 COST OF SALES A L OE= + 500 0  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000
© Michael Allison. Author’s permission required for external use.  Transaction #7: the owner made cash drawings of $1,000... 2.10 COST OF SALES A L OE= + 1,000 0  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 126000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 126000 TOTAL EQUITIES 126000
© Michael Allison. Author’s permission required for external use. TASK In-class Homework Ex2.5 – March 5th and 6th X Ex2.6 X Ex2.7 X Ex2.8 X Ex2.9 X Ex2.10 X

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2.10 Cost of Sales

  • 2. Video of this presentation at… YouTube Channel for VCE Accounting
  • 3. © Michael Allison. Author’s permission required for external use.  A sports store sells a pair of runners for cash for $200…  But how much Profit has the business made? Business Customer Assets Liabilities Owner’s Equity= +  Cash $200  $200 $0  $200  Capital $200 2.10 COST OF SALES
  • 4. © Michael Allison. Author’s permission required for external use.  Why isn’t the firm’s Profit the full $200?  Because, before the firm sold the shoes, the firm bought the shoes for $50  The $50 the firm paid for the shoes is an Expense called “Cost of Sales” Business CustomerSupplier Assets Liabilities Owner’s Equity= +  Cash $200  $150 $0  $150  Capital $200  Inventory $50  Capital $50 2.10 COST OF SALES
  • 5. © Michael Allison. Author’s permission required for external use.  Recording sales of stock requires two items to be entered – a firm sold stock for $1,000 plus GST of $100 which originally cost $400  First item – the sale: the business is earning revenue and collecting GST. Cash sale Credit sale 2.10 COST OF SALES Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,100 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  1,100  100  1,000
  • 6. © Michael Allison. Author’s permission required for external use.  Recording sales of stock requires two items to be entered – a firm sold stock for $1,000 plus GST of $100 which originally cost $400  Second item – the cost of sale: stock is being sacrificed to make a sale. This is an expense it is called cost of sales Cost of sale 2.10 COST OF SALES Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400 Assets Liabilities Owner’s Equity Cash at Bank Debtors Stock GST Liability Creditors Loan Capital  400  400
  • 7. © Michael Allison. Author’s permission required for external use.  What is Cost of Sales?  When stock is sold, it decreases the Stock [Asset] balance  This amount is effectively transferred into the Cost of Sales [E] account  E.g. A firm makes a sale of $800 plus $80 GST (cost price of the stock sold was $300) Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 Stock $100 1. Before sale – firm has $900 worth of Stock [Asset]in its backroom 2. Firm sells $300 worth of stock 3. Value of the stock sold is transferred into an Expense account called Cost of Sales Cost of Sales [Expense] 4. Value of Stock [Asset] is now $600 4. Value of Cost of Sales [Expense] is $300 2.10 COST OF SALES
  • 8. © Michael Allison. Author’s permission required for external use.  Transaction #5: sold goods for cash $20,000 plus $2,000 GST (the cost price of the goods sold was $9,000)... 2.10 COST OF SALES A L OE= + 13,000  2,000  11,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  22,000  2,000  20,000  9,000  9,000 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 89000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 2500 Stock 15000 Owner’s Equity Capital 80000 TOTAL ASSETS 116500 TOTAL EQUITIES 116500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500
  • 9. © Michael Allison. Author’s permission required for external use.  Transaction #6: paid wages of $500... 2.10 COST OF SALES A L OE= + 500 0  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  500  500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 111000 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 91000 TOTAL ASSETS 127500 TOTAL EQUITIES 127500 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000
  • 10. © Michael Allison. Author’s permission required for external use.  Transaction #7: the owner made cash drawings of $1,000... 2.10 COST OF SALES A L OE= + 1,000 0  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Assets Liabilities Owner’s Equity Cash at Bank Stock Shop Fittings GST Liability Creditors Loan Capital  1,000  1,000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 126000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 110500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 90500 TOTAL ASSETS 127000 TOTAL EQUITIES 127000 Balance Sheet Assets $ Liabilities $ Cash at bank 109500 Loan 20000 Shop fittings 10000 Creditors 16500 GST refund 500 Stock 6000 Owner’s Equity Capital 89500 TOTAL ASSETS 126000 TOTAL EQUITIES 126000
  • 11. © Michael Allison. Author’s permission required for external use. TASK In-class Homework Ex2.5 – March 5th and 6th X Ex2.6 X Ex2.7 X Ex2.8 X Ex2.9 X Ex2.10 X