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Question

Transactions of M/s. Vipin Traders are given below.

Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.

Rs

(a)

Business started with cash

1,25,000

(b)

Purchased goods for cash

50,000

(c)

Purchase furniture from R.K. Furniture

10,000

(d)

Sold goods to Parul Traders (costing Rs 7,000 vide bill no. 5674)

9,000

(e)

Paid cartage

100

(f)

Cash Paid to R.K. furniture in full settlement

9,700

(g)

Cash sales (costing Rs 10,000)

12,000

(h)

Rent received

4,000

(i)

Cash withdrew for personal use

3,000

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Solution

S.No.

Explanation

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Furniture

+

Debtors

Creditors

(a)

Increase in cash

1,25,000

Increase in capital

1,25,000

1,25,000

+

=

NIL

+

1,25,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

=

75,000

+

50,000

=

NIL

+

1,25,000

(c)

Increase in furniture

10,000

=

Increase in creditors

=

10,000

75,000

+

50,000

+

10,000

=

10,000

+

1,25,000

(d)

Increase in debtors

9,000

Decrease in stock

(7,000)

Increase in capital (Profit)

2,000

75,000

+

43,000

+

10,000

+

9,000

=

10,000

+

1,27,000

(e)

Decrease in capital (Cartage Expenses)

(100)

Decrease in cash

(100)

74,900

+

43,000

+

10,000

+

9,000

=

10,000

+

1,26,900

(f)

Decrease in creditors

=

(10,000)

Decrease in cash

(9,700)

Increase in capital (Discount-received)

300

65,200

+

43,000

+

10,000

+

9,000

=

NIL

+

1,27,200

(g)

Increase in cash

12,000

Decrease in stock

(10,000)

Increase in capital (Profit)

2,000

77,200

+

33,000

+

10,000

+

9,000

=

NIL

+

1,29,200

(h)

Increase in cash

4,000

Increase in capital (Income)

4,000

81,200

+

33,000

+

10,000

+

9,000

=

NIL

+

1,33,200

(i)

Decrease in capital

(3,000)

Decrease in cash

(3,000)

78,200

+

33,000

+

10,000

+

9,000

=

NIL

+

1,30,200


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