Show the accounting equation on the basis of following transactions:
(i) Commenced business with Cash ₹ 20,000; Goods ₹ 50,000 and Furniture ₹ 30,000.
(ii) Purchased goods from Gopal on Credit ₹ 40,000.
(iii) Sold goods for Cash ₹ 40,000 (costing ₹ 30,000).
(iv) Sold goods to Ram on Credit ₹ 65,000 (costing ₹ 50,000).
(v) Withdrew for personal use goods costing ₹ 5,000.
(vi) Purchased typewriter for personal use of the proprietor ₹ 20,000.
(vii) Purchased chairs for office use for Cash ₹ 10,000.
(viii) Paid for printing ₹ 500 and received Commission ₹ 1,200.
(ix) Introduced fresh Capital ₹ 40,000.
(x) Paid to Gopal ₹ 30,000.

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Solution

ACCOUNTING EQUATION

S. No. Transaction Assets = Liabilities + Capital

Cash + Stock + Furniture Debtors = Creditors

(i) Started business with cash, goods and furniture +20,000 +50,000 +30,000 + 1,00,000

20,000 + 50,000 + 30,000 = 1,00,000

(ii) Purchased goods on credit from Gopal +40,000 +40,000

20,000 + 90,000 + 30,000 = 40,000 + 1,00,000

(iii) Sold goods (costing Rs 30,000) for cash Rs 40,000 +40,000 –30,000 +10,000 (Profit)

60,000 + 60,000 + 30,000 = 40,000 + 1,10,000

(iv) Sold goods (costing Rs 50,000) to Ram for Rs 65,000 –50,000 +65,000 +15,000 (Profit)

60,000 + 10,000 + 30,000 + 65,000 = 40,000 + 1,25,000

(v) Goods withdrawn for personal use –5,000 –5,000 (Drawings)

60,000 + 5,000 + 30,000 + 65,000 = 40,000 + 1,20,000

(vi) Purchased typewriter for personal use –20,000 –20,000 (Drawings)

40,000 + 5,000 + 30,000 + 65,000 = 40,000 + 1,00,000

(vii) Purchased chairs for office use –10,000 +10,000

30,000 + 5,000 + 40,000 + 65,000 = 40,000 + 1,00,000

(viii) Paid for printing Rs 500 and received commission Rs 1,200 –500 +1,200 –500 (Expense) +1,200 (Income)

30,700 + 5,000 + 40,000 + 65,000 = 40,000 + 1,00,700

(ix) Introduced additional capital +40,000 +40,000 (Fresh Capital)

70,700 + 5,000 + 40,000 + 65,000 = 40,000 + 1,40,700

(x) Paid to Gopal –30,000 –30,000

40,700 + 5,000 + 40,000 + 65,000 = 10,000 + 1,40,700

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