272 Accounting: Business Reporting for Decision Making
ILLUSTRATIVE EXAMPLE 7.4Balance sheet
Teresa’s Carpets and Rugs
Balance sheet as at 2 April 2016
Assets
Current
Cash $60 000Liabilities
Non-current
Loan $50 000
Non-current
Lease prepayment 10 000Equity
Capital contributed — T Tang 20 000
$70 000 $70 000Teresa’s statement of cash flows for the period 1–2 April 2016 is shown in illustrative example 7.5.
ILLUSTRATIVE EXAMPLE 7.5Statement of cash flows
Teresa’s Carpets and Rugs
Statement of cash flows for the period 1–2 April 2016
Cash inflows
Proceeds from loan
Proceeds from capital (equity) contributed$50 000
20 000
Total cash inflows 70 000
Lease payment $10 000
Total cash outflows 10 000
Net cash flow 60 000
Beginning cash balance —
Ending cash balance $60 000Teresa needs to fit out the shop in order to display the wares she has for sale. On 3 April she contracts a
builder to complete the fitout for $20 000. The next day the builder finishes the fitout and Teresa writes a
cheque for $20 000 in favour of the builder. Teresa expects the life of the shop fittings to be five years.
Teresa’s balance sheet as at 4 April 2016 is shown in illustrative example 7.6.
ILLUSTRATIVE EXAMPLE 7.6Balance sheet
Teresa’s Carpets and Rugs
Balance sheet as at 4 April 2016
Assets
Current
Cash $40 000Liabilities
Non-current
Loan $50 000
Non-current
Shop fittings
Lease prepayment20 000
10 000Equity
Capital contributed — T Tang 20 000
$70 000 $70 000