Show the accounting equation on the basis of the following transactions

1. Mr. Ketan Shah started business with cash Rs 50,000.
2. Purchased goods from Ramesh Rs 30,000.
3. Withdrew goods for personal use Rs 2,000.
4. Purchased household goods for Rs 15,000 giving Rs 5,000 in Cash and balance through loan.
5. Paid Cash Rs 300 for interest.

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Solution

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

=

Ramesh

+

Loan

+

(i)

Commenced business with cash Rs 50,000

50,000

50,000

50,000

–

=

–

–

50,000

(ii)

Purchased goods from Ramesh Rs 30,000

30,000

=

30,000

50,000

+

30,000

=

30,000

+

–

+

50,000

(iii)

Withdrew goods for personal use Rs 2,000

(2,000)

=

(2,000)

50,000

+

28,000

=

30,000

+

–

+

48,000

(iv)

Purchased household goods for Rs 15,000 giving Rs 5,000 in cash and balance through loan

(5,000)

=

10,000

(15,000)

45,000

+

28,000

=

30,000

+

10,000

+

33,000

(v)

Paid Cash Rs 300 for interest

(300)

=

(300)

44,700

+

28,000

=

30,000

+

10,000

+

32,700

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S. No.	Transaction	Assets			=	Liabilities			+	Capital
S. No.	Transaction	Cash	+	Stock	=	Ramesh	+	Loan	+
(i)	Commenced business with cash Rs 50,000	50,000								50,000
		50,000		–	=	–		–		50,000
(ii)	Purchased goods from Ramesh Rs 30,000			30,000	=	30,000
		50,000	+	30,000	=	30,000	+	–	+	50,000
(iii)	Withdrew goods for personal use Rs 2,000			(2,000)	=					(2,000)
		50,000	+	28,000	=	30,000	+	–	+	48,000
(iv)	Purchased household goods for Rs 15,000 giving Rs 5,000 in cash and balance through loan	(5,000)			=			10,000		(15,000)
		45,000	+	28,000	=	30,000	+	10,000	+	33,000
(v)	Paid Cash Rs 300 for interest	(300)			=					(300)
		44,700	+	28,000	=	30,000	+	10,000	+	32,700