Accounting equation after recording transactions ( video below)

A business commenced with capital in cash of $ 3,000. Inventory costing $2,400  plus sales tax is purchased on credit, and half is sold for $3,000 plus sales tax, the customer paying in cash at once. The sales tax rate is 10%.

What would the accounting equation after these transactions show?

Answer

$

Assets

Opening cash                                                       3,000

Cash received $(3,000 + 300 sales tax)           3,300

Closing cash                                                         6,300

Inventory $(2,400 – 1,200)                               1,200

Total Assets                                                       7,500  

Liabilities

Opening liabilities                                                   –

Sales tax payable $(300 – 240)                            60

Trade payable $(2,400 + 240 sales tax)           2,640

Closing liabilities                                              2,700

Capital

Opening capital                                                    3,000

Profit on sale of inventory $(3,000 – 1,200)   1,800

Closing capital                                                    4,800

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