Effects of Transactions on Accounting Equation (Part 1)

Jessica deposited $1,000 of her own cash into the business bank account.

• Cash at bank +$1,000

• Cash in hand +$1,000

• Capital +$1,000

• Capital -$1,000

The business obtained a loan of $20,000 from the bank.

• Mortgage loan +$20,000

• Loan from bank +$20,000

• Cash at bank +$20,000

• Cash in hand +$20,000

Mary owns a fashion retail outlet. The business purchased dresses worth $600 by cheque.

• Fixtures & Fittings +$600

• Inventory +$600

• Cash at bank -$600

• Cash in hand -$600

The business sold inventory and received $200 cash. The cost of the inventory was $80.

• Sales revenue +$200

• Cash in hand +$200

• Cash at bank +$200

• Cost of sales +$80

• Inventory -$80

The business sold $1,500 worth of inventory on credit to a customer. The cost of the inventory was $500.

• Cash at bank +$1,500

• Sales revenue +$1,500

• Trade receivables +$1,500

• Cost of sales +$500

• Inventory -$500

A credit customer returned $300 worth of inventory of the wrong colour. The cost of the inventory was $130.

• Sales revenue -$300

• Trade receivable -$300

• Cost of sales -$130

• Inventory +$130

• Sales returns +$300