Question

Question 1. Analyse these transactions using accounting equation. [2 + 3 + 3 = 8 Marks] Cash = 200 000 Bank =240 000 Debtors = 100 000 Building 160 000 Land= 100 000 Overdraft 100 000 Creditors= 160 000 Notes Receivables=160 000 Notes Payables= 120 000 Loan=240 000 Capital ? Prepare the balance sheet and find out the capital? Balance sheet The company bought furniture for $ 240 000 paid 45% on credit and the rest by cheque. Balance sheet The company sold furniture for $ 160 000 received 25% on credit and the rest by cheque. Balance sheet

Answer 1

All the parts of first question only has been answered.

Amount Liabilities and Capital Overdraft Creditors Notes Payable Loan Total Liabilities $ $ $ $ $ Balance Sheet Amount Assets 100,000 Cash 160,000 Bank 120,000 Debtors 240,000 Notes Receivables 620,000 Land Building 340,000 960,000 Total Assets $ $ $ $ $ $ 200,000 240,000 100,000 160,000 100,000 160,000 Capital (960000-620000) Total Liabilities and Capital $ $ $ 960,000 The capital balance is computed as balancing figure, i.e., $340,000 Transaction 1 Purchase of furniture for $240,000, paid 45% credit and rest cheque. The furniture shall be added as asset in the balance sheet for $240,000. The Creditors shall be increased to the extent of $108,000 (240000*45%). The Bank is reduced to the extent of $132,000. Liabilities and Capital Overdraft Creditors (160000+108000) Notes Payable Loan Total Liabilities Balance Sheet Amount Assets $ 100,000 Cash $ 268,000 Bank (240000-132000) $ 120,000 Debtors $ 240,000 Notes Receivables $ 728,000 Land Building $ 340,000 Furniture $ 1,068,000 Total Assets Amount $ 200,000 $ 108,000 $ 100,000 $ 160,000 $ 100,000 $ 160,000 $ 240,000 $ 1,068,000 Capital (1068000-728000) Total Liabilities and Capital

Transaction 2 Sold the furniture for $160,000, received 25% credit and rest cheque. The furniture shall be reduced to the extent of cost, i.e., $240,000. The Debtors shall be increased to the extent of $40,000 (160000*25%). The Bank is increased to the extent of $120,000. Capital is reduced to the extent of $80,000 (240000-160000) as loss on sale of furniture. Liabilities and Capital Overdraft Creditors Notes Payable Loan Total Liabilities Balance Sheet Amount Assets $ 100,000 Cash $ 268,000 Bank (108000+120000) $ 120,000 Debtors (100000+40000) $ 240,000 Notes Receivables $ 728,000 Land Building $ 260,000 Furniture (240000-240000) $ 988,000 Total Assets Amount 200,000 228,000 140,000 160,000 100,000 160,000 $ $ $ $ $ $ $ $ $ Capital (340000-80000) Total Liabilities and Capital 988,000