1
Question
Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet:−
1. Started business with Cash ₹ 1,20,000.
2. Purchased a typewriter for Cash for ₹ 8,000 for office use.
3. Purchased goods for ₹ 50,000 for cash.
4. Purchased goods for ₹ 40,000 on credit.
5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit.
6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000.
7. Received ₹ 800 for Commission.
8. Withdrew for private use ₹ 5,000 in cash.
1. Started business with Cash ₹ 1,20,000.
2. Purchased a typewriter for Cash for ₹ 8,000 for office use.
3. Purchased goods for ₹ 50,000 for cash.
4. Purchased goods for ₹ 40,000 on credit.
5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit.
6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000.
7. Received ₹ 800 for Commission.
8. Withdrew for private use ₹ 5,000 in cash.
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Solution
ACCOUNTING EQUATION
S. No.
Transaction
Assets
=
Liabilities
+
Capital
Cash
+
Typewriter
+
Stock
+
Debtors
=
Creditors
(i)
Started business with cash
+1,20,000
+
1,20,000
1,20,000
=
1,20,000
(ii)
Purchased typewriter for office use
–8,000
+
8,000
1,12,000
+
8,000
=
1,20,000
(iii)
Purchased goods for cash
–50,000
+50,000
62,000
+
8,000
+
50,000
=
1,20,000
(iv)
Purchased goods on credit
+40,000
40,000
62,000
+
8,000
+
90,000
=
40,000
+
1,20,000
(v)
Goods costing Rs 60,000 sold for Rs 80,000 on credit
–60,000
+80,000
+20,000 (Profit)
62,000
+
8,000
+
30,000
+
80,000
=
40,000
+
1,40,000
(vi)
Paid rent Rs 1,500 and salaries Rs 2,000
–3,500
–3,500 (Expenses)
58,500
+
8,000
+
30,000
+
80,000
=
40,000
+
1,36,500
(vii)
Commission received
+800
+800 (Income)
59,300
+
8,000
+
30,000
+
80,000
=
40,000
+
1,37,300
(viii)
Withdrew cash for private use
–5,000
–5,000 (Drawings)
54,300
+
8,000
+
30,000
+
80,000
=
40,000
+
1,32,300
Balance Sheet of Rajaram
as on ……
Liabilities
Amount (Rs)
Assets
Amount (Rs)
Creditors
40,000
Cash
54,300
Capital
1,32,300
Typewriter
8,000
Stock
30,000
Debtors
80,000
1,72,300
1,72,300
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Typewriter | + | Stock | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash | +1,20,000 | + | 1,20,000 | ||||||||
| 1,20,000 | = | 1,20,000 | ||||||||||
| (ii) | Purchased typewriter for office use | –8,000 | + | 8,000 | ||||||||
| 1,12,000 | + | 8,000 | = | 1,20,000 | ||||||||
| (iii) | Purchased goods for cash | –50,000 | +50,000 | |||||||||
| 62,000 | + | 8,000 | + | 50,000 | = | 1,20,000 | ||||||
| (iv) | Purchased goods on credit | +40,000 | 40,000 | |||||||||
| 62,000 | + | 8,000 | + | 90,000 | = | 40,000 | + | 1,20,000 | ||||
| (v) | Goods costing Rs 60,000 sold for Rs 80,000 on credit | –60,000 | +80,000 | +20,000 (Profit) | ||||||||
| 62,000 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,40,000 | ||
| (vi) | Paid rent Rs 1,500 and salaries Rs 2,000 | –3,500 | –3,500 (Expenses) | |||||||||
| 58,500 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,36,500 | ||
| (vii) | Commission received | +800 | +800 (Income) | |||||||||
| 59,300 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,37,300 | ||
| (viii) | Withdrew cash for private use | –5,000 | –5,000 (Drawings) | |||||||||
| 54,300 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,32,300 | ||
|
|
||||||||||||
| Balance Sheet of Rajaram as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 40,000 | Cash | 54,300 |
| Capital | 1,32,300 | Typewriter | 8,000 |
| Stock | 30,000 | ||
| Debtors | 80,000 | ||
| 1,72,300 | 1,72,300 | ||
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