Linda starts her accountancy practice on 1 May 2018. She opens a business bank account and pays in £50,000 of her own money to provide the practice with cash with which to start operating. Her fees to clients in her first year total up to £100,000 (there are no outstanding fees due for payment at 30 April 2019 and all fees received have been paid into her business bank account). Her office expenses are £40,000 (all of these have been paid by the end of the financial year from her business bank account and there are no outstanding expenses at 30 April 2019) and she withdraws £2,000 each month to cover her own personal living expenses. What is the figure that will appear in Linda's trial balance for her bank account at 30 April 2019?

Question

Quizplus · Accepted Answer

Linda's bank account will have a debit balance of £86,000. She started with £50,000, earned £100,000 in fees, spent £40,000 on expenses, and withdrew £24,000 for personal use (£2,000 x 12 months). The calculation is: £50,000 + £100,000 - £40,000 - £24,000 = £86,000.

Linda Starts Her Accountancy Practice on 1 May 2018