Question

Prepare Accounting Equation from the following:
(a) Started business with Cash ₹ 2,00,000.
(b) Purchased goods for Cash ₹ 60,000 and on Credit ₹ 1,50,000.
(c) Sold goods for Cash costing ₹ 40,000 at a profit of 20% and on Credit costing ₹ 72,000 at a profit of 25%.
(d) Paid for Rent ₹ 5,000.

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Stock	+	Debtors	=	Creditors
(i)	Started business with cash	+2,00,000								+2,00,000
		2,00,000					=			2,00,000
(ii)	Purchased Goods for Cash Rs 60,000 and on credit Rs 1,50,000	–60,000		+2,10,000				+1,50,000
		+1,40,000	+	2,10,000			=	1,50,000	+	2,00,000
(iii)	Sold goods for cash costing Rs 40,000 at a profit of 20% and on credit Rs 72,000 at a profit of 25%	+48,000		–1,12,000		+90,000				+26,000 (Profit)
		+1,88,000	+	98,000	+	90,000	=	1,50,000	+	2,26,000
(iv)	Rent paid	–5,000								–5,000 (Expenses)
		+1,83,000	+	98,000	+	90,000	=	1,50,000	+	2,21,000

Working Note:

WN1 Calculation of Selling Price of Goods Sold




Total Cost of Goods Sold = 40,000 + 72,000 = Rs 1,12,000