Question

Show the effect of the following transactions and also prepare a Balance Sheet:
(i) Started business with cash ₹ 60,000.
(ii) Rent received ₹ 2,000.
(iii) Accrued interest ₹ 500.
(iv) Commission received in advance ₹ 1,000.
(v) Amount withdrawn ₹ 5,000.

Answer 1

S. No.	Transaction	Assets			=	Liabilities	+	Capital
		Cash (Rs)	+	Accrued Interest (Rs)	=	Advance Commission (Rs)		(Rs)
(i)	Started business with Cash Rs 60,000	60,000			=			60,000
		60,000			=			60,000
(ii)	Rent Received Rs 2,000	2,000			=			2,000 (Income)
		62,000			=			62,000
(iii)	Accrued Interest Rs 500			500	=			500 (Income)
		62,000	+	500	=			62,500
(iv)	Commission received in advance Rs 1,000	1,000			=	1,000
		63,000	+	500	=	1,000	+	62,500
(v)	Amount withdrawn Rs 5,000	– 5,000			=			– 5,000
		58,000	+	500	=	1,000	+	57,500

Balance Sheet
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital	57,500	Cash	58,000
Advance Commission	1,000	Accrued Interest	500
	58,500		58,500