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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

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Solution

## 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

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