Accounting Business Reporting for Decision Making

CHAPTER 4 Business transactions 149

4.19   LO4

From the following descriptions of business transactions, choose two appropriate column headings

for the worksheet. Justify for each description your choice of heading.

a. The owner contributes capital to the business.

b. The business purchases cabinets and shelving for the business on credit from a furniture

supplier.

c. The business purchases computers, printers and a digital camera for business use.

d. The owner withdraws cash for personal use.

e. The business provides services on credit.

4.20   LO4

State the effect of each of the following business transactions for Humphrey Sports. For example,

in (a) increase cash and increase capital.

a. J Humphrey commenced business by injecting cash into her business.

b. Paid wages.

c. Purchased goods for sale on credit.

d. Sold goods on credit.

e. Received an invoice for annual insurance on building and paid the account.

f. J Humphrey withdrew an iPad from the business.

g. Sold inventory for cash.

h. T Comery (accounts receivable) paid amount outstanding.

i. Humphrey Sports paid accounts payable in full.

4.21   LO4

Complete the following table. (Note: Each row should be treated independently.)

Current

assets +

Non-current

assets =

Current

liabilities +

Non-current

liabilities + Capital Profit/loss

200 a. 1 700 1 100 4 000 700

6 400 19 700 50 400 b. 750

15 100 8 400 3 900 2 200 11 100 c.

d. 5 700 10 700 17 900 3 500 5 300

4.22   LO5, 9

Cash sales of $2079 have caused the worksheet to be out of balance because a mistake was made

when the figures were put into the worksheet. The bookkeeper accidentally increased the cash

account by $2097 and increased the profit or loss account in the worksheet by $2079. This is often

referred to as a ‘transposition error’. Discuss how this type of error can be quickly identified and

corrected.

4.23   LO3, 4

Choose two appropriate account names for each of the following business transactions. State

whether you would debit or credit each of the accounts.

a. D Dango commenced business ‘DD’ by contributing cash.

b. Cash sales by DD to customer.

c. Paid business registration fees.

d. Paid wages to part-time employee.

e. Cash purchases of inventory.

f. Sold goods on credit to customer.

g. Borrowed money from Sunny Days Bank.

h. Purchased office chair for cash from Retro Office Furniture.

i. Received interest from Sunny Days Bank.