Exercise 5 (30 points) Presented below is a list of possible transactions. 1. Recorded sales of product. 2. Share issue as payment for an invoice reflecting incorporation fees. 3. Recorded wage expense of 30,000. The cash paid was 20,000; the difference was due to various amounts withheld. 4. Purchased Inventory for 35,000 on account (assume perpetual system is used). 5. A firm sells its accounts receivable to a factor for a fee of 2%. 6. Recorded employer's payroll taxes. 7. Recorded bonuses due to employees. 8. Honored warranty contracts in the period of sale, reducing the asset repair parts. 9. Recorded a liability on a lawsuit that the company will probably lose. 10. Recorded cash sales of 75,260, which includes 10% VAT. Instructions Set up a table using the format shown below and analyze the effect of the above transactions on the financial statement categories indicated, Transaction 1 2 Assets ? 2 Liabilities 7 ? Equity ? ? For each of the ten transactions, replace them with one of the following Increase D: Decrease NE. No effect Exercise 6 (30 points) On May 5 2020, London Home Ltd. purchased 12,500 of merchandise from Scandinavian Wood Designs, FOB destination, terms 3/15, n/30. Scandinavian Wood Designs pays the freight costs of 900 on May 6. Damaged goods totaling 1,200 are returned to Scandinavian Wood Designs for credit on May 10. The fair value of these goods is 500. On May 19, London Home pays Scandinavian Wood Designs in full, less the purchase discount. Both companies use a perpetual inventory system. Instructions a. Prepare separate journal entries for each transaction on the books of London Home. b. Prepare separate journal entries for each transaction for Scandinavian Wood Designs. Assume that the merchandise purchased by London Home on May 5 had cost Scandinavian Wood Designs 7,500