Jane receives her $500 scholarship on her transaction bank account (transaction 1). She pays her $250 rent with a cheque (transaction 2) and a $100 food bill with her debit card (transaction 3). She transfers $50 to her saving account (transaction 4). For each transaction, below the balance sheet, (a) Draw one balance sheet in which you represent the changes in Jane's balance sheet resulting from each transaction. [Mention precisely which items in the balance sheet are affected; represent the changes with arrows going up or down followed by the appropriate number]. Give a written explanation why the balance sheet is affected that way. [Be careful to not simply repeat in words what can be already seen in the balance sheet. The explanation needs to add value. ] (5 marks) (b) Calculate Jane's surplus and describe the form(s) that her surplus currently takes. [Provide clear definitions before applying numbers

(a)

Transaction 1: Scholarship Assets: Bank Account +$500 Liabilities: No change Equity: +$500

Explanation: Jane's bank account balance increases by $500 due to the scholarship. Since she doesn't owe this money to anyone, her equity (the difference between her assets and liabilities) also increases by$500.

Transaction 2: Rent Payment Assets: Bank Account -$250 Liabilities: No change Equity: -$250

Explanation: Jane pays her rent, which reduces her bank account balance by $250. Since this is a payment, not a loan, her liabilities don't change. Her equity decreases by$250 because her assets have decreased.

Transaction 3: Food Bill Payment Assets: Bank Account -$100 Liabilities: No change Equity: -$100

Explanation: Jane pays her food bill, reducing her bank account balance by $100. Again, this is a payment, not a loan, so her liabilities don't change. Her equity decreases by$100 because her assets have decreased.

Transaction 4: Transfer to Savings Assets: Bank Account -$50, Savings Account +$50 Liabilities: No change Equity: No change

Explanation: Jane transfers money from her bank account to her savings account. This doesn't change her total assets, as the money is still hers, just in a different account. Therefore, her equity doesn't change.

(b)

Jane's surplus is calculated as her income minus her expenses. In this case, her income is the $500 scholarship, and her expenses are the rent and food bill, totaling$350. Therefore, her surplus is $500 -$350 = $150.

This surplus currently takes the form of cash in her bank account. After the transactions, she has $150 left in her bank account. This is liquid wealth, meaning it can be easily accessed and used for further transactions.