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.

Answer 1

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