Quiz DAFCO Mr. Mwihaki started a business on 1st January 2017. during the first month of trading the
following transactions took place.
Wrote a personal cheque and deposited into the business bank account Sh800,000
Withdrew Sh200,000 from the bank and put it into the cash till.
2nd Jan, Purchased goods by cheque Sh70,000
3rd Jan, Bought furniture for cash Sh25,000
DBMCO
Elijah Timothy
2
Finish attempt
3rd Jan, Bought equipment on credit Sh75,000
4th Jan, Sold goods for cash Sh100,000
Time left 0:41
5th Jan, Bought goods and paid by cheque Sh 200,000
6th Jan, Bought a motor van paying by cheque Sh.210,000
10th Jan, Obtain loan from the bank Sh 500,000
12th Jan, Sold goods on credit Sh75,000
16th Jan, Sold goods payment made by cheque Sh 100,000
16th Jan, Received a cheque from a debtor Sh.60,000
30th Jan, Took Sh10,000 from the cash till personal use.​

Question Completion:

Show the effects of the transactions on the accounting equation.

DAFCO

Jan. 1:

Assets (Bank +Sh800,000) = Liabilities + Equity (Common Stock +Sh800,000)

Assets (Bank -Sh200,000 Cash +Sh200,000) = Liabilities + Equity

Jan. 2:

Assets (Bank -Sh70,000 Inventory +Sh70,000) = Liabilities + Equity

Jan 3:

Assets (Furniture +Sh25,000 Cash -Sh25,000) = Liabilities + Equity

Jan. 3:

Assets (Equipment +Sh75,000) = Liabilities (Accounts payable +Sh75,000) + Equity

Jan. 4:

Assets (Cash +Sh100,000) = Liabilities + Equity (Retained Earnings +Sh100,000)

Jan. 5:

Assets (Inventory +Sh200,000 Bank -Sh200,000) = Liabilities + Equity

Jan. 6:

Assets (Motor Van +Sh210,000 Bank -Sh210,000) = Liabilities + Equity

Jan. 10:

Assets (Bank +Sh500,000) = Liabilities (Bank Loan +Sh500,000) + Equity

Jan. 12:

Assets (Accounts Receivable +Sh75,000) = Liabilities + Equity (Retained Earnings +Sh75,000)

Jan. 16:

Assets (Bank +Sh100,000) = Liabilities + Equity (Retained Earnings +Sh100,000)

Jan. 30:

Assets (Cash -Sh10,000) = Liabilities + Equity (Common Stock -Sh10,000)

Explanation:

The accounting equation indicates that Dafco's assets are equal to its liabilities plus equity.  This equation is the basis of the double-entry system of accounting.  It is always in balance with each transaction whenever the correct postings are made into the correct accounts.