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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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