Question

Develop an Accounting Equation from the following transactions:

		₹
(i)	Mohan commenced business with cash	50,000
(ii)	Purchased goods for cash	30,000
(iii)	Purchased goods on credit	20,000
(iv)	Sold goods (costing ₹ 10,000) for	12,000
(v)	Bought furniture on credit	2,000
(vi) (vii)	Paid cash to a creditor Salary paid	15,000 1,000

Answer 1

S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash (Rs)	+	Stock (Rs)	+	Furniture (Rs)	=	Creditors (Rs)		(Rs)
(i)	Mohan commenced business with cash	50,000					=			50,000
		50,000					=			50,000
(ii)	Purchased goods for cash	– 30,000	+	30,000			=
		20,000	+	30,000			=			50,000
(iii)	Purchased goods on credit			20,000			=	20,000
		20,000	+	50,000			=	20,000	+	50,000
(iv)	Sold goods costing Rs 10,000 for Rs 12,000	12,000	+	– 10,000			=			2,000 (profit)
		32,000	+	40,000			=	20,000	+	52,000
(v)	Bought furniture on credit					2,000	=	2,000
		32,000	+	40,000	+	2,000	=	22,000	+	52,000
(vi)	Paid cash to a creditor	– 15,000					=	– 15,000
		17,000	+	40,000	+	2,000	=	7,000	+	52,000
(vii)	Salary Paid	– 1,000					=			– 1,000 (expenses)
		16,000	+	40,000	+	2,000	=	7,000	+	51,000

Assets	=		16,000 + 40,000 + 2,000
	=	Rs	58,000
Liabilities	=	Rs	7,000
Capital	=	Rs	51,000