Explain effect of each transaction on accounting equation

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Reference no: EM13947272

The following transactions relate to Toy Manufacturers Company during the month of June.

Date		Business transactions	£
June	1	Purchase toy components from supplier, 100 items at £3 each, paying in cash, and place in raw materials store.	300
June	3	Remove 70 components from raw materials store to meet production department's request (cost £3 each).	210
June	5	Carry out labour work and use production facilities to convert components into finished goods. Additional costs incurred for labour and use of facilities were £2.50 per toy processed.	175
June	6	Finished goods are transferred to finished goods store. Each toy has cost £5.50 in total (70 toys ´ £5.50 = £385).	385
June	11	50 toys, which cost £5.50 each to manufacture, are delivered to a customer.	275
June	14	The customer pays a price of £8 cash per toy immediately on delivery.	400

(a) Calculate the profit on sale.

(b) Explain the effect of each transaction on the accounting equation.

Reference no: EM13947272

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