SA Attorneys purchased office cleaning materials of R1 300 from Africa Wholesalers and paid with the business debit card. At the time of the purchase SA Attorneys had a favourable bank balance.Prepare the BAE incorporating the information form the above transaction in the table below by indicating the net effect (amount) and the account debited and credited:Instructions for numeric responses:1. Use a full stop to indicate any decimals (eg: 1000.01)2. Round off to the second decimal after the full stop (eg: 50.56)3. When an element decreases, use a negative sign in front of the amount (eg: -1000.01) 4. When an element increases, the amount will be without any sign (eg: 1000.01)5. Only show the amount, do not show the "R" (eg: 1000)6. If no amount should be recorded in any of the numeric spaces, please indicate it by filling in a zero ("0") Assets=Equity+LiabilitiesAnswer Answer AnswerAnswer Answer Answer
Question
SA Attorneys purchased office cleaning materials of R1 300 from Africa Wholesalers and paid with the business debit card. At the time of the purchase SA Attorneys had a favourable bank balance.Prepare the BAE incorporating the information form the above transaction in the table below by indicating the net effect (amount) and the account debited and credited:Instructions for numeric responses:1. Use a full stop to indicate any decimals (eg: 1000.01)2. Round off to the second decimal after the full stop (eg: 50.56)3. When an element decreases, use a negative sign in front of the amount (eg: -1000.01) 4. When an element increases, the amount will be without any sign (eg: 1000.01)5. Only show the amount, do not show the "R" (eg: 1000)6. If no amount should be recorded in any of the numeric spaces, please indicate it by filling in a zero ("0") Assets=Equity+LiabilitiesAnswer Answer AnswerAnswer Answer Answer
Solution
The transaction described involves the purchase of office cleaning materials, which is an expense for the business. In accounting terms, this would decrease the business's assets (as cash is going out) and decrease the equity (as expenses reduce profits, which are part of the owner's equity).
Here's how you would fill in the table:
| Assets | Equity | Liabilities |
|---|---|---|
| -1300 | -1300 | 0 |
Explanation:
-
Assets: The business used its debit card to pay for the cleaning materials, which means it spent cash. This reduces the business's assets by R1,300. So, you would put "-1300" under Assets.
-
Equity: The purchase of cleaning materials is an expense, which reduces the business's profits. Profits are part of the owner's equity, so this transaction reduces Equity by R1,300. So, you would put "-1300" under Equity.
-
Liabilities: This transaction doesn't involve any borrowing or obligations to pay in the future, so it doesn't affect Liabilities. So, you would put "0" under Liabilities.
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