Match column a to column b and answer the accounting equation questions.

Here are the solutions to your questions.

1. Match column a to column b.

1. Asset: F
2. Debit: C
3. Credit: I
4. Capital: G
5. Liabilities: H
6. Accounting equation: J
7. Owner's equity: B
8. Transactions: E

2. TRADING BUSINESS: ACCOUNTING EQUATION

The business sells goods with a profit markup of 50% on the cost price.
Selling Price = Cost Price $\times$ 1.50

Transaction 1: Purchased stock from Simon Wholesalers for R8 000, paid with an EFT.

• Assets: Stock increases by R8 000, Bank decreases by R8 000.
• Owner's Equity: No effect.
• Liabilities: No effect.

$$\text{Assets} (\text{Stock} + \text{R}8\,000, \text{Bank} - \text{R}8\,000) = \text{Owner's Equity} + \text{Liabilities}$$

Transaction 2: Sold goods with a cost price of R500.

• Selling Price = R500 $\times$ 1.50 = R750.
• Assets: Cash increases by R750, Stock decreases by R500.
• Owner's Equity: Sales (Income) increases by R750, Cost of Sales (Expense) decreases by R500. Net increase of R250.
• Liabilities: No effect.

$$\text{Assets} (\text{Cash} + \text{R}750, \text{Stock} - \text{R}500) = \text{Owner's Equity} (\text{Sales} + \text{R}750, \text{Cost of Sales} - \text{R}500) + \text{Liabilities}$$

Transaction 3: Purchased equipment for cash from Heidi Traders for R9 000.

• Assets: Equipment increases by R9 000, Bank decreases by R9 000.
• Owner's Equity: No effect.
• Liabilities: No effect.

$$\text{Assets} (\text{Equipment} + \text{R}9\,000, \text{Bank} - \text{R}9\,000) = \text{Owner's Equity} + \text{Liabilities}$$

Transaction 4: Sold stock for cash, R1 500.

• Cost Price = R1 500 / 1.50 = R1 000.
• Assets: Cash increases by R1 500, Stock decreases by R1 000.
• Owner's Equity: Sales (Income) increases by R1 500, Cost of Sales (Expense) decreases by R1 000. Net increase of R500.
• Liabilities: No effect.

$$\text{Assets} (\text{Cash} + \text{R}1\,500, \text{Stock} - \text{R}1\,000) = \text{Owner's Equity} (\text{Sales} + \text{R}1\,500, \text{Cost of Sales} - \text{R}1\,000) + \text{Liabilities}$$

Transaction 5: Received cash from M Melby as rent for a spare office, R900.

• Assets: Cash increases by R900.
• Owner's Equity: Rent Income increases by R900.
• Liabilities: No effect.

$$\text{Assets} (\text{Cash} + \text{R}900) = \text{Owner's Equity} (\text{Rent Income} + \text{R}900) + \text{Liabilities}$$

Transaction 6: The owner withdrew R1 800 cash from the ATM for personal use.

• Assets: Cash decreases by R1 800.
• Owner's Equity: Drawings decrease by R1 800.
• Liabilities: No effect.

$$\text{Assets} (\text{Cash} - \text{R}1\,800) = \text{Owner's Equity} (\text{Drawings} - \text{R}1\,800) + \text{Liabilities}$$