Question

Prepare Accounting Equation from the following:

		(₹)
(a)	Kunal started business with cash	2,50,000
(b)	He purchased furniture for cash	35,000
(c)	He paid commission	2,000
(d)	He purchased goods on credit	40,000
(e)	He sold goods (Costing ₹ 20,000) for cash	26,000

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Furniture	+	Stock	=	Creditors
(i)	Kunal started business with cash	+2,50,000							+	2,50,000
		2,50,000					=			2,50,000
(ii)	Purchased furniture for cash	–35,000		+35,000
		2,15,000	+	35,000			=			2,50,000
(iii)	Commission paid	–2,000								-2,000 (Expense)
		2,13,000	+	35,000			=		+	2,48,000
(iv)	Purchased goods on credit					+40,000		+40,000
		2,13,000	+	35,000	+	40,000	=	40,000	+	2,48,000
(iv)	Sold goods costing Rs 20,000 for Rs 26,000	+26,000				–20,000				+6,000 (Profit)
		2,39,000	+	35,000	+	20,000	=	40,000	+	2,54,000