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Question

Show the effect of following transaction on the accounting equation:

Rs

(a)

Manoj started business with

(i) Cash

2,30,000

(ii) Goods

1,00,000

(iii) Building

2,00,000

(b)

He purchased goods for cash

50,000

(c)

He sold goods(costing Rs 20,000)

35,000

(d)

He purchased goods from Rahul

55,000

(e)

He sold goods to Varun (Costing Rs 52,000)

60,000

(f)

He paid cash to Rahul in full settlement

53,000

(g)

Salary paid by him

20,000

(h)

Received cash from Varun in full settlement

59,000

(i)

Rent outstanding

3,000

(j)

Prepaid Insurance

2,000

(k)

Commission received by him

13,000

(l)

Amount withdrawn by him for personal use

20,000

(m)

Depreciation charge on building

10,000

(n)

Fresh capital invested

50,000

(o)

Purchased goods from Rakhi

6,000

Open in App
Solution

S.No.

Explanation

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Building

+

Debtors

+

Prepaid Expenses

Creditors

+

Outstanding Expenses

(a)

Increase in cash, stock and building

2,30,000

+

1,00,000

+

2,00,000

Increase in capital

5,30,000

2,30,000

+

1,00,000

+

2,00,000

=

+

5,30,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

1,80,000

+

1,50,000

+

2,00,000

=

+

5,30,000

(c)

Increase in cash

35,000

Decrease in stock

(20,000)

increase in capital (Profit)

15,000

2,15,000

+

1,30,000

+

2,00,000

+

5,45,000

(d)

Increase in stock

55,000

Increase in creditors

=

55,000

2,15,000

+

1,85,000

+

2,00,000

=

55,000

+

5,45,000

(e)

Increase in debtors

60,000

Decrease in stock

(52,000)

Increase in capital (Profit)

8,000

2,15,000

+

1,33,000

+

2,00,000

+

60,000

=

55,000

+

5,53,000

(f)

Decrease in creditors

=

(55,000)

Decrease in cash

(53,000)

Increase in capital (Discount received)

2,000

1,62,000

+

1,33,000

+

2,00,000

+

60,000

=

NIL

+

5,55,000

(g)

Decrease in cash

(20,000)

Decrease in capital

(20,000)

1,42,000

+

1,33,000

+

2,00,000

+

60,000

=

NIL

+

5,35,000

(h)

Increase in cash

59,000

Decrease in capital (Discount allowed)

(1,000)

Decrease in debtors

60,000

2,01,000

+

1,33,000

+

2,00,000

+

NIL

=

NIL

+

+

5,34,000

(i)

Increase in outstanding Expenses

3,000

decrease in capital (Expense)

(3,000)

2,01,000

+

1,33,000

+

2,00,000

+

NIL

=

NIL

+

3,000

+

5,31,000

(j)

Decrease in prepaid expenses

2,000

Decrease in cash

(2,000)

1,99,000

+

1,33,000

+

2,00,000

+

NIL

2,000

=

NIL

+

3,000

+

5,31,000

(k)

Increase in cash

13,000

increase in capital (Income)

13,000

2,12,000

+

1,33,000

+

2,00,000

+

NIL

+

2,000

=

NIL

+

3,000

+

5,44,000

(l)

Decrease in capital

(20,000)

Decrease in cash

(20,000)

1,92,000

+

1,33,000

+

1,90,000

+

NIL

+

2,000

=

NIL

+

3,000

+

5,24,000

(m)

Decrease in capital

(10,000)

Decrease in building

(10,000)

1,92,000

+

1,33,000

+

1,90,000

+

NIL

+

2,000

=

NIL

+

3,000

+

5,14,000

(n)

Increase in cash

50,000

Increase in capital

50,000

2,42,000

+

1,33,000

+

1,90,000

+

NIL

+

2,000

=

NIL

+

3,000

+

5,64,000

(o)

Increase in stock

10,000

Increase in creditors

10,000

2,42,000

+

1,43,000

+

1,90,000

+

NIL

+

2,000

=

10,000

+

3,000

+

5,64,000


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