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Question

Show the Accounting Equation on the basis of the following transactions and present a Balance Sheet on the last new equation balance:
(i) Raj commenced business with cash 70,000
(ii) Purchased goods on credit 14,000
(iii) Withdrew for Private use 1,700
(iv) Goods purchased for cash 10,000
(v) Paid wages 300
(vi)
(vii)
(viii)
(ix)
Paid to creditors
Sold goods on credit for
Sold goods for cash (cost price was Purchased motorcycle for cash 3,000)
Purchased furniture for

10,000
15,000
4,000

​500

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Solution

S. No.

Transactions

Assets

=

Liabilities

+

Capital

Cash

(Rs)

+

Stock

(Rs)

+

Furniture

(Rs)

+

Debtors

(Rs)

Creditors

(Rs)

(Rs)

(i)

Raj Commenced business

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)

Withdraw for Private use

– 1,700

=

– 1,700

(Drawings)

68,300

+

14,000

=

14,000

+

68,300

(iv)

Goods purchased for Cash

– 10,000

+

10,000

58,300

+

24,000

=

14,000

+

68,300

(v)

Paid Wages

– 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

– 15,000

+

15,000

=

48,000

+

9,000

+

15,000

=

4,000

+

68,000

(viii)

Sold goods for cash (costing Rs 3,000)

4,000

– 3,000

1,000

(Profit)

52,000

+

6,000

+

15,000

=

4,000

+

69,000

(ix)

Purchased Furniture

– 500

500

51,500

+

6,000

+

500

+

15,000

=

4,000

+

69,000

Balance Sheet

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital

69,000

Cash

51,500

Creditors

4,000

Stock

6,000

Furniture

500

Debtors

15,000

73,000

73,000


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