Complete the columns to show the effects of the following transactions;
Effect upon
Assets Liabilities Capital
(a) Bought a van on credit £8,700.
(b) Repaid by cash a loan owed to F Duff £10,000.
(c) Bought goods for £1,400 paying by cheque.
(d) The owner puts a further £4,000 cash into the business.
(e) A debtor returns to us £150 goods. We agree to make an
allowance for them.
(f) Bought goods on credit £760.
(g) The owner takes out £200 cash for his personal use
(h) We pay a creditor £1,150 by cheque.
Answers
IT IS A PROFIT OF £1,150 - £150 = £1,000
Assets Liabilities Capital
(a) Van £8,700 Credit £8,700 No change
(b) Cash £10,000 Loan £10,000 No change
(c) Stock £1,400 Bank £1,400 No change
(d) Cash £4,000 No change Capital £4,000
(e) Stock £150 No change No change
(f) Stock £760 Credit £760 No change
(g) Cash £200 No change Capital -£200
(h) No change Credit £1,150 No change
(a) Bought a van on credit £8,700: This transaction increases the asset of the company, as a van is purchased, but it also increases the liability side of the balance sheet as the company owes money to the creditor. There is no effect on capital.
(b) Repaid by cash a loan owed to F Duff £10,000: This transaction decreases the liability of the company, as a loan is paid off with cash. There is no effect on assets or capital.
(c) Bought goods for £1,400 paying by cheque: This transaction increases the asset of the company, as stock is purchased, but it also decreases the bank balance, as the payment is made through cheque. There is no effect on capital.
(d) The owner puts a further £4,000 cash into the business: This transaction increases the cash balance of the company, which in turn increases the asset. It also increases the capital of the business.
(e) A debtor returns to us £150 goods. We agree to make an allowance for them: This transaction does not affect the assets, liabilities or capital of the company, as the goods were returned.
(f) Bought goods on credit £760: This transaction increases the asset of the company, as stock is purchased, but it also increases the liability side of the balance sheet as the company owes money to the creditor. There is no effect on capital.
(g) The owner takes out £200 cash for his personal use: This transaction decreases the cash balance of the company, which in turn decreases the asset. It also decreases the capital of the business.
(h) We pay a creditor £1,150 by cheque: This transaction decreases the liability of the company, as the creditor is paid, but it also decreases the bank balance, as the payment is made through cheque. There is no effect on capital.
Overall, these transactions show how a company's assets, liabilities and capital can be affected by various financial transactions, including purchases, repayments, cash injections and withdrawals, and payments to creditors.
To learn more about Assets from the given link.
https://brainly.in/question/901812
#SPJ3