Question

Show the Accounting Equation on the basis of the following and present a balance sheet on the last new equation balances:

		(₹)
(i)	Manu started business with cash	50,000
(ii)	Bought furniture for	500
(iii)	Purchased goods on credit	4,000
(iv)	Sold goods on cash (cost ₹ 500) for	700
(v)	Received rent	200
(vi)	Purchased goods for cash	1,000
(vii)	Withdrew for personal use	700
(viii)	Paid to creditors	400
(ix)	Paid for salaries	200

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Furniture	+	Stock	=	Creditors
(i)	Manu started business with cash	+50,000								+50,000
		50,000					=		+	50,000
(ii)	Purchased Furniture	–500		+500
		49,500	+	500					+	50,000
(iii)	Purchased goods on credit					+4,000		+4,000
		49,500	+	500	+	4,000	=	4,000	+	50,000
(iv)	Sold goods costing Rs 500 for Rs 700	+700				–500				+200 (Profit)
		50,200	+	500	+	3,500	=	4,000	+	50,200
(v)	Rent received	+200								+200 (Income)
		50,400	+	500	+	3,500	=	4,000	+	50,400
(vi)	Purchased goods for cash	–1,000				+1,000
		49,400	+	500	+	4,500	=	4,000	+	50,400
(vii)	Withdrew for personal use	–700								–700 (Drawings)
		48,700	+	500	+	4,500	=	4,000	+	49,700
(viii)	Paid to creditors	–400						–400
		48,300	+	500	+	4,500	=	3,600	+	49,700
(ix)	Salaries paid	–200								-200
		48,100	+	500	+	4,500	=	3,600	+	49,500

Balance Sheet as on ……
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	3,600	Cash	48,100
Capital	49,500	Furniture	500
		Stock	4,500
	53,100		53,100