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Here is the analysis of the transactions and the balance sheet in English:
i) Show the effects of the above transactions on assets, capital and liabilities.
The following table shows how each transaction affects the accounting equation (Assets = Capital + Liabilities).
| Transaction | Description of Transaction | Assets (Sh.) | Capital (Sh.) | Liabilities (Sh.) |
|---|---|---|---|---|
| Start | 0 | 0 | 0 | |
| a) | Deposited Sh. 50,000 in a bank from own saving. | +50,000 (Bank) | +50,000 | 0 |
| Balance | 50,000 | 50,000 | 0 | |
| b) | Borrowed Sh. 100,000 from ICDC and deposited the same in a business bank account. | +100,000 (Bank) | 0 | +100,000 (Loan) |
| Balance | 150,000 | 50,000 | 100,000 | |
| c) | Bought premises worth Sh. 70,000 by cheque. | +70,000 (Premises) -70,000 (Bank) | 0 | 0 |
| Balance | 150,000 | 50,000 | 100,000 | |
| d) | Withdrew Sh. 20,000 from bank for business use (cash). | +20,000 (Cash) -20,000 (Bank) | 0 | 0 |
| Balance | 150,000 | 50,000 | 100,000 | |
| e) | Bought stock costing Sh. 5,000 on credit. | +5,000 (Stock) | 0 | +5,000 (Creditors) |
| Balance | 155,000 | 50,000 | 105,000 | |
| f) | Sold stock costing Sh. 5,000 for Sh. 8,000 and received Sh. 6,000 in cash. | -5,000 (Stock) +6,000 (Cash) +2,000 (Debtors) | +3,000 (Profit) | 0 |
| Balance | 158,000 | 53,000 | 105,000 | |
| g) | Converted a personal car worth Sh. 200,000 into a business asset. | +200,000 (Car) | +200,000 | 0 |
| Balance | 358,000 | 253,000 | 105,000 | |
| h) | Paid wife's hospital bill Sh. 3,000 in cash from the business. | -3,000 (Cash) | -3,000 (Drawings) | 0 |
| Balance | 355,000 | 250,000 | 105,000 | |
| i) | Paid creditors Sh. 3,000 by cheque. | -3,000 (Bank) | 0 | -3,000 (Creditors) |
| Final Balance | 352,000 | 250,000 | 102,000 |
ii) Prepare Aura's balance sheet on August 31, 2024.
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