The following transactions occurred for the month of November 2019 for Hoad Ltd: 

a. The company was incorporated, with shareholders investing $200 000 in cash. 

b. Purchased inventory for cash, $20 000. 

c. Paid $4000 for a month’s rent on the premises. 

d. Purchased inventory on credit, $30 000. 

e. Received an advertising bill for a newspaper advertisement to promote the new company. The $1000 bill will be paid in December.

f. Inventory with a cost of $40 000 was sold on credit for $90 000. g Paid $25 000 of accounts payable. 

h. Received $30 000 from accounts receivable. 

i. Paid wages of $15 000. 

j. Paid sales commission at the rate of 1 per cent on sales made during the month. 

k. Purchased a new computer for $6000; paid $3000 in cash and $3000 to be paid in 15 months time. 

l. Owed employees $2000 in wages at the end of the month.

Required: 

1. Show the effect of each of the above transactions on the accounting equation. 

2. Prepare an income statement and a balance sheet at 30 November 2019. 

3. Prepare journal entries for each transaction and determine the balance for each account. 

4. For each transaction a to l, what is the effect on net profit and total assets? Write ‘increase’, ‘decrease’ or ‘no effect’ for each transaction.