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Question

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

(i) Started business with cash Rs.30,000; Stock Rs.12,000; Machinery Rs.20,000;
Furniture Rs.10,000.

(ii) 13rd of the above goods sold at a profit of 10% on cost and half of the payment is received in cash.

(iii) Cash withdrawn for personal use Rs.2,000.

(iv) Interest on drawings charged @ 5 %.

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Solution

Accounting Equation

ParticularsAssets=LiabilitiesCash+Stock+Machinery+Furniture+Debtors=Creditors+Capital(i) Commenced Business30,000+12,000+20,000+10,0000=0+72,000(ii) Goods sold2,200+(4000)+0+0+2,200=0+400New Equation32,200+8,000+20,000+10,0002,200=0+72,400(iii) Drawings(2,000)+0+0+00=0++(2,000)New Equation30,200+8,000+20,000+10,0002,200=0+70,400(iv) Interest on Drawings0+0+0+0+0=0++100(100)New Equation30,200|+8,000+20,000+10,0002,200=0+70,400


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