On 1 September 20.18 Mr Will Turner started a new blacksmith business called Iron Duke. Iron Duke manufactures and sells domestic cast iron furniture. The following transactions took place during the first financial year of the entity ending 31 August 20.19.

• On 1 September 20.18 the factory building the business will be using was purchased for R230 000 using a long-term loan that is payable on 31 August 20.24.
• The business bought a CNC machine on credit from Big Traders for R11 500. The business paid R1 500 cash for the installation of the machine. Both transactions took place on 30 November 20.18.

Show the effect of each transaction on the basic accounting equation with a plus sign (+) for an increase and a minus sign (-) for a decrease next to each amount under each element. Also indicate the account(s) that will be affected by each transaction next to the affected elements for the financial year ended 31 August 20.19. (The business makes use of the perpetual inventory system.)

Instructions:

Drag the correct answer into the correct space.

An option can be used more than once.

If an options has been provided and it is not applicable to the specific questions please put N/A in the accounts column and a 0 in the amounts column.

Keep the transactions strictly in the order they were given.

Buildings

Equipment

Bank

Machinery

Big Traders/Trade receivables control - Big Traders/Trade payables control - Long-term loan - Installation costs