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Question

# Prepare an Accounting Equation and Balance Sheet on the following basis: (i) Ajeet started business with cash ₹ 20,000. (ii) He purchased furniture for ₹ 2,000. (iii) He paid rent of ₹ 200. (iv) He purchase goods on credit ₹ 3,000. (v) He sold goods (cost price ₹ 2,000) for ₹ 5,000 on cash.

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Solution

## S. No. Transaction Assets = Liabilities + Capital Cash (Rs) + Furniture (Rs) + Stock (Rs) = (Rs) (i) Ajit started business Rs 20,000 20,000 = 20,000 20,000 = 20,000 (ii) He purchased furniture for Rs 2,000 – 2,000 + 2,000 = 18,000 + 2,000 = 20,000 (iii) He paid Rent of Rs 200 – 200 = – 200 (expense) 17,800 + 2,000 = 19,800 (iv) He purchased goods on credit Rs 3,000 3,000 = 3,000 17,800 + 2,000 + 3,000 = 3,000 + 19,800 (v) He sold goods (cost price Rs (2,000) for Rs 5,000 on cash 5,000 + + –2,000 = 3,000 (Profit) 22,800 + 2,000 + 1,000 = 3,000 + 22,800 Assets = 22,800 + 2,000 + 1,000 = Rs 25,800 Liabilities = Rs 3,000 Capital = Rs 22,800 Balance Sheet Liabilities Amount (Rs) Assets Amount (Rs) Capital 22,800 Cash 22,800 Creditors 3,000 Furniture 2,000 Stock 1,000 25,800 25,800

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