The accounting equation is the Alpha of Accounting rules. As the junior accountant at the stationery shop, Polka-Dots (Pty) Ltd.
Transactions related to the 2022 financial year:
1. Posters to the value of R550 was purchased by the primary school. Payment was
made in cash.
2. Unwanted goods of R800 purchased by Mrs. Strong on account, was returned.
The cost of the goods is R500.
3. Mr. Prince applied to open an account at Polka-Dots (Pty) Ltd. A limit of R2 000
was approved by management.
4. Mr. Prince purchased stationery of R1 750 for his Grade 9 child on credit.
5. Fly Bank charged the monthly bank charges of R45.
6. The municipal bill in respect of water and electricity usage, amounting to R850
was received.
7. A long-outstanding dispute with the cellphone company was finally resolved. The
correcting credit was passed by the cellphone company of R140.
8. To fill up the stock shortages, an order of R5 000 was issued to GREAT Ltd.
9. Rental of R600 was paid as per the entered lease agreement.
10. Cash sales of R750 was made to Mrs. Strong. The cost of the goods is R400.
11. Fuel of R800 for the delivery truck was posted to the salaries and wages
account.
12. Mr. Plan’s son was accepted to study at the university. The stationery needs are
not yet communicated. As Mr. Plan will be travelling he paid a deposit of R4 000
to Polka-Dot (Pty) Ltd to apply to his son’s stationery needs.
13. Mr. Sick passed away. His estate has insufficient funds to settle his account of
R3 500. The lawyers offered a final settlement of 60c in the rand.
14. Depreciation is calculated on the straight-line basis of 25% by Polka-Dot (Pty)
Ltd. The annual depreciation on the delivery truck, purchased for R350 000 in 2020, have not been accounted.
15. The company uses the periodic inventory system. At financial year-end stock of
R5 500 was on hand. The opening balance on the inventory account amounts to 8 000.
16. The owner settles the vehicle loan of R5 600 from her own account.
Required:
1.1. Record the transactions (1-16) in the accounting format provided. Note that the accounting equation is sensitive to +/- and to general ledger accounts. (40)
Format to be used:
Asset
Equity
Liability
Financial impact
Account
Financial impact
Account
Financial impact
Account
+500
Bank
500
Accounts payable
1.2. Record the transactions (1-16) in the accounting records via general journals for the financial year ended 31 July 2022