Exercise 2.5 : Deborah started business on 1 January 20X0. On that day she transferred £150,000 from…

Exercise 2.5:

Deborah started business on 1 January 20X0. On that day she transferred £150,000 from her personal account to a newly opened business bank account. Her transactions during January were as follows:

1 Jan.

Paid rent on the business premises, £12,000 in respect of the six months to 30 June 20X0.

2 Jan.

Purchased goods on credit from Dawe for £17,500.

3 Jan.

Purchased goods for cash £23,000.

4 Jan.

Ordered a van, priced at £40,000 from Ivor on credit.

7 Jan.

Sold half the goods bought on 2 January to Anne on credit for £12,000.

11 Jan.

Sold for cash all the goods bought on 3 Jan. for £30,000.

14 Jan.

Took delivery of the van from Ivor; there were extras amounting to £120 which Deborah paid in cash.

21 Jan.

Drew £6,000 from the business bank account for her own use.

25 Jan.

Anne returned one quarter of the goods sold to her on 7 January, claiming that they were defective; Deborah agreed that the goods were defective.

28 Jan.

The goods returned by Anne were returned to Dawe, who agreed that they were defective.

29 Jan.

Paid staff wages for the month £7,500.

Using the information given in exercise 2.5, analyses the transactions in debit/credit form showing, in each case, that the extended accounting equation is maintained, e.g.

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