# PEV June 2007 2.1c help

agilmoj
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Can anyone explain how the Increase in short term borrowings of -95,000

and the increase in creditors of -20,000 is calculaed in the PEV June 2007 exam paper. 2.1c

I asked my tutor and he could not explain it. He told me to just work it out using the first method which was to just add the re-calculated Profit of 318,000 to the share capital of 725,000

I really want to know how the second method is calculated.

Thanks

James

and the increase in creditors of -20,000 is calculaed in the PEV June 2007 exam paper. 2.1c

I asked my tutor and he could not explain it. He told me to just work it out using the first method which was to just add the re-calculated Profit of 318,000 to the share capital of 725,000

I really want to know how the second method is calculated.

Thanks

James

## Comments

2,034Registered, Moderator[email protected]

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2RegisteredThanks

2,034Registered, ModeratorI hope that you are not in my class. If so, I will give you the same advice I give in class.

BEWARE OF EXAMINERS' ANSWERS.There are 2 ways find a revised net asset value on a balance sheet.

In an exam 1. is much easier. In this case:-

we had £683,000 and we increased the profit from -£42,000 to £318,000 (£360,000) so we will have £1,043,000.

Using 2.

We

Now look at the revised balance sheet (in thousands)

Machinery £1600

Stock £90

Trade debtors £225

Cash nil

Short term borrowing £145

Trade creditors £45

Net current assets £125

Long term borrowings £682

Net assets £1,043

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