Show the accounting equation on the basis of the following transactions.

1. Mr. Rohit Kulkarni started business with cash Rs 70,000
2. Bought goods from sanjay Rs 1,000.
3. Sold goods to Shyam for Rs 50,000 (costing Rs 30,000).
4. Goods destroyed by fire (cost Rs 500, sale Price Rs 600).
5. Purchased Furniture from J.K Furniture on credit Rs 5,000.

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Solution

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Furniture

+

Shyam

=

Sanjay

+

J.K. Furniture

+

(i)

Commenced business with cash Rs 70,000

70,000

–

–

–

–

–

70,000

(ii)

Purchased goods from Sanjay Rs 10,000

–

10,000

–

–

=

10,000

–

–

70,000

+

10,000

+

–

–

=

10,000

+

–

+

70,000

(iii)

Sold goods to Shyam for Rs 50,000 (costing Rs 30,000)

–

(30,000)

–

50,000

=

–

–

20,000

(Profit)

70,000

+

(20,000)

+

–

+

50,000

=

10,000

+

–

+

90,000

(iv)

Goods destroyed by fire (cost Rs 500, sale Price Rs 600)

–

(500)

–

–

=

–

–

(500)

70,000

+

(20,500)

+

–

+

50,000

=

10,000

+

–

+

89,500

(v)

Purchased Furniture from J.K. Furniture on Credit Rs 5,000

–

–

5,000

–

=

–

5,000

–

70,000

+

(20,500)

+

5,000

+

50,000

=

10,000

+

5,000

+

89,500

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