Question

Prepare an accounting equation from the following:

(i) Kunal started business with cash 2,50,000 Rs

(ii) He purchased furniture for cash 35,000 Rs

(iii) He paid commission 2,000 Rs

(iv) He purchased goods on credit 40,000 Rs

(v) He sold goods (costing 20,000) for cash 26,000 Rs

Answer 1

$\begin{array}{ccccccc}\text{No.}& \text{Transactions}& \text{Assets (Rs)}& =& \text{Liabilities (Rs)}& +& \text{Capital (Rs)}\\ \text{(i)}& \text{Kunal started business}& & & & & \\ & \text{with cash Rs 2,50,000}& \text{2,50,000}& =& 0& +& 2,50,000\\ \text{(ii)}& \text{Purchased furniture}& \text{(+)35,000}& & & & \\ & \text{for cash}& \text{(-)35,000}& =& 0& +& 0\\ & \text{New Equation}& \text{2,50,000}& =& 0& +& \text{2,50,000}\\ \text{(iii)}& \text{Commission paid}& \text{-(2,000)}& =& 0& +& \text{(-)2,000}\\ & \text{New Equation}& \text{2,48,000}& =& 0& +& \text{2,48,000}\\ \text{(iv)}& \text{Purchase goods on credit}& \text{(+)40,000}& =& \text{40,000}& +& 0\\ & \text{New Equation}& \text{2,88,000}& =& \text{40,000}& +& \text{2,48,000}\\ \text{(v)}& \text{Sells goods costing}& & & & & \\ & \text{Rs 20,000 for}& \text{(-)20,000}& & & & \\ & \text{Rs 26,000 in cash}& \text{(+)26,000}& =& 0& +& \text{(+) 6,000}\\ & \text{New Equation}& \text{2,94,000}& =& 40,000& +& \text{2,54,000}\end{array}$