Question

Vinod has the following transactions. Show accounting equation for the same:

(i) Commenced business with cash Rs.80,000.

(ii) Paid rent in advance Rs.1,000.

(iii) Purchased goods for cash Rs.30,000 and credit Rs.20,000.

(iv) Sold goods costing Rs.20,000 for Rs.30,000.

(v) Paid Salary Rs.800 and Salary outstanding Rs.200.

Answer 1

Accounting Equation

$\begin{array}{ccccc}\text{Particulrs}& \text{Assets}& =& \text{Liabilities}& \\ & \text{Cash + Stock + Prepaid Rent}& =& \text{Creditors +}& \text{Capital}\\ \text{(i) Commenced Business}& 80,000+0+0& =& 0+& 80,000\\ \text{(ii) Paid Rent in advance}& (1,000)+0+1,000& =& 0+& 0\\ & & & & \\ \text{New Equation}& 79,000+0+1,000& =& 0+& 80,000\\ & & & & \\ \text{(iii) Purchased goods}& (30,000)+50,000+0& =& 20,000+& 0\\ & & & & \\ \text{New Equation}& 49,000+50,000+1,000& =& 20,000+& 80,000\\ & & & & \\ \text{(iv) Sold goods}& 30,000+(20,000)+0& =& 0+& 10,000\\ & & & & \\ \text{New Equation}& 79,000+30,000+1,000& =& 20,000+& 90,000\\ & & & & \\ \text{(v) Salary paid}\&\text{outstanding}& \left(800\right)+0+0& =& 200& +(1,000)\\ & & & & \\ \text{Final Equation}& 78,200+30,000+1,000& =& 20,200& +89,000\\ & & & & \\ & & & & \end{array}$