Write up the assets, capital, and liabilities account in the books of Bo Dada to record the following transactions: June 8: Bought Van on Credit from Cool Cars #170,000 June 12:... Write up the assets, capital, and liabilities account in the books of Bo Dada to record the following transactions: June 8: Bought Van on Credit from Cool Cars #170,000 June 12: Took #8000 out of the banks and put it into the Cash till June 15: Bought office fixtures pay by Cash ₩120,000
Understand the Problem
The question requires preparing an accounting record to reflect the assets, capital, and liabilities of Bo Dada based on the given transactions. This involves properly categorizing and recording each transaction under the appropriate accounts to maintain an accurate financial representation.
Answer
The transactions affect the assets, liabilities, and capital as follows: June 8: Van (+#170,000), Accounts payable (+#170,000). June 12: Cash (+#8,000), Bank (-#8,000). June 15: Office Fixtures (+#120,000), Cash (-#120,000).
Here's how the transactions would affect the assets, liabilities, and capital of Bo Dada:
- June 8:
- Assets: Van increases by #170,000
- Liabilities: Increase accounts payable to Cool Cars by #170,000
- June 12:
- Assets: Cash increases by #8,000, Bank decreases by #8,000
- June 15:
- Assets: Office Fixtures increase by #120,000, Cash decreases by #120,000
Answer for screen readers
Here's how the transactions would affect the assets, liabilities, and capital of Bo Dada:
- June 8:
- Assets: Van increases by #170,000
- Liabilities: Increase accounts payable to Cool Cars by #170,000
- June 12:
- Assets: Cash increases by #8,000, Bank decreases by #8,000
- June 15:
- Assets: Office Fixtures increase by #120,000, Cash decreases by #120,000
More Information
The accounting equation is Assets = Liabilities + Owner's Equity. Each transaction affects at least two accounts to keep the equation in balance.
Tips
A common mistake is not understanding the basic accounting equation and how each transaction affects the different accounts. For example, buying an asset on credit increases both assets and liabilities.
Sources
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