Question

Prepare the Accounting Equation on the basis of the following:
(a) Started business with cash ₹ 1,40,000 and Stock ₹ 2,50,000.
(b) Sold goods (costing ₹ 50,000) at a profit of 25% on the cost.
(c) Deposited into bank account ₹ 1,80,000.
(d) Purchased goods from Mohan ₹ 80,000.

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Stock	+	Bank	=	Creditors
(i)	Started business with cash and goods	+1,40,000		+2,50,000						+3,90,000
		1,40,000	+	2,50,000			=			3,90,000
(ii)	Goods (costing Rs 50,000) sold at a profit of 25% on cost	+62,500		–50,000						+12,500 (Profit)
		2,02,500	+	2,00,000			=			4,02,500
(iii)	Deposited into bank	–1,80,000				+1,80,000
		22,500	+	2,00,000	+	1,80,000	=			4,02,500
(iv)	Purchased goods from Mohan			+80,000				+80,000
		22,500	+	2,80,000	+	1,80,000	=	80,000	+	4,02,500

Working Note:

WN1 Calculation of Selling Price