 Cash received from accounts receivable (debtors) of £75,000. Sale of inventory (stock) for £90,000 on credit the inventory had cost£55,000.A 5 year bank loan of £90,000 is arranged and the cash received. A non-current asset is purchased on credit for £80,000, depreciationon this asset is to be provided at 20% on the straight line basis with a zero residual value.(i) What will be the figure for total equity at the end of the period?(ii) What distinguishes current and non-current assets and why is this distinction important?

Equity of owners increases with revenue and decreases with expenses.

Answered: Cash received from accounts receivable…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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 Cash received from accounts receivable (debtors) of £75,000.
 Sale of inventory (stock) for £90,000 on credit the inventory had cost

£55,000.
A 5 year bank loan of £90,000 is arranged and the cash received.
A non-current asset is purchased on credit for £80,000, depreciation

on this asset is to be provided at 20% on the straight line basis with a zero residual value.

(i) What will be the figure for total equity at the end of the period?
(ii) What distinguishes current and non-current assets and why is this distinction important?

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