Fred owns a garage and has tried to get everything together ready for the preparation of business
accounts. He has drawn up the list of items below. You are required to identify, with reasons, the
balance sheet heading under which each item should be classified, and the amount that should be
included.
a A motor car was bought for resale at a cost of $ The retail price was $
b Various loose tools for car repairs cost $
c Two hydraulic jacks were bought for $ each.
d Freehold premises cost $
e $ was spent on digging and finishing a pit for repairs.
f The original cost of spare parts held as general stock was $
g Spare parts were bought from the previous owner at the time of purchasing the garage. A value
of $ was agreed upon. Subsequently it became apparent that only $ of these spares
was of any use.
