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Accounting Fundamentals - Practical Scenario

accounting Jul 30, 2022

Maria is a fresh graduate who lives in Kensington, Sydney. She studied fashion design at the UNSW and graduated a couple of months back. Her passion has always been to start her own clothing store and last week she achieved this by opening her clothing store in Maroubra.
She obtained $10,000 from her father and a short-term loan of $2,000 from the bank. Her father lent the $10,000 as a gift and does not expect Maria to repay it. Maria puts $3,000 from her own savings in order to commence operations.

The clothing store is a rented space for a monthly rent of $2,450. Maria bought cloth racks and display dummies for a cost of $4,600. The Point of Sales system was installed for a cost of $1,250. All other equipment in the store is worth $4,400.

Maria has been designing and developing clothes over the last 6 months. She has 15 unique designs and 165 individual pieces. The combined selling price of all the pieces is $13,200. Maria expects at least $8,000 in sales in the first month. She hired an assistant to help her at the store for a monthly payment of $2,800. 

The first month passed and Maria had greater than expected results. Her total revenue was $12,624. 82% of this was direct cash sales and the remaining was done using credit cards. Her bank takes a commission of 2 cents per every dollar she makes from credit card sales. 

Required: Using the details given, classify each figure of the scenario into an asset, expense, equity, liability, or revenue. Assume you are at the end of the month.

The paid version of this article will contain the answers to the above question.
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