2020 PHS 3E POA EOY P1 Q1

2020 PHS 3E POA EOY P1 Q1

1 Shane started a business, Sheng Yang Store on 1 May 2020. He carried out a number of transactions in the month of May 2020.

Additional information

1. The owner took out an office computer costing $2 100 for his son. This has not been recorded yet.

2. The net realisable value of the inventory was $47 930.

3. Interest expense of $200 was unpaid.

REQUIRED

a. State the accounting equation.

[1]

b. The following were some transactions in the month of May 2020. Analyse how the transactions would affect the elements in the accounting equation. May 1 transaction is shown as an example.

[12]

Date

Transaction

Assets

Equity

Liabilities

May 1

Shane transferred
$15 000 from his personal bank to the business bank account.

Cash at bank +$15 000

Capital +$15 000

No effect

May 6

Sheng Yang Store bought furniture for office use, 

$8 000 on credit from Wood Forest.

   

May 12

Sheng Yang Store paid for insurance by cheque, $100.

   

May 18

Sheng Yang Store sold inventory costing $5 000 for $8 200 on credit to Sing Lee.

 

   

May 20

Sing Lee returned goods sold to him at $400. These cost $280.

   

[TOTAL 13]

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