Balance Sheet for Baker Ltd as at 31st March 2022

  1. The following are extracts from the accounts of Baker Ltd at the beginning of the year:
    £
    Trade receivables 140,210
    Plant & equipment 40,481
    Cash 781,709
    Fixtures & Fittings 40,080
    Trade Payables 45,891
    Property 95,081
    Opening inventory 78,000
    Goodwill 17,159
    Long term loan 1,010,710
    Inventory 1,051,715
    Share capital ?
    During the year the following transactions took place:
  2. The company returned Furniture & Fittings of £15,040 (bought on cash) that were faulty.
  3. Retained earnings £500,000
  4. They received from customers £25,000.
  5. They bought Plant & equipment £16,000 on cash.
  6. They obtained a loan of £12,498 and they will repay it in 9 month’s time
  7. They repaid their suppliers £15,500.
  8. Depreciation to be charged on Plant & Equipment of £10,000.
  9. The closing inventory is £1,051,715
    a. Prepare the Balance Sheet for Baker Ltd as at 31st March 2022. (20 marks)
    b. Calculate the Liquidity ratios and explain the significance of the results. (5 marks)

Sample Solution