Record the transactions in the Cash Book and the General Journal for January 2018 and close off the book at the end of the month. Do the posting to the ledgers. Indicate what effect each of the following transactions has on the accounting equation (effect/reason).

Here is the effect of each transaction on the accounting equation:

• Transaction 2: Bought goods for N$7 000 and paid by EFT, received 10% trade discount.

  • Effect: Assets: No net effect (Inventory increases by N$6 300, Bank decreases by N$6 300). Liabilities: No effect. Equity: No effect.
  • Reason: Purchase of inventory for cash, after a trade discount of N$7 000$\times$0.10 = N$700.

• Transaction 3: Paid On Time Courier by debit card N$700 for carriage on purchases to the business.

  • Effect: Assets: Decrease by N$700 (Bank). Liabilities: No effect. Equity: Decrease by N$700 (Carriage expense).
  • Reason: Payment of an expense.

• Transaction 5: Donated N$2 000 cash to the Old Age Home.

  • Effect: Assets: Decrease by N$2 000 (Cash). Liabilities: No effect. Equity: Decrease by N$2 000 (Donation expense).
  • Reason: Payment of an expense.

• Transaction 7: EFT N$70 000 to Standard Bank as a fixed deposit at 12% interest per annum receivable at the end of every month.

  • Effect: Assets: No net effect (Fixed Deposit increases by N$70 000, Bank decreases by N$70 000). Liabilities: No effect. Equity: No effect.
  • Reason: Transfer of funds to an investment.

• Transaction 9: Cash sales of goods N$12 000 as per cash register roll CRR11.

  • Effect: Assets: Increase by N$12 000 (Cash). Liabilities: No effect. Equity: Increase by N$12 000 (Sales revenue).
  • Reason: Sale of goods for cash.

• Transaction 10: Received cash N$900 from B Boss in full settlement of his account.

  • Effect: Assets: Decrease by N$100 (Cash increases by N$900, Accounts Receivable decreases by N$1 000). Liabilities: No effect. Equity: Decrease by N$100 (Discount Allowed expense).
  • Reason: Collection from a debtor with a discount allowed (N$1 000 - N$900 = N$100).

• Transaction 12: S Simon was written off as a bad debt.

  • Effect: Assets: Decrease by N$500 (Accounts Receivable). Liabilities: No effect. Equity: Decrease by N$500 (Bad Debts expense).
  • Reason: Recognition of an uncollectible debt as an expense.

• Transaction 23: A customer bought goods for N$990 and paid with his credit card.

  • Effect: Assets: Increase by N$990 (Bank). Liabilities: No effect. Equity: Increase by N$990 (Sales revenue).
  • Reason: Sale of goods via credit card.

• Transaction 26: Deposited all cash into the current bank account of the business.

  • Effect: Assets: No net effect (Cash decreases by N$12 900, Bank increases by N$12 900). Liabilities: No effect. Equity: No effect.
  • Reason: Transfer of cash to bank.
  • Calculation of cash deposited: N$2 000 (initial) - N$2 000 (Tx 5) + N$12 000 (Tx 9) + N$900 (Tx 10) = N$12 900.

• Transaction 30: EFT N$2 000 to Great Suppliers to settle the business's account.

  • Effect: Assets: Decrease by N$2 000 (Bank). Liabilities: Decrease by N$2 000 (Accounts Payable). Equity: No effect.
  • Reason: Payment to a creditor.

• Transaction 31: Received an EFT from Standard Bank for interest on the fixed deposit.

  • Effect: Assets: Increase by N$700 (Bank). Liabilities: No effect. Equity: Increase by N$700 (Interest revenue).
  • Reason: Receipt of interest revenue (N$70 000$\times$0.12$\div$12 = N$700).