Reference no: EM132938256

Question - 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.

Required -

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.