Question

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

(i) Commenced business with cash Rs. 3,00,000.

(ii) Purchased goods for cash Rs. 80,000.

(iii) Purchased machinery on credit Rs. 1,25,000.

(iv) Purchased old car for personal use for Rs. 1,00,000.

Answer 1

Accounting Equation

$\begin{array}{ccccc}\text{Particulars}& \text{Assets}& =& \text{Liabilites}& \\ & \text{Cash + Stock + Machinery}& =& \text{Creditors +}& \text{Capital}\\ \text{(i) Commenenced Business})& 3,00,000+0+0& =& 0+& 3,00,000\\ \text{(ii)Purchased goods}& (80,000)+80,000+0& =& 0+& 0\\ & & & & \\ \text{New Equation}& 2,20,000+80,000+0& =& 0+& 3,00,000\\ \text{(iii) Purchased Machine}& 0+0+1,25,000& =& 1,25,000+& 0\\ & & & & \\ \text{New Equation}& 2,20,000+80,000+1,25,000& =& 1,25,000+& 3,00,000\\ \text{(iv) Purchased car}& (1,00,000)+0+0& =& 0+& (1,00,000)\\ & & & & \\ \text{Final Equation}& 1,20,000+80,000+1,25,000& =& 1,25,000& 2,00,000\\ & & & & \end{array}$