The following transactions took place during the month of April 2019 in the books of account of Mr. Motto, a sole trader:
1st Mr. Motto opened a business bank account and deposited a cheque for N$150 000.
6th He purchased a motor vehicle for N$120 000 on credit from Mayo Vehicle CC.
10th He bought goods on credit from Paul for N$5 000.
11th He sold goods on credit to Matina for N$3 000.
12th Matina paid Mr. Motto N$3 000 for the goods bought on credit and claimed a discount
5% for early payment.
25th Mr. Motto settled his account with Paul by cheque and was given a settlement discount of 10%.
The business uses a periodic inventory system.
You are required to:
i. Identify the Journal book of prime entry and source document (s) used by Mr. Motto to record each of the above transactions. (8 marks)
ii. Show the effect (+ for increase / - for decrease, the amount, and the account) of each of the above transactions on the accounting equation.
e.g.
Journal Source document
1 March Sales journal Receipt
Date Asset
Owner’s equity Liabilities
e.g.
1 March
+5 000 (Cash)
-5 000 (Stationery)