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Question - George and Val set up a company together to trade as decorators. George owns a three-year-old van, which he puts into the company instead of cash for share capital.
Val puts in €2000 in cash and they agree the van is worth €2000. They have no premises as such. Materials are stored in their home garage or left in the van. In the first month of business the following transactions take place:
(a) They get an order worth €600 to decorate a small flat. The customer pays €300 in advance.
(b) They buy materials worth €125 on credit from Cork Building Merchants which are used in this job.
(c) When the job is finished the customer pays a further €100 but says they will have to wait another month for the balance of €200.
(d) They get an order to decorate a large house for €120O plus materials. They buy €27O of materials on credit from the same builders' merchants.
(e) At the end of the month they have done 80 per cent of the work on the house painting order and they pay themselves €5OO each as salary.
Show the transactions and then draw up a statement of profit or loss the month and a statement of financial position as at the end of the month.
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