1
Question
Show the accounting equation on the basis of the following transactions and present a Balance Sheet of the last new equation balance:
(₹)
(i)
Mohan commenced business with
70,000
(ii)
Purchased goods on Credit
14,000
(iii)
Withdrew for private use
1,700
(iv)
Purchased goods for Cash
10,000
(v)
Paid wages
300
(vi)
Paid to Creditors
10,000
(vii)
Sold goods on Credit at par
15,000
(viii)
Sold goods for Cash (cost price was ₹ 3,000)
4,000
(ix)
Purchased furniture for cash
500
|
|
(₹) |
|
| (i) |
Mohan commenced business with |
70,000 |
| (ii) | Purchased goods on Credit | 14,000 |
| (iii) | Withdrew for private use | 1,700 |
| (iv) | Purchased goods for Cash | 10,000 |
| (v) | Paid wages | 300 |
| (vi) | Paid to Creditors | 10,000 |
| (vii) | Sold goods on Credit at par | 15,000 |
| (viii) | Sold goods for Cash (cost price was ₹ 3,000) | 4,000 |
| (ix) | Purchased furniture for cash | 500 |
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Solution
ACCOUNTING EQUATION
S. No.
Transaction
Assets
=
Liabilities
+
Capital
Cash
+
Stock
+
Debtors
+
Furniture
=
Creditors
(i)
Started business with cash
+70,000
+
70,000
70,000
=
70,000
(ii)
Purchased goods on credit
+14,000
+14,000
70,000
+
14,000
=
14,000
+
70,000
(iii)
Withdrew for private use
–1,700
–1,700 (Drawings)
68,300
+
14,000
=
14,000
+
68,300
(iv)
Purchased goods for cash
–10,000
+10,000
58,300
+
24,000
=
14,000
+
68,300
(v)
Wages paid
–300
–300 (Expense)
58,000
+
24,000
=
14,000
+
68,000
(vi)
Paid to creditors
–10,000
–10,000
48,000
+
24,000
=
4,000
+
68,000
(vii)
Sold goods on credit at par
–15,000
+15,000
48,000
+
9,000
+
15,000
=
4,000
+
68,000
(viii)
Sold goods (costing Rs 3,000) for Rs 4,000
+4,000
–3,000
+1,000 (Profit)
52,000
+
6,000
+
15,000
=
4,000
+
69,000
(ix)
Furniture purchased
–500
+500
51,500
+
6,000
+
15,000
+
500
=
4,000
+
69,000
Balance Sheet
as on ……
Liabilities
Amount (Rs)
Assets
Amount (Rs)
Creditors
4,000
Cash
51,500
Capital
69,000
Stock
6,000
Debtors
15,000
Furniture
500
73,000
73,000
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock | + | Debtors | + | Furniture | = | Creditors | ||||
| (i) | Started business with cash | +70,000 | + | 70,000 | ||||||||
| 70,000 | = | 70,000 | ||||||||||
| (ii) | Purchased goods on credit | +14,000 | +14,000 | |||||||||
| 70,000 | + | 14,000 | = | 14,000 | + | 70,000 | ||||||
| (iii) | Withdrew for private use | –1,700 | –1,700 (Drawings) | |||||||||
| 68,300 | + | 14,000 | = | 14,000 | + | 68,300 | ||||||
| (iv) | Purchased goods for cash | –10,000 | +10,000 | |||||||||
| 58,300 | + | 24,000 | = | 14,000 | + | 68,300 | ||||||
| (v) | Wages paid | –300 | –300 (Expense) | |||||||||
| 58,000 | + | 24,000 | = | 14,000 | + | 68,000 | ||||||
| (vi) | Paid to creditors | –10,000 | –10,000 | |||||||||
| 48,000 | + | 24,000 | = | 4,000 | + | 68,000 | ||||||
| (vii) | Sold goods on credit at par | –15,000 | +15,000 | |||||||||
| 48,000 | + | 9,000 | + | 15,000 | = | 4,000 | + | 68,000 | ||||
| (viii) | Sold goods (costing Rs 3,000) for Rs 4,000 | +4,000 | –3,000 | +1,000 (Profit) | ||||||||
| 52,000 | + | 6,000 | + | 15,000 | = | 4,000 | + | 69,000 | ||||
| (ix) | Furniture purchased | –500 | +500 | |||||||||
| 51,500 | + | 6,000 | + | 15,000 | + | 500 | = | 4,000 | + | 69,000 | ||
|
|
||||||||||||
| Balance Sheet as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 4,000 | Cash | 51,500 |
| Capital | 69,000 | Stock | 6,000 |
| Debtors | 15,000 | ||
| Furniture | 500 | ||
| 73,000 | 73,000 | ||
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