INTRODUCTION TO FINANCIAL ACCOUNTING
PROBLEM SOLVING EXERCISES 1
1. REQUIRED
■ Show the effect of the following transactions of Stella Traders on the Accounting equation:
Assets = Equity + Liabilities
■ Assume that the Bank balance is favourable at all times and that the perpetual inventory system
is in operation.
■ State increase by, decrease by or no change.
TRANSACTIONS
1.1 Obtained cash from the bank to increase the cash float, R800.
1.2 Received a credit invoice for stationery purchased, R400.
1.3 The owner used the funds of the business to pay her personal cell phone account, R500.
1.4 The owner increased her capital contribution from R100 000 to R150 000 by depositing cash
into the banking account of the business.
1.5 Purchased equipment on credit. The invoice amount of R10 000 was subject to a 10% trade
discount.
2. REQUIRED
■ Show the effect of the following transactions of Stella Traders on the Accounting equation:
Assets = Equity + Liabilities
■ Assume that the Bank balance is favourable at all times and that the perpetual inventory system
is in operation.
■ State increase by, decrease by or no change.
TRANSACTIONS
2.1 Received R900 from H. Hubert whose account was previously written off as irrecoverable.
2.2 Purchased equipment on credit from KM Wholesalers, R5 000.
2.3 An EFT was made to eThekwini Municipality for rates, R1 600.
2.4 Purchased a delivery vehicle for cash, R250 000.
2.5 An EFT for R800 was made to a creditor, LW Wholesalers, in full settlement of an account of
R825.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller BookSquad. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
