Analyse the effect of each transaction and prove that the accounting equation always remains balancec:
1. Introduced Rs 800000 as cash and Rs 50000 by stock.
2. Purchased plant for Rs 300000 by paying Rs 15000 in cash and balance at a later date.
3. Deposited Rs 600000 into the bank.
4. Purchased office furniture for Rs 100000 and made payment by cheque.
5. Purchased goods worth Rs 80000 for cash and Rs 35000 on credit.
6. Goods amounting to Rs 45000 was sold for Rs 60000 on cash basis.
7. Goods costing Rs 80000 was sold for Rs 125000 on credit basis.
8. Cheque issued to the supplier of the goods worth Rs 35000.
9. Cheque received from customer amounting to Rs 75000.
10 Withdrawn by the owner for personal use Rs 25000.

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Solution

S. No.
Transactions
Assets
=
Liabilities
+
Capital
Cash
(Rs)
+
Stock
(Rs)
+
Plant
(Rs)
+
Bank
(Rs)
+
Furniture
(Rs)
+
Debtors
(Rs)

(Rs)

(Rs)
(i)
Commenced business with cash Rs 8,00,000 and Stock Rs 50,000
8,00,000

50,000

8,50,000
(ii)
Purchased Plant for Rs 3,00,000 and paid Rs 15,000 in cash and balance at later date
(15,000)

3,00,000

2,85,000

7,85,000
+
50,000
+
3,00,000

2,85,000
+
8,50,000
(iii)
Deposited Rs 6,00,000 into Bank
(6,00,000)

6,00,000

1,85,000
+
50,000
+
3,00,000
+
6,00,000

=
2,85,000
+
8,50,000
(iv)
Purchased Office Furniture and payment made through cheque

(1,00,000)

1,00,000

1,85,000
+
50,000
+
3,00,000
+
5,00,000
+
1,00,000

=
2,85,000
+
8,50,000
(v)
Purchased Goods for 80,000 in cash and 35,000 on credit
(80,000)

1,15,000

35,000

1,05,000
+
1,65,000
+
3,00,000
+
5,00,000
+
1,00,000

=
3,20,000
+
8,50,000
(vi)
Goods Sold on Cash Basis
60,000

(45,000)

15,000 (Profit)

1,65,000
+
1,20,000
+
3,00,000
+
5,00,000
+
1,00,000

=
3,20,000
+
8,65,000
(vii)
Goods Sold on Credit

(80,000)

1,25,000

45,000 (Profit)

1,65,000
+
40,000
+
3,00,000
+
5,00,000
+
1,00,000
+
1,25,000
=
3,20,000
+
9,10,000
(viii)
Cheque issued to the Supplier

(35,000)

(35,000)

1,65,000
+
40,000
+
3,00,000
+
4,65,000
+
1,00,000
+
1,25,000
=
2,85,000
+
9,10,000
(ix)
Cheque received from Customer

75,000

(75,000)

1,65,000
+
40,000
+
3,00,000
+
5,40,000
+
1,00,000
+
50,000
=
2,85,000
+
9,10,000
(x)
Withdrawn for Personal Use
(25,000)

(25,000)

1,40,000
+
40,000
+
3,00,000
+
5,40,000
+
1,00,000
+
50,000
=
2,85,000
+
8,85,000

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Similar questions

Analyse the effect of each transaction and prove that the accounting equation (A = L + C) always remains balanced.
(i) Introduced Rs. 4,00,000 as cash and Rs. 25,000 by stock.
(ii) Purchased plant for Rs. 1,50,000 by paying Rs. 7,500 in cash and balance at a later date.
(iii) Deposited Rs. 3,00,000 into the bank.
(iv) Purchased office furniture for Rs. 50,000 and made payment by cheque.
(v) Purchased goods worth Rs. 40,000 for cash and for Rs. 17,500 on credit.
(vi) Goods amounting to 22,500 was sold for Rs. 30,000 on cash basis
(vii) Goods costing to Rs. 40,000 was sold for Rs. 62,500 on credit basis.
(viii) Cheque issued to the supplier of goods worth Rs. 17,500.
(ix) Cheque Received from customer amounting to Rs. 37,500.
(x) Withdrawn by the owner for personal use Rs. 12,500.

Record the following transactions of Mr. Chavan in a cash book with cash and bank columns for the month April. 2011.

2011 Apr.
1	Cash Balance Rs 56,000 Bank overdraft Rs 11,000.
3	Purchased goods for Rs 13,000 for cash at 2% cash discount.
6	Received a bearer cheque for Rs 13,250 in full settlement of Rs 13,500 from Govind Traders.
9	Purchased 100 shares of Amar Ltd. of Rs 100 each at Rs 110 each and paid by cheque the
	amount immediately.
11	Sold goods of Rs 7,000 at 5% cash discount to Pramod and he paid half the amount immediately.
14	Deposited into bank Rs 11,000.
17	Received a crossed cheque for Rs 18,000 from Gajanan Traders.
20	Bank paid our telephone bill Rs 3,230.
21	Bank charged Rs 540 as interest on overdraft.
22	Paid by cheque to Urmila Rs 8,000.
25	Deposited into bank the cheque received from Govind Traders.
27	Received a bearer cheque for Rs 3,460 for rent which was deposited into bank.
29	Bank informed that the cheque received for rent was dishonoured.
30	Paid life insurance premium of Mr. Chavan Rs 4,250 by cash and electricity bill Rs 7,400 by cheque.

From the following transactions prepare necessary ledger accounts and balance them.

2011 Jan.	1	Sachin started Business with Cash Rs 10,000 and Machinery Rs 15,000
	1	Purchased goods for cash Rs 3,000.
	3	Sold goods for cash Rs 4,000.
	5	Purchased furniture on credit from Poona Traders Rs 7,000.
	8	Purchased goods on credit from Mr. Dilip Rs 2,000 at 10% T.D.
	10	Sold goods on credit to Mr. Mahendra Rs 8,000 at 12.5% T.D.
	15	Paid Rent Rs 600.
	28	Withdraw cash for personal use Rs 1,000.
	20	Paid cash to Mr. Dilip Rs 1,800.
	25	Received cash from Mr. Mahendra Rs 6,800.
	31	Paid to Miss Sunita Rs 400 for salaries

Prepare accounting equation on the basis of the following:

(a) Harsha started business with cash Rs 2,00,000

(b) Purchased goods from Naman for cash Rs 40,000

(d) Bought furniture on credit Rs 7,000

Prepare Cash Book with Bank Column of Vinod from the following transactions:

Jan. 1 Cash in hand Rs. 100 and Bank Balance Rs. 2,000

Jan. 5 Purchased goods by Cheque Rs. 1,200.

Jan. 6 Drew Cheque for office use Rs. 50.

Jan. 7 Purchased Stationery for Cash Rs. 10

Jan. 8 Received cheque from Mr. X Rs. 125.

Jan. 10 Carriage paid in cash Rs. 33.

Jan. 12 Z paid us cheque Rs. 175

Jan. 12 Paid Mr. A by cheque Rs. 195

Jan. 27 Received cheque for sales Rs. 200.

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S. No.	Transactions	Assets											=	Liabilities	+	Capital
S. No.	Transactions	Cash (Rs)	+	Stock (Rs)	+	Plant (Rs)	+	Bank (Rs)	+	Furniture (Rs)	+	Debtors (Rs)		(Rs)		(Rs)
(i)	Commenced business with cash Rs 8,00,000 and Stock Rs 50,000	8,00,000		50,000												8,50,000
(ii)	Purchased Plant for Rs 3,00,000 and paid Rs 15,000 in cash and balance at later date	(15,000)				3,00,000								2,85,000
		7,85,000	+	50,000	+	3,00,000								2,85,000	+	8,50,000
(iii)	Deposited Rs 6,00,000 into Bank	(6,00,000)						6,00,000
		1,85,000	+	50,000	+	3,00,000	+	6,00,000					=	2,85,000	+	8,50,000
(iv)	Purchased Office Furniture and payment made through cheque							(1,00,000)		1,00,000
		1,85,000	+	50,000	+	3,00,000	+	5,00,000	+	1,00,000			=	2,85,000	+	8,50,000
(v)	Purchased Goods for 80,000 in cash and 35,000 on credit	(80,000)		1,15,000										35,000
		1,05,000	+	1,65,000	+	3,00,000	+	5,00,000	+	1,00,000			=	3,20,000	+	8,50,000
(vi)	Goods Sold on Cash Basis	60,000		(45,000)												15,000 (Profit)
		1,65,000	+	1,20,000	+	3,00,000	+	5,00,000	+	1,00,000			=	3,20,000	+	8,65,000
(vii)	Goods Sold on Credit			(80,000)								1,25,000				45,000 (Profit)
		1,65,000	+	40,000	+	3,00,000	+	5,00,000	+	1,00,000	+	1,25,000	=	3,20,000	+	9,10,000
(viii)	Cheque issued to the Supplier							(35,000)						(35,000)
		1,65,000	+	40,000	+	3,00,000	+	4,65,000	+	1,00,000	+	1,25,000	=	2,85,000	+	9,10,000
(ix)	Cheque received from Customer							75,000				(75,000)
		1,65,000	+	40,000	+	3,00,000	+	5,40,000	+	1,00,000	+	50,000	=	2,85,000	+	9,10,000
(x)	Withdrawn for Personal Use	(25,000)														(25,000)
		1,40,000	+	40,000	+	3,00,000	+	5,40,000	+	1,00,000	+	50,000	=	2,85,000	+	8,85,000