Question 1

You are the accountant of a trading company that sells new car tires. The following transactions took place during May 2020:

1. Acquired additional premises for a warehouse,financed by a 100% bank mortgage bond. The building cost R500 000.

2. Purchased tyres from an overseas supplier for R80 000 cash.

3. Received a loan of R100 000 from the bank on 1 May 2020, at 8% interest rate per annum.

4. Cash sales of tyres, R15 000 (cost price R8 000).

5. Salaries for May 2020 have not been paid, R30 000.

6. Sold tyres to customers on credit for R3 500. The cost price was R1 800.

7. Interest on the loan has not yet been accounted for. Required: Show the effect of these transactions on the accounting equation of the company for May 2020.