Reference no: EM132931227
Problem - Effect of transactions on accounting equation - On August 1 Joseph set up Exacta Reprographic Company. The following transactions took place during the first month:
a) Joseph deposited £70,000 in the company's bank account in exchange for 7,000 shares of £10 each in the share capital of the company.
b) Took out a bank loan, £25,000.
c) Purchased for cash two photocopiers costing £40,000 each.
d) Purchased office supplies on credit £10,000.
e) Received photocopying revenues £25,000
f) Paid office rent in cash £2,000.
g) Paid staff salary £600.
h) Billed customers for services £7,000.
i) Repaid a part of the bank loan £10,000.
j) Purchased a photocopier on credit £40,000.
k) Declared and paid dividends, £2,500.
1. Construct a table of the assets, liabilities and owner's equity in equation form, using the following column headings: Cash; Debtors; Office Supplies; Office Equipment; Creditors; and Shareholders' Equity.
2. Analyse the effects of the transactions on the accounting equation A = OE + OL.
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