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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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