Question

Prepare Accounting Equation from the following:-

		(₹)
1.	Sandeep started business with Cash	1,00,000
2.	Purchased furniture for cash	5,000
3.	Purchased goods for cash	20,000
4.	Purchased goods on credit	36,000
5.	Paid for rent	700
6.	Goods costing ₹ 40,000 sold at a profit of 20% for cash

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Furniture	+	Stock	=	Creditors
(i)	Sandeep started business with cash	1,00,000							+	1,00,000
		1,00,000					=		+	1,00,000
(ii)	Purchased furniture for cash	–5,000		+5,000
		95,000	+	5,000			=		+	1,00,000
(iii)	Purchased goods for cash	–20,000				+20,000
		75,000	+	5,000	+	20,000	=		+	1,00,000
(iv)	Purchased goods on credit					+36,000		+36,000
		75,000	+	5,000	+	56,000	=	36,000	+	1,00,000
(v)	Rent paid	-700								–700
		74,300	+	5,000	+	56,000	=	36,000	+	99,300
(vi)	Goods costing Rs 40,000 sold at a profit of 20% for cash	+48,000				-40,000				+8,000
		1,22,300	+	5,000	+	16,000	=	36,000	+	1,07,300

Working Note:

WN1 Calculation of Sale Price