Show The Effect Of The Following Transactions On Assets, Liabilities And Capital Using The Accounting Equation. Also Prepare A Balance Sheet: (I) Started Business With Cash Rs. 60,000 (Ii) Rent Received Rs. 2,000 (Iii) Accrued Interest Rs. 500 (Iv) Commission Received In Advance Rs. 1,000 (V) Amount Withdrawn Rs. 5,000 -

Open in App

Solution

S.No Transaction Assets = Liabilities + Capital

Cash + Accrued Interest = Advance Commission + Capital

1 Started business with cash Rs.60,000 60,000 = 60,000

60,000 = 60,000

2 Rent received Rs.2,000 2,000 = 2000 (Income)

62,000 = 62,000

3 Accrued Interest Rs.500 500 = 500 (Income)

62,000 + 500 = 62,500

4 Commission received in advance Rs.1,000 1,000 = 1000

63,000 + 500 = 1000 + 62,500

5 Amount withdrawn Rs.5,000 -5000 = -5,000

58000 + 500 = 1000 + 57,500

Balance sheet

Liabilities Amount Assets Amount

Capital 57,500 Cash 58,000

Advance Commission 1000 Accrued Interest 500

58,500 58,500

Explore more such questions and answers at BYJU’S.

Suggest Corrections

Similar questions

Q. 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(v) Amount withdrawn ₹ 5,000.

Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Use accounting equation to show the effect of the following transactions of M/s Royal Traders:

		Rs
(a)	Started business with cash	1,20,000
(b)	Purchased goods for cash	10,000
(c)	Rent received	5,000
(d)	Salary outstanding	2,000
(e)	Prepaid Insurance	1,000
(f)	Received interest	700
(g)	Sold goods for cash (costing Rs 5,000)	7,000
(h)	Goods destroyed by fire	500

Show the accounting equation on the basis of the following transactions.

1. Rajkumar started business with cash Rs 30,000.
2. Purchased goods for cash Rs 1,000.
3. Paid salary Rs 400.
4. Paid rent in advance Rs 2,000.
5. Charged depreciation Rs 300 on Furniture and Rs 500 on Machinery.

Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Join BYJU'S Learning Program

S.No	Transaction			Assets = Liabilities + Capital
		Cash +		Accrued Interest =		Advance Commission	+ Capital
1	Started business with cash Rs.60,000	60,000			=			60,000
		60,000			=			60,000
2	Rent received Rs.2,000	2,000			=			2000 (Income)
		62,000			=			62,000
3	Accrued Interest Rs.500			500	=			500 (Income)
		62,000	+	500	=			62,500
4	Commission received in advance Rs.1,000	1,000			=	1000
		63,000	+	500	=	1000	+	62,500
5	Amount withdrawn Rs.5,000	-5000			=			-5,000
		58000	+	500	=	1000	+	57,500

Balance sheet
Liabilities	Amount	Assets	Amount
Capital	57,500	Cash	58,000
Advance Commission	1000	Accrued Interest	500
	58,500		58,500