Practice Exercise - Nairobi Trading Strictly Confidential

Table of Contents

Nairobi Balance Sheet

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

1. Issued common shares of 500.

2. Bought equipment for 300 with cash.
3. Bought inventory of 100. 80 of this was paid in cash. The remainder is outstanding at the balance sheet date.
4. Sold 75% of the inventory for 120. 100 of this had been received in cash at the balance sheet date.
5. Paid a cash operating expense of 15.

Journal Entries
1. Issued common shares of 500. Debit Credit
Cash 500
Common shares 500
500 500

2. Bought equipment for 300 with cash Debit Credit

Cash 300
Property, Plant & Equipment 300
300 300

3. Bought inventory of 100. Debit Credit

Inventory 100
Cash 80
Accounts Payable 20
100 100

4. Sold 75% of the inventory for 120 Debit Credit

Cash 100
Accounts Receivable 20
Revenue 120
Inventory 75
Cost of Sales 75
195 195

5. Paid a cash operating expense of 15. Debit Credit

Cash 15
Operating Expense 15
15 15

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 Balance Sheet
ASSETS TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Current Assets Current Liabilities

Cash 205 Accounts Payable 20
Accounts Receivable 20 Total Current Liabilties 20
Inventory 25
Total Current Assets 250 Non-Current Liabilities
Long-Term Debt –
Non-Current Assets Total Non-Current Liabilities –
Property, Plant & Equipment 300
Total Non-Current Assets 300 Shareholders' Equity
Common Shares 500
Retained Earnings
Revenue 120
Cost of Sales (75)
Other Operating Expenses (15)
Total Retained Earnings 30
Total Shareholders' Equity 530

Total Assets 550 Total Liabilities & Equity 550

Total Assets 550

Total Liabilities & Equity 550
Difference –

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