Geranium Traders is a clothing store in Diepkloof. Petunia Mokoena owns it. Geranium Traders use the perpetual inventory system to record inventory transactions. Mark‐up is 20% on the selling price on all good sold. The business is a registered VAT vendor and trades only with registered VAT Vendors. A VAT rate of 15% applies where appropriate. The following transactions took place in the month of August 2020: NO DATE TRANSACTION 1.1 1 Owner contributed cash R200 000 1.2 3 Purchased goods for cash R10 000 excluding VAT 1.3 5 Credit sales to Mr Abdul R2 000 excluding VAT 1.4 6 Paid R345 in cash for an advert in the local newspaper 1.5 8 Petunia took clothing for personal use to the value of R5 000, being the cost price, excluding VAT 1.6 10 Purchased clothing on credit from PAM Clothing R6 000 excluding VAT 1.7 12 Cash sales R460 including VAT 1.8 14 Mr Ang, a debtor, has been declared bankrupt. His balance owing is R3 500. Geranium Traders receives 50c in the rand owed by Mr Ang, and the remaining outstanding balance must be written off. 1.9 17 Purchased clothing on credit from Cherry Clothing R4 025 including VAT 1.10 19 Debtor Mr Abdul paid R1 000 in part settlement of his account. 1.11 24 Paid PAM Clothing the full amount outstanding of R12 000 and received a 10% settlement discount Analyse each of the above transactions and complete the table as follows: Example: Paid R200 for Telephone Account NO ACCOUNT DEBITED ACCOUNT CREDITED ASSETS OWNER'S EQUITY LIABILITIES Example Telephone Bank -200 -200 For each transaction, show the double-entry (debit and credit general ledger names), as well as the effect on the accounting equation. Use the + and – signs to show the effect on the equation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Geranium Traders is a clothing store in Diepkloof. Petunia Mokoena owns it. Geranium Traders use the perpetual inventory system to record inventory transactions. Mark‐up is 20% on the selling price on all good sold.

The business is a registered VAT vendor and trades only with registered VAT Vendors. A VAT rate of 15% applies where appropriate. The following transactions took place in the month of August 2020:

NO	DATE	TRANSACTION
1.1	1	Owner contributed cash R200 000
1.2	3	Purchased goods for cash R10 000 excluding VAT
1.3	5	Credit sales to Mr Abdul R2 000 excluding VAT
1.4	6	Paid R345 in cash for an advert in the local newspaper
1.5	8	Petunia took clothing for personal use to the value of R5 000, being the cost price, excluding VAT
1.6	10	Purchased clothing on credit from PAM Clothing R6 000 excluding VAT
1.7	12	Cash sales R460 including VAT
1.8	14	Mr Ang, a debtor, has been declared bankrupt. His balance owing is R3 500. Geranium Traders receives 50c in the rand owed by Mr Ang, and the remaining outstanding balance must be written off.
1.9	17	Purchased clothing on credit from Cherry Clothing R4 025 including VAT
1.10	19	Debtor Mr Abdul paid R1 000 in part settlement of his account.
1.11	24	Paid PAM Clothing the full amount outstanding of R12 000 and received a 10% settlement discount

Analyse each of the above transactions and complete the table as follows:
Example: Paid R200 for Telephone Account

NO	ACCOUNT DEBITED	ACCOUNT CREDITED	ASSETS	OWNER'S EQUITY	LIABILITIES
Example	Telephone	Bank	-200	-200

For each transaction, show the double-entry (debit and credit general ledger names), as well as the effect on the accounting equation. Use the + and – signs to show the effect on the equation.

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