Session 3 Case studies and Solutions Nursery Management Understanding and Managing Finance

McLaney and Atrill Exercise 2.1 and 2.1 p 54 Wrapping Paper Accounts (End of Day 3) Cash Flow Op. Bal. £63 Sale £32 £95 Cash paid-£46 C. Bal. £49 Profit and Loss Sales £32 Cost of goods-£23 Profit. £9 Balance Sheet Cash £49 Stock £28 Total Wealth £77 NB this is just the asset side of the Balance Sheet

McLaney and Atrill Exercise 2.1 and 2.1 p 54  On day 4, Paul purchases stock for £53 in cash. During the day he sells stock that cost £33 for £47.  Construct a cash flow statement, profit and loss account and a balance sheet. for the fourth day.

McLaney and Atrill Exercise 2.1 and 2.1 p 54 Wrapping Paper day 3 Cash Flow Op. Bal. £49 Sale £47 £96 Cash paid-£53 C. Bal. £43 Profit and Loss Sales £47 Cost of goods-£33 Profit. £14 Balance Sheet Cash £43 Stock £48 Total Wealth £91 Can you now account for the ‘Total Wealth ‘figure?

McLaney and Atrill Exercise 2.1 and 2.1 p 54 - Solution Wrapping Paper - Total Wealth Cash on Day 1£40 Profit Day 1 £15 Profit Day 2 £13 Profit Day 3 £9 Profit Day 4 £14 Total£91 Balance Sheet Cash £43 Stock £48 Total Wealth £91 Can you now create the right hand side to the Balance sheet?

McLaney and Atrill Exercise 2.1 and 2.1 p 54- Solution Wrapping Paper Balance Sheet CLAIMS Owner’s Capital£40 Retained Profits £51 Total£91 ASSETS Cash £43 Stock £48 Total £91

Up and Down Increase Asset Decrease Asset Increase Claims Decrease Claims Increase Asset Decrease Asset Increase Claims Decrease Claims Which of the actions on the right can balance each of the actions on the left?

Up and Down Increase Asset Decrease Asset Increase Claims Decrease Claims Increase Asset Decrease Asset Increase Claims Decrease Claims Note that each action can be balanced in two different ways.