Question

Show the accounting equation on the basis of the following transaction:

(a)	Udit started business with:		Rs
	(i)	Cash	5,00,000
	(ii)	Goods	1,00,000
(b)	Purchased building for cash		2,00,000
(c)	Purchased goods from Himani		50,000
(d)	Sold goods to Ashu (Cost Rs 25,000)		36,000
(e)	Paid insurance premium		3,000
(f)	Rent outstanding		5,000
(g)	Depreciation on building		8,000
(h)	Cash withdrawn for personal use		20,000
(i)	Rent received in advance		5,000
(j)	Cash paid to Himani on account		20,000
(k)	Cash received from Ashu		30,000

Answer 1

S.No.	Explanation	Assets							=	Liabilities					+	Capital
		Cash	+	Stock	+	Building	+	Debtors		Creditors	+	Outstanding Expenses	+	Unaccrued Income
(a)	Increase in cash	5,00,000
	Increase in stock			1,00,000
	Increase in capital															6,00,000
		5,00,000	+	1,00,000					=	NIL					+	6,00,000
(b)	Increase in building					2,00,000
	Decrease in cash	(2,00,000)							=
		3,00,000	+	1,00,000	+	2,00,000			=	NIL					+	6,00,000
(c)	Increase in stock			50,000
	Increase in creditors								=	50,000
		3,00,000	+	1,50,000	+	2,00,000			=	50,000					+	6,00,000
(d)	Increase in debtors							36,000
	Decrease in stock			(25,000)
	Increase in capital (Profit)															11,000
		3,00,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000					+	6,11,000
(e)	Decrease in cash	(3,000)
	Decrease in capital (Expense)															(3,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+				+	6,08,000
(f)	Decrease in capital (Expense)											5,000
	Increase in liabilities															(5,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+	5,000			+	6,03,000
(g)	Decrease in building					(8,000)
	Decrease in capital															(8,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,95,000
(h)	Decrease in cash	(20,000)
	Decrease in capital															(20,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,75,000
(i)	Increase in cash	5,000
	Increase in liability													5,000
		2,82,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000	+	5,000	+	5,75,000
(j)	Decrease in creditors									(20,000)
	Decrease in cash	(20,000)
		2,62,000	+	1,25,000	+	1,92,000	+	36,000	=	30,000	+	5,000	+	5,000	+	5,75,000
(k)	Increase in cash	30,000
	Decrease in debtors							(30,000)
		2,92,000	+	1,25,000	+	1,92,000	+	6,000	=	30,000	+	5,000	+	5,000	+	5,75,000