Accounting Solutions 2

8/2/2019 Accounting Solutions 2

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Accounting - An introduction to principles and practice, 6E. Solutions to all Questions 9

Chapter 2 The Accounting Equation

Question 2.1

5000 = 0 + 5000

Question 2.2

1. 15000 = 0 + 15000

2. 25000 = 0 + 250003. 20000 = 5000 + 150004. 30000 = 7000 + 230005. 10000 = 3000 + 70006. 85000 = 15000 + 700007. 37000 = 0 + 370008. 38000 = 0 + 380009. 60000 = 10000 + 5000010.75000 = 25000 + 50000.

Question 2.3

1 July 2010 A Argenton commenced businessAssets = Liabilities + Owners Equity

Bank = 6000 Capital =31000

Motor Vehicle =25000

31000 = + 31000

4 July 2010 purchased inventory on creditAssets = Liabilities + Owners Equity

Bank 6000 Accounts Payable =3300 Capital 31000

Inventory =3300

Motor Vehicle 25000

34300 = 3300 + 31000

5 July 2010 paid cash for inventoryAssets = Liabilities + Owners Equity

Bank 6000 Accounts Payable 3300 Capital 31000

- 2200

=3800

Inventory 3300

+2200

=5500

Motor Vehicle 2500034300 = 3300 + 31000

6 July 2010 additional capital introducedAssets = Liabilities + Owners Equity


+3000 +3000

=6800 +4500

Inventory 5500 =38500

Motor Vehicle 25000

Office Equipment =450041800 = 3300 + 38500


2/21


Question 2.4

22 August 2010 P Dumont obtained a loanAssets = Liabilities + Owners Equity


+10000 Loan from Bank =10000

=13000

Inventory 2200

Premises 4500060200 = 11500 + 48700

25 August 2010 paid accounts payableAssets = Liabilities + Owners Equity


- 1500 - 1500

=11500 = 0

Inventory 2200 Loan from Bank 10000

Premises 45000

58700 = 10000 + 48700

26 August 2010 acquired inventory on credit and for cashAssets = Liabilities + Owners Equity

Bank 11500 Accounts Payable =3080 Capital 48700

- 1210 Loan from Bank 10000

=10290

Inventory 2200

+3080

+1210

=6490

Premises 4500061780 = 13080 + 48700

Question 2.5

1 September 2010 P Barrack commenced business with various assetsAssets = Liabilities + Owners Equity

Bank = 2000 Capital =46000

Inventory = 1000

Motor Vehicle = 8000

Premises =35000

46000 = 46000

3 September 2010 inventory purchased for cashAssets = Liabilities + Owners Equity

Bank 2000 Capital 46000

- 1012

=988

Inventory 1000

+1012

=2012

Motor Vehicle 8000Premises 35000

46000 = 46000


3/21


4/21


Question 2.6

1 September 2010 commenced business with various assetsAssets = Liabilities + Owners Equity

Bank = 2000 dr

Capital =46000 cr

Inventory = 1000 dr

Motor Vehicles = 8000 dr

Premises =35000 dr

46000 = 46000


Bank 2000 dr Capital 46000 cr - 1012 cr

=988 drInventory 1000 dr

+1012 dr

=2012 drMotor Vehicles 8000 drPremises 35000 dr

46000 = 46000

4 September 2010 bank granted a mortgageAssets = Liabilities + Owners Equity

Bank 988 dr Mortgage =15000 cr Capital 46000 cr

+15000 dr=15988 dr

Inventory 2012 drMotor Vehicles 8000 drPremises 35000 dr

61000 = 15000 + 46000

6 September 2010 machinery was purchased on creditAssets = Liabilities + Owners Equity

Bank 15988 dr Accounts Payable =8250 cr Capital 46000 cr

Inventory 2012 dr Mortgage 15000 crMotor Vehicles 8000 drPremises 35000 drMachinery =8250 d

r

69250 = 23250 + 46000

7 September 2010 inventory purchased on creditAssets = Liabilities + Owners Equity

Bank 15988 dr Accounts Payable 8250 cr Capital 46000 crInventory 2012 dr +1320 cr

+1320 dr =9570 cr

=3332 dr Mortgage 15000 crMotor Vehicles 8000 drPremises 35000 drMachinery 8250 dr

70570 = 24570 + 46000


5/21


Question 2.6 finalised

10 September 2010 machinery was purchased for cashAssets = Liabilities + Owners Equity

Bank 15988 dr Accounts Payable 9570 cr Capital 46000 cr - 2530 cr Mortgage 15000 cr

=13458 drInventory 3332 dr

Motor Vehicles 8000 drPremises 35000 drMachinery 8250 dr

+2530 dr

=10780 dr

70570 = 24570 + 46000

13 September 2010 payment of an account payableAssets = Liabilities + Owners Equity

Bank 13458 dr Accounts Payable 9570 cr Capital 46000 cr - 8250 cr - 8250 dr

=5208 dr =1320 crInventory 3332 dr Mortgage 15000 crMotor Vehicles 8000 drPremises 35000 drMachinery 10780 dr

62320 = 16320 + 46000

Question 2.7

Account balances of Fred McKay as 31 March 2010Assets = Liabilities + Owners Equity

Current Assets Current Liabilities Capital 32000Bank 15000 Accounts Payable 8000Inventory 10000 Non-current LiabilitiesNon-current Assets Loan - J Flynn 35000Motor Vehicles 30000 Mortgage 50000Premises 65000Computers 5000

125000 = 93000 + 32000

Question 2.8

Account balances of Margaret Robertson as 31 March 2010Assets = Liabilities + Owners Equity

Current Assets Current Liabilities Capital 105000Cash at Bank 25000 Accounts Payable 35000Inventory 40000 Non-current LiabilitiesNon-current Assets Loan - A Pendix 100000Land & Buildings 120000 Mortgage - Union 45000Machinery 80000Office Equipment 20000

285000 = 180000 + 105000


6/21


Question 2.9

Account Group Account Number

Assets 10 - 19(debit) Current Assets 10-14

Bank 10Cash on Hand 11Inventory 12Petty Cash 13

Non-current Assets 15-19Computers 15Land and Buildings 16Machinery 17Motor Vehicles 18

Liabilities 20 - 29(credit) Current Liabilities 20-24

Accounts Payable 20

Non-current Liabilities 25-29Loan from P Broker 25Mortgage on Land and 26

Buildings

Owners Equity 30 - 39(credit) Capital 30

Question 2.10


Assets 10 - 19(debit) Current Assets 10 -14

Bank 10Inventory 11

Non-current Assets 15 - 19Premises 15Motor Vehicle 16Machinery 17Office Equipment 18Computers 19

Liabilities 20 - 29(credit) Current Liabilities 20 - 24

Accounts Payable 20

Non-current Liabilities 25 - 29Mortgage 25Loan from Bank 26

Owners Equity 30 - 39(credit) Capital 30


7/21


Question 2.11

Balance Sheet of Fred McKayas at 31 March 2010

Current Assets Current LiabilitiesBank 15000 Accounts Payable 8000Inventory 10000 25000 Non-current LiabilitiesNon-current Assets Loan from J Flynn 35000Motor Vehicles 30000 Mortgage 50000 85000

Premises 65000 Total Liabilities 93000Computers 5000 100000 Owners Equity

Capital 32000

125000 125000

Question 2.12

Balance Sheet of Margaret Robertsonas at 31 March 2010

Current Assets Current LiabilitiesBank 25000 Accounts Payable 35000

Inventory 40000 65000 Non-current LiabilitiesNon-current Assets Loan from A Pendix 100000Land & Buildings 120000 Mortgage - Credit Union 45000 145000Machinery 80000 Total Liabilities 180000Office Equipment 20000 220000 Owners Equity

Capital 105000

285000 285000

Question 2.13

Balance Sheet ofA Argentonas at 6 July 2010

Current Assets Current LiabilitiesBank 6800 Accounts Payable 3300Inventory 5500 12300 Owners EquityNon-current Assets Capital 38500Motor Vehicles 25000Office Equipment 4500 29500

41800 41800

Question 2.14

Balance Sheet ofP Dumontas at 31 August 2010

Current Assets Current LiabilitiesBank 10290 Accounts Payable 3080Inventory 6490 16780 Non-current LiabilitiesNon-current Assets Loan - Bank 10000Premises 45000 Total Liabilities 13080

Owners EquityCapital 48700

61780 61780


8/21


Question 2.15

Balance Sheet ofP Barrackas at 30 September 2010

Current Assets Current LiabilitiesBank 5208 Accounts Payable 1320Inventory 3332 8540 Non-current LiabilitiesNon-current Assets Mortgage 15000Motor Vehicles 8000 Total Liabilities 16320

Premises 35000 Owners EquityMachinery 10780 53780 Capital 46000

62320 62320Question 2.16

1 September 2010 commencement of business by K PullenAssets = Liabilities + Owners Equity

Bank =12000 dr Mortgage =7500 cr Capital =52000 cr

Inventory = 3000 dr

Building =37000 dr

Machinery = 7500 dr

59500 = 7500 + 52000

4 September 2010 purchased inventory for cashAssets = Liabilities + Owners Equity

Bank 12000 dr Mortgage 7500 cr Capital 52000 cr

- 2310 cr

=9690 dr

Inventory 3000 dr

+2310 dr

=5310 dr

Building 37000 dr

Machinery 7500 dr

59500 = 7500 + 52000

7 September 2010 additional cash and motor vehicle contributed by ownerAssets = Liabilities + Owners Equity

Bank 9690 dr Mortgage 7500 cr Capital 52000 cr

+7500 dr +7500 cr

=17190 dr +15000 cr

Inventory 5310 dr =74500 cr

Building 37000 dr

Machinery 7500 dr

Motor Vehicle =15000 dr82000 = 7500 + 74500

10 September 2010 inventory purchased on creditAssets = Liabilities + Owners Equity

Bank 17190 dr Accounts Payable =2915 cr Capital 74500 cr

Inventory 5310 dr Mortgage 7500 cr

+2915 dr

=8225 dr

Building 37000 dr

Machinery 7500 dr

Motor Vehicle 15000 dr84915 = 10415 + 74500


9/21


Question 2.16 continued

13 September 2010 machinery bought for cashAssets = Liabilities + Owners Equity

Bank 17190 dr Accounts Payable 2915 cr Capital 74500 cr

- 4620 cr Mortgage 7500 cr

=12570 dr

Inventory 8225 dr

Building 37000 dr

Machinery 7500 dr

+4620 dr

=12120 dr

Motor Vehicle 15000 dr

84915 = 10415 + 74500

17 September 2010 loan from V AlanAssets = Liabilities + Owners Equity


+10000 dr Mortgage 7500 cr

=22570dr

Loan from V Alan =10000cr

Inventory 8225 dr

Building 37000 dr

Machinery 12120 dr


94915 = 20415 + 74500

22 September 2010 machinery purchased on creditAssets = Liabilities + Owners Equity


Inventory 8225 dr +8800 cr

Building 37000 dr =11715 crMachinery 12120 dr Mortgage 7500 cr

+8800 dr Loan from V Alan 10000 cr

=20920 dr


103715 = 29215 + 74500



- 3960 cr Mortgage 7500 cr

=18610 dr Loan from V Alan 10000 crInventory 8225 dr

+3960 dr

=12185 dr

Building 37000 dr

Machinery 20920 dr


103715 = 29215 + 74500


10/21



26 September 2010 payment of account payableAssets = Liabilities + Owners Equity


- 2915 cr - 2915 dr

=15695 dr =8800 cr


Building 37000 dr Loan from V Alan 10000 cr

Machinery 20920 dr


100800 = 26300 + 74500

27 September 2010 purchased inventory on creditAssets = Liabilities + Owners Equity


Inventory 12185 dr +4070 cr

+4070 dr =12870 cr

=16255 dr Mortgage 7500 cr


Machinery 20920 drMotor Vehicle 15000 dr

104870 = 30370 + 74500

28 September 2010 paid account payableAssets = Liabilities + Owners Equity


- 8800 cr - 8800 dr

=6895 dr =4070 cr




96070 = 21570 + 74500


Assets 10 - 19[debit] Current Assets 10-14

Bank 10Inventory 11

Non-current Assets 15-19

Building 15Machinery 16Motor Vehicle 17

Liabilities 20 - 29[credit] Current Liabilities 20-24

Accounts Payable 20

Non-current Liabilities 25-29Mortgage 25Loan from V Alan 26

Owners Equity 30 - 39[credit] Capital 30


11/21



Balance Sheet of K Pullenas at 30 September 2010

Current Assets Current Liabilities

Bank 6895 Accounts Payable 4070Inventory 16255 23150 Non-current Liabilities

Non-current Assets Mortgage 7500Building 37000 Loan from V Alan 10000 17500

Machinery 20920 Total Liabilities 21570Motor Vehicle 15000 72920 Owners Equity

Capital 7450096070 96070

Question 2.17

Account Name Account Group Chart of Account Accounts Payable current liability (CL) 20 Accounts Receivable current asset (CA) 10Bank current asset (CA) 11Capital owners equity (OE) 30Commission Received revenue (R) 40

Cost of Goods Sold expense (E) 50Discount Allowed expense (E) 51Discount Received revenue (R) 41Interest expense (E) 52Inventory current asset (CA) 12Land and Buildings non-current asset (NCA) 15Loan (repayable in 10 months) current liability (CL) 21Machinery non-current asset (NCA) 16Mortgage on Land and Buildings non-current liability (NCL) 25Motor Vehicles non-current asset (NCA) 17Office Equipment non-current asset (NCA) 18Rent Received revenue (R) 42

Sales revenue (R) 43Telephone expense (E) 53Wages and Salaries expense (E) 54

Question 2.18

Account Name Account Group Chart of AccountStationery expense (E) 50Sales revenue (R) 40Salaries expense (E) 51Rent expense (E) 52Postage expense (E) 53Premises non-current asset (NCA) 15

Motor Vehicles non-current asset (NCA) 16Loan (repayable in 18 months) non-current liability (NCL) 25Inventory current asset (CA) 10Interest Received revenue (R) 41Equipment non-current asset (NCA) 17Electricity expense (E) 54Computers non-current asset (NCA) 18Commission expense (E) 55Cartage Outwards expense (E) 56Cartage Inwards expense (E) 57Capital owners equity (OE) 30Bank Overdraft current liability (CL) 20

Accounts Receivable current asset (CA) 11 Accounts Payable current liability (CL) 21


12/21


Question 2.19

10 July 2010 cash sale of inventory (using perpetual inventory system)Assets[debit]

= Liabilities[credit]

+ Owners Equity [cr]+(Revenue [cr] - Expense [dr] )


+2475 dr Sales =2475 cr

=9275 dr -Cost of goods sold - 1210 dr

Inventory 5500 dr = Profit =1265 cr

- 1210 cr

=4290 dr


Office Equipment 4500 dr

43065 = 3300 + 39765

15 July 2010 sold inventory on credit (using perpetual inventory system)Assets[debit]




Accnt Receivable =3740 dr Sales 2475 cr

Inventory 4290 dr +3740 cr- 1540 cr =6215 cr

=2750 dr -Cost of goods sold -1210 dr

Motor Vehicle 25000 dr - 1540 dr

Office Equipment 4500 dr = -2750 dr

= Profit =3465 cr

45265 = 3300 + 41965

18 July 2010 payment of account payableAssets[debit]



Bank 9275 dr Accounts Payable 3300 cr Capital 38500 cr- 3300 cr - 3300 dr Sales 6215 cr

=5975 dr = 0 -Cost of goods sold -2750 dr

Accnt Receivable 3740dr = Profit 3465 crInventory 2750 dr



41965 = 0 + 41965

21 July 2010 purchased inventory on creditand for cash (using perpetual inventory system)Assets

[debit]

= Liabilities

[credit]

+ Owners Equity [cr]+

(Revenue [cr] - Expense [dr] )Bank 5975 dr Accounts Payable =2860 cr Capital 38500 cr

- 1595 cr Sales 6215 cr

4380 dr -Cost of goods sold -2750 dr

Accnt Receivable 3740dr = Profit 3465 cr

Inventory 2750 dr

+2860 dr

+1595 dr

7205 dr



44825 = 2860 + 41965


13/21



25 July 2010 payment of expenses and purchase of machinery for cashAssets[debit]




- 900 cr Sales 6215 cr

- 110 cr -Cost of goods sold -2750 dr

- 1540 cr Wages = - 900 dr

=1830 dr Electricity = - 110 dr Accnt Receivable 3740dr = -3760 dr

Inventory 7205 dr = Profit =2455 cr



Machinery =1540 dr

43815 = 2860 + 40955

29 July 2010 receipt from account receivable and payment to account payableAssets[debit]



Bank 1830 dr Account Payable 2860cr Capital 38500 cr+3740 dr - 2860 dr Sales 6215 cr

- 2860 cr = 0 -Cost of goods sold -2750 dr

=2710 dr Wages -900 dr

Accnt Receivable 3740dr Electricity -110 dr

- 3740 cr -3760 dr

= 0 = Profit 2455 cr

Inventory 7205 dr



Machinery 1540 dr

40955 = 0 + 40955

Balance Sheet ofA Argentonas at 31 July 2010

Current Assets Owners EquityBank 2710 Capital 38500Inventory 7205 9915 Add Profit 2455 40955

Non-current AssetsMotor Vehicles 25000Office Equipment 4500Machinery 1540 31040

40955 40955Question 2.20

Balance Sheet of G Cooranbongas at 31 March 2010

Current Assets Current LiabilitiesBank 2500 Accounts Payable 900 Accounts Receivable 1800 Non-current LiabilitiesInventory 1000 5300 Loan - Bank 5000

Non-current Assets Total Liabilities 5900Office Equipment 3500 Owners Equity

Computers 6000 9500 Capital 7000Add Profit 1900 8900

14800 14800


14/21


Question 2.21

2 January 2010 D Brad commenced business

Assets[debit]



Bank = 7000 dr Capital =19100crEquipment =12100 dr

19100 = 191004 January 2010 purchased machinery and inventory for cash

Assets[debit]



Bank 7000 dr Capital 19100 cr

- 2090 cr

- 2255 cr

=2655 dr

Inventory =2255 dr

Equipment 12100 dr

Machinery =2090 dr

19100 = 19100

7 January 2010 sold inventory on credit (using perpetual inventory system)Assets[debit]




Accnt Receivable =4070 dr Sales = 4070 cr

Inventory 2255 dr -Cost of goods sold = - 1980 dr

- 1980 cr = Profit =2090 cr

=275 dr

Equipment 12100 dr

Machinery 2090 dr

21190 = 21190

9 January 2010 additional capitalAssets[debit]




+2000 dr +2000 cr

=4655 dr +13860 cr

Accnt Receivable 4070dr =34960 cr

Inventory 275 dr Sales 4070 cr

Equipment 12100 dr -Cost of goods sold -1980 dr

Machinery 2090 dr = Profit 2090 cr

Motor Vehicle =13860dr

37050 = 3705012 January 2010 loan from A Relo

Assets[debit]



Bank 4655 dr Loan from A Relo =7500 cr Capital 34960 cr

+7500 dr Sales 4070 cr

=12155 dr -Cost of goods sold -1980 dr


Inventory 275 dr

Equipment 12100 dr


44550 = 7500 + 37050


15/21



15 January 2010 equipment and inventory purchased on creditAssets[debit]



Bank 12155 dr Accounts Payable +6050 cr Capital 34960 cr Accnt Receivable 4070dr +2365 cr Sales 4070 cr

Inventory 275 dr =8415 cr -Cost of goods sold -1980 dr

+2365 dr Loan from A Relo 7500 cr = Profit 2090 cr

=2640 dr

Equipment 12100 dr

+6050 dr

=18150 dr

Machinery 2090 dr


52965 = 15915 + 37050

17 January 2010 cash saleAssets[debit]



Bank 12155 dr Accounts Payable 8415 cr Capital 34960 cr+3575 dr Loan from A Relo 7500 cr Sales 4070 cr

=15730 dr +3575 cr

Accnt Receivable 4070dr =7645 cr

Inventory 2640 dr -Cost of goods sold -1980 dr

- 1925 cr - 1925 dr

=715 dr = - 3905 dr

Equipment 18150 dr = Profit =3740 crMachinery 2090 dr


54615 = 15915 + 38700

20 January 2010 sale on creditAssets[debit]



Bank 15730 dr Accounts Payable 8415 cr Capital 34960 cr Accnt Receivable 4070dr Loan from A Relo 7500 cr Sales 7645 cr

+968 dr +968 cr

=5038 dr =8613 cr

Inventory 715 dr -Cost of goods sold -3905 dr

- 385 cr - 385 dr

=330 dr = - 4290 drEquipment 18150 dr = Profit =4323 crMachinery 2090 dr


55198 = 15915 + 39283


16/21


Question 2.21 finalised23 January 2010 asset purchased for cash

Assets[debit]




- 3850 cr Loan from A Relo 7500 cr Sales 8613 cr

=11880 dr -Cost of goods sold - 4290 dr


Inventory 330 drEquipment 18150 dr

Machinery 2090 dr

+3850 dr

=5940 dr


55198 = 15915 + 3928325 January 2010 payment of account payable

Assets[debit]



Bank 11880 dr Accounts Payable 8415 cr Capital 34960 cr- 6050 cr - 6050 dr Sales 8613 cr

=5830 dr =2365 cr -Cost of goods sold - 4290 dr

Accnt Receivable 5038dr Loan from A Relo 7500 cr = Profit 4323 crInventory 330 dr

Equipment 18150 dr

Machinery 5940 dr


49148 = 9865 + 3928328 January 2010 payment to account payable and receipt from account receivable

Assets

[debit]

= Liabilities

[credit]

+ Owners Equity [cr]+

(Revenue [cr] - Expense [dr] )Bank 5830 dr Accounts Payable 2365 cr Capital 34960 cr

- 2365 cr - 2365 dr Sales 8613 cr

+4070 dr = 0 -Cost of goods sold - 4290 dr

=7535 dr Loan from A Relo 7500 cr = Profit 4323 cr Accnt Receivable 5038dr

- 4070 cr

=968 dr

Inventory 330 dr

Equipment 18150 dr

Machinery 5940 dr


46783 = 7500 + 39283

Balance Sheet of D Bradas at 31 January 2010

Current Assets Non-current LiabilitiesBank 7535 Loan from A Relo 7500 Accounts Receivable 968 Owners EquityInventory 330 8833 Capital 34960

Non-current Assets Add Profit 4323 392

Equipment 18150

Machinery 5940Motor Vehicle 13860 37950

46783 46783


17/21


Question 2.22


Assets 10 - 19[debit] Current Assets 10-14

Petty Cash 10 Accounts Receivable 11Inventory 12Non-current Assets 15-19Office Equipment 15Premises 16Investment in Shares 17Motor Vehicles 18

Liabilities 20 - 29[credit] Current Liabilities 20-24

Bank Overdraft 20 Accounts Payable 21

Non-current Liabilities 25-29Long Term Loan 25

Owners Equity 30 - 39[credit] Capital 30Revenue 40 - 49

[credit] Sales 40Rent Received 41Dividends Received 42

Expense 50 - 69[debit] Cartage Inwards 51

Electricity 52Import Duty 53Interest 54

Salaries 55Telephone 56Stationery 57Vehicle Expenses 58Bad Debt Expense 59 Advertising 6

Question 2.23

Balance Sheet of S T Davidas at 30 April 2010

Current Assets Current Liabilities

Accounts Receivable 3300 Loan from Bank 4000Bank 1500 Accounts Payable 330 4330

Inventory 880 5680 Owners Equity

Non-current Assets Capital 34700Office Furniture 6600 Add Profit 4050 38750

Computers 8800Motor Vehicles 22000 37400

43080 43080

Revenue: Sales 11000 Less Expenses: Salaries 2000 + Cost of goods sold 3300 + Rent1100 + Vehicle expenses 550 = 6950. Revenue - expenses = 11000 - 6950 = 4050 profit

Current assets 5680 + non-current assets 37400 - current liabilities 4330 = owners equity38750.Owners equity 38750 - profit 4050 = capital before the profit 34700


18/21


19/21


Question 2.26

BusinessTransaction

AccountingEquationElement

Account Name An increase ordecrease of the

account

Account isdebit orcredit

Paid wagesexpense Wages increase debitasset Bank decrease credit

Purchased inventory on creditasset Inventory increase debitliability Accounts Payable increase credit

Sale of inventory on creditasset Accounts Receivable increase debitrevenue Sales increase creditexpense Cost of Goods Sold increase debitasset Inventory decrease credit

Received cash from a customer for inventory sold earlier in the monthasset Bank increase debitasset Accounts Receivable decrease credit

Purchased office equipment for cashasset Office Equipment increase debitasset Bank decrease credit

Question 2.27

BusinessTransaction



account


Rent receivedasset Bank increase debitrevenue Rent Received increase credit

Sale of inventory for cashasset Bank increase debitrevenue Sales increase creditexpense Cost of Goods Sold increase debitasset Inventory decrease credit

Purchased inventory on creditasset Inventory increase debitliability Accounts Payable increase credit

Paid supplier for inventory purchased on credit last month

liability Accounts Payable decrease debitasset Bank decrease credit


20/21


Question 2.28

BusinessTransaction



account


Commenced business with cash and motor vehicleasset Bank increase debitasset Motor Vehicle increase debitowners equity Capital increase credit

Purchased inventory for cashasset Inventory increase debitasset Bank decrease credit

Sale of inventory on creditasset Accounts Receivable increase debitrevenue Sales increase creditexpense Cost of Goods Sold increase debitasset Inventory decrease credit

Purchase of machinery on creditasset Machinery increase debit

liability Accounts Payable increase creditSold inventory for cashasset Bank increase debitrevenue Sales increase creditexpense Cost of Goods Sold increase debitasset Inventory decrease credit

Purchased stationery on creditexpense Stationery increase debitliability Accounts Payable increase credit

Paid salariesexpense Salaries increase debit

asset Bank decrease creditObtained a mortgage from the bank

asset Bank increase debitliability Mortgage increase credit

Paid cash for equipmentasset Equipment increase debitasset Bank decrease credit

Paid the supplier of stationery, purchased earlier on creditliability Accounts Payable decrease debitasset Bank decrease credit

Rent receivedasset Bank increase debitrevenue Rent Received increase credit

Received cash from customers for inventory, sold earlier on creditasset Bank increase debitasset Accounts Receivable decrease credit


21/21


Question 2.29

BusinessTransaction



account


Purchased inventory on creditasset Inventor increase debitliabilit Accounts Pa able increase credit

Paid cash for motor vehicleasset Motor Vehicle increase debitasset Bank decrease credit

Paid rentex ense Rent increase debitasset Bank decrease credit

Obtained a loan from the credit unionasset Bank increase debitliabilit Loan from Credit Union increase credit

Cash sale of inventoryasset Bank increase debitrevenue Sales increase credit

ex ense Cost of Goods Sold increase debitasset Inventor decrease credit

Additional computer and machinery introduced by the ownerasset Com uter increase debitasset Machiner increase debitowners e uit Ca ital increase credit

Paid the supplier of inventory purchased earlier, on creditliabilit Accounts Pa able decrease debitasset Bank decrease credit

Sold inventory on creditasset Accounts Receivable increase debitrevenue Sales increase creditex ense Cost of Goods Sold increase debitasset Inventor decrease credit

Paid cash for advertisingex ense Advertisin increase debitasset Bank decrease credit

Cash received from customer who had been sold inventory on creditasset Bank increase debitasset Accounts Receivable decrease credit

Paid cash for office equipmentasset Office E ui ment increase debitasset Bank decrease credit

Commission receivedasset Bank increase debitrevenue Commission Received increase credit

Accounting Solutions 2

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