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Practice Exercise - Lagos Trading Strictly Confidential

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Lagos Balance Sheet

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Construct a Balance Sheet for Lagos Trading Inc.

You have been asked to build a Balance Sheet for a company called Lagos Trading Inc. that has undertaken the following transactions

1. Issued common shares of 400.


2. Borrowed 200 from the bank for 5 years.
3. Bought property & equipment for 350 using cash.
4. Bought inventory of 150 on credit. The entire amount is still outstanding at the balance sheet date.
5. Sold 50% of the inventory for 200. 50 of this had been received in cash at the balance sheet date.
6. Paid a cash operating expense of 20.
7. Paid the bank interest of 10 for the loan.

Balance Sheet

ASSETS TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Current Assets Current Liabilities


Cash 270 Accounts Payable 150
Accounts Receivable 150 Total Current Liabilties 150
Inventory 75
Total Current Assets 495 Non-Current Liabilities
Long-Term Debt 200
Non-Current Assets Total Non-Current Liabilities 200
Property, Plant & Equipment 350
Total Non-Current Assets 350 Shareholders' Equity
Common Shares 400
Retained Earnings
Revenue 200
Cost of Sales (75)
Other Operating Expenses (20)
Interest Expense (10)
Total Retained Earnings 95
Total Shareholders' Equity 495

Total Assets 845 Total Liabilities & Equity 845

Total Assets 845


Total Liabilities & Equity 845
Difference –

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