Question

The following transactions occurred in the first month of the business operation:

No	Transactions	Effect on
		Assets	Liabilities	Equity
Example	Commission received, RM200	Increase		Increase
1	Introduced capital of RM50,000 cash into the business.
2	Withdrew RM500 cash to pay for his mother’s medical bills.
3	Bought a van on credit RM70,000 from Proton.
4	Customer paid the business RM6,300.
5	The business pay supplier RM2,700 through online banking.
6	Repaid a RM780 loan owed to Robert by cash.
7	Paid internet bills RM200.
8	Purchased goods by cash RM1,200.
9	Opened a bank account at MAYBANK and deposited RM30,000 cash.
10	Paid to staff salary by cheque amounting to RM2,600.

Required: Complete the above columns to show the effects (Increase/Decrease) of the transactions.

Answer 1

Note: Certain assumptions have been made due to insufficient information regarding some of the transactions. The same have been shown below the table.

No	Transactions	Effect on
		Assets	Liabilities	Equity
1	Introduced capital of RM50,000 cash into the business.	Increase		Increase
2	Withdrew RM500 cash to pay for his mother’s medical bills.	Decrease		Decrease
3	Bought a van on credit RM70,000 from Proton.	Increase	Increase
4	Customer paid the business RM6,300.*	Increase		Increase
5	The business pay supplier RM2,700 through online banking.**	Decrease	Decrease
6	Repaid a RM780 loan owed to Robert by cash.	Decrease	Decrease
7	Paid internet bills RM200.	Decrease		Decrease
8	Purchased goods by cash RM1,200.	Increase/ Decrease
9	Opened a bank account at MAYBANK and deposited RM30,000 cash.	Increase/ Decrease
10	Paid to staff salary by cheque amounting to RM2,600.	Decrease		Decrease

Notes and Assumptions:

4. It is assumed that the customer has paid for sales or services rendered and not on account or in advance hence cash (asset) increases and revenue (equity) increases.

5. It is assumed that the payment has been made to the supplier on account thereby decreasing cash (asset) and decreasing accounts payable (liability).

8. There is an increase in inventory (asset) and a decrease in cash (asset). Hence, both effects shown under Assets. Kindly show as required.

9. There is an increase in bank (asset) and a decrease in cash (asset). Hence, both effects shown under Assets. Kindly show as required.

For any clarifications. kindly write under the comments section.