Question

Prepare Accounting Equation from the following :−
1. Started business with cash ₹ 75,000 and goods ₹ 25,000.
2. Paid for Rent ₹ 2,000.
3. Bought goods for cash ₹ 30,000 and on credit for ₹ 44,000.
4. Goods costing ₹ 50,000 sold at a profit of 25%, out of which ₹ 27,500 received in Cash.
5. Purchased a Motor-cycle for personal use ₹ 20,000.

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Stock	+	Debtors	=	Creditors
(i)	Started business with cash and goods	+75,000	+	25,000			=		+	1,00,000
		75,000	+	25,000			=			1,00,000
(ii)	Rent paid	–2,000								–2,000 (Expense)
		73,000	+	25,000			=			98,000
(iii)	Bought goods for cash and on credit	–30,000		+74,000				+44,000
		43,000	+	99,000			=	44,000	+	98,000
(iv)	Goods costing Rs 50,000 sold at a profit of 25% out of which Rs 27,500 received in cash	+27,500		–50,000		+35,000				+12,500 (Profit)
		70,500	+	49,000	+	35,000	=	44,000	+	1,10,500
(v)	Purchased motor cycle for personal use	–20,000								–20,000 (Drawings)
		50,500	+	49,000	+	35,000	=	44,000	+	90,500

Working Note:

WN1 Calculation of Selling Price