Show an Accounting Equation for the following transactions:
(i) D. Mahapatra commenced business with cash ₹ 50,000 and ₹ 1,00,000 by cheque; goods ₹ 60,000; machinery ₹ 1,00,000 and furniture ₹ 50,000.
(ii) 1/3rd of above goods sold at a profit of 10% on cost and half of the payment is received in cash.
(iii) Depreciation on machinery provided @ 10%.
(iv) Cash withdrawn for personal use ₹ 10,000.
(v) Interest on drawings charged @ 5%.
(vi) Goods Sold to Gupta for ₹ 10,000 and received a Bill Receivable for the same amount for 3 months.
(vii) Received ₹ 10,000 from Gupta against the Bills Receivable on its maturity.

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Solution

Transactions

Assets

=

Liabilities

+

Capital

Cash

(Rs)
+ Bank
(Rs)
+

Stock

(Rs)

+

Machinery

(Rs)

+

Furniture

(Rs)

+

Debtors

(Rs)

+

Bills Receivable

(Rs)

(Rs)

(1)

Started Business with Cash of Rs 50,000 and Bank of Rs 1,00,000

50,000
+ 1,00,000

1,50,000

Stock Rs 60,000

60,000

60,000

Machinery Rs 1,00,000

1,00,000

1,00,000

Furniture Rs 50,000

50,000

50,000

50,000
+ 1,00,000
+

60,000

+

1,00,000

+

50,000

=

3,60,000

(ii)

1/3^rd of above goods sold at a profit of 10% on cost, that is, 60,000 × 1/3 = 20,000 × 110% = 22,000 and half of this is received in Cash

11,000

(20,000)

11,000

2,000

(Profit)

61,000
+ 1,00,000
+

40,000

+

1,00,000

+

50,000

+

11,000

=

3,62,000

(iii)

Depreciate Machinery by 10% (1,00,000 × 10%)

(10,000)

(10,000)

Expenses

61,000
+ 1,00,000
+

40,000

+

90,000

+

50,000

+

11,000

=

3,52,000

(iv)

Cash withdrawn for personal use

(10,000)

(10,000)

51,000
+ 1,00,000
+

40,000

+

90,000

+

50,000

+

11,000

=

3,42,000

(v)

Interest on Drawings charged @ 5% (10,000 × 5%)

(500)

500

51,000
+ 1,00,000
+

40,000

+

90,000

+

50,000

+

11,000

=

3,42,000

(vi)

Goods Sold to Gupta for Rs 10,000 and received a Bill Receivable for the same amount.

(10,000)

10,000

51,000
+ 1,00,000
+

30,000

+

90,000

+

50,000

+

11,000

+

10,000

=

3,42,000

(vii)

Received Rs 10,000 from Gupta against the Bill Receivable on its maturity.

10,000

(10,000)

61,000
+ 1,00,000
+

30,000

+

90,000

+

50,000

+

11,000

+

NIL

=

NIL

+

3,42,000

Suggest Corrections

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	Transactions	Assets													=	Liabilities	+	Capital
	Transactions	Cash (Rs)	+	Bank (Rs)	+	Stock (Rs)	+	Machinery (Rs)	+	Furniture (Rs)	+	Debtors (Rs)	+	Bills Receivable (Rs)				(Rs)
(1)	Started Business with Cash of Rs 50,000 and Bank of Rs 1,00,000	50,000	+	1,00,000														1,50,000
	Stock Rs 60,000					60,000												60,000
	Machinery Rs 1,00,000							1,00,000										1,00,000
	Furniture Rs 50,000									50,000								50,000
		50,000	+	1,00,000	+	60,000	+	1,00,000	+	50,000					=			3,60,000
(ii)	1/3^rd of above goods sold at a profit of 10% on cost, that is, 60,000 × 1/3 = 20,000 × 110% = 22,000 and half of this is received in Cash	11,000				(20,000)						11,000						2,000 (Profit)
		61,000	+	1,00,000	+	40,000	+	1,00,000	+	50,000	+	11,000			=			3,62,000
(iii)	Depreciate Machinery by 10% (1,00,000 × 10%)							(10,000)										(10,000) Expenses
		61,000	+	1,00,000	+	40,000	+	90,000	+	50,000	+	11,000			=			3,52,000
(iv)	Cash withdrawn for personal use	(10,000)																(10,000)
		51,000	+	1,00,000	+	40,000	+	90,000	+	50,000	+	11,000			=			3,42,000
(v)	Interest on Drawings charged @ 5% (10,000 × 5%)																	(500)
																		500
		51,000	+	1,00,000	+	40,000	+	90,000	+	50,000	+	11,000			=			3,42,000
(vi)	Goods Sold to Gupta for Rs 10,000 and received a Bill Receivable for the same amount.					(10,000)								10,000
		51,000	+	1,00,000	+	30,000	+	90,000	+	50,000	+	11,000	+	10,000	=			3,42,000
(vii)	Received Rs 10,000 from Gupta against the Bill Receivable on its maturity.	10,000												(10,000)
		61,000	+	1,00,000	+	30,000	+	90,000	+	50,000	+	11,000	+	NIL	=	NIL	+	3,42,000