MPA702 Assignment 1: Transaction Analysis, Balance Sheet, Income Statement, and Liability Status

MPA702 Assignment 1
Name:
Student Id:
Part A
Transaction Analysis Chart
Date
Description of Transactions
Assets Liabilities Owner’s
equity
1 April Initial Investment +160,000 +160,000
2 April Office Space
+360,000
+324,000
2 April Payment for Office Space -36,000
3 April Purchase of Office Equipment +-18,000
3 April Purchase of Medical Journal +- 3600
4 April Purchase of Office furniture +- 3000
4 April Insurance payment +- 2400
4 April Purchase of office stationery +860 -860
5 April Credit purchase of motor vehicle +30,000 -30,000
12 April Invoiced Carringvale + 2000
13 April Donated personal Laptop + 4500 -4500
16 April Invoiced Client +9800
17 April Cash At Bank +2000
30 April Paid Mortgage -2800 -1600 -1200
1 May Invoiced a client +9800
1 May Withdrawal for personal use -2400 -2400
1 May Paid wages -1200
24 May Payment received +- 5800
26 May Telephone & Internet bills paid +- 320
27 May Services provided to Big Pharma Ltd
as Big Pharma Ltd (35 days)
+- 77,000
30 May Paid Mortgage -2800 -1600 -1200
2 June Invoiced a client for services +9200
9 June Paid wages -1800 - 1800
16 June Motor vehicle expenses -580
16 June Credit sales received +8400
25 June Personal withdrawal +2800
25 June Payment for office stationery -260
30 June Mortgage Repayment -2800 -1600 -1200

MPA702 Assignment 1
Part B:
Health policy and research consultancy
Classified Balance Sheet
As At 30th June/ 2018
ITEMS AMOUNT ($)
ASSETS
Current assets
Cash at Bank 85265
Trade receivables 8300
Cash In Hand 91200
Total current assets 184765
Fixed assets
Office Space 360,000
Motor Vehicle 28500
Office Equipment 16,650
Office furniture 2925
Office Stationery 860
Total non-current assets 408,935
Total assets 593,700
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 27400
Deferred tax 800
Total current liabilities 28200
Long-term liabilities
Long-term mortgage 324000
Total liabilities 352200
Shareholders’ Equity
Initial equity 164500
Personal earnings 77,000
Total Equity 241500
Total liabilities and equity 593700
Health policy and research consultancy

MPA702 Assignment 1
Classified Income Statement
As At 30th June/ 2018
ITEMS AMOUNT($)
Revenue & Gains
Service Fee 93200
Total Revenue & Gains 93200
Less: Expenses & Losses
Insurance 2400
Mortgage Principal 3200
Interest 2400
Wages 2200
Telephone & Internet 320
Motor Vehicle 580
Depreciation 2925
Office Supplies 500
Utility Owing 680
15205
Net Income 77995
Part C:
Just like Park, most people are concerned with the liability status of their
businesses before starting operations. Liability forms the basis of choosing between
setting up either sole proprietorship or a private limited company. Both business
structures have their advantages and disadvantages. Limited companies have
separate legal entity from their shareholders/ directors, while sole proprietorships do
not (Latimer, 2012). In a situation where a sole proprietor faces financial difficulties,
its owner will have unlimited liability for its debts. On the other hand, the liability of
shareholders/ directors of the company to its debts are limited (Muscat, 2016).
In a business context, liability is defined as the money a business owes
outsiders such as creditors and suppliers. The debts come in the form of unpaid hire
purchase, unpaid invoice, and unpaid loans. In Australia, directors/ shareholders
cannot be held personally responsible for the debts owned by their companies