1. Use accounting equation to show effect of the following transactions
on assets, liabilities and capital :
(a) Started business with cash 30,000 goods 40,000 and furniture
20,000.
(b) Bought goods from Raman 20,000
(c) Sold goods bought from Raman to Sohan for 25,000
(d) Paid rent 4,000 and rent still outstanding 1,000
(e) Sohan settled his account at a discount of 500.
(f) Received commission 5,000 including 1,000 as advance.
[Ans. Cash 55,500 + Stock 340,000 + Furniture 20,000 = Creditors
20,000 + Rent Outstanding 1,000 + Advance Commission 1,000
+ Capital 93,500]
[Hint. Trans. (f) Com. *4,000 is income and 1,000 advance received
is liability]
5. Prove that accounting equation is satisfied in all the following cases :
Answers
Answer:
Transaction Assets = Liabilities + Capital
Cash + Furniture + Stock = Creditors
(i) Sandeep started business with cash 1,00,000 + 1,00,000
1,00,000 = + 1,00,000
(ii) Purchased furniture for cash –5,000 +5,000
95,000 + 5,000 = + 1,00,000
(iii) Purchased goods for cash –20,000 +20,000
75,000 + 5,000 + 20,000 = + 1,00,000
(iv) Purchased goods on credit +36,000 +36,000
75,000 + 5,000 + 56,000 = 36,000 + 1,00,000
(v) Rent paid -700 –700
74,300 + 5,000 + 56,000 = 36,000 + 99,300
(vi) Goods costing Rs 40,000 sold at a profit of 20% for cash +48,000 -40,000 +8,000
1,22,300 + 5,000 + 16,000 = 36,000 + 1,07,300
Working Note:
WN1 Calculation of Sale Price
cost of Goods sold =40,000
Add: Profit 20 of $40,000 =8,000
selling Price =48,000
Answer:
Explanation:
Accounting Equation
Cash Stock Furniture Debtor o/s Creditor Capital
(a) 30000 40000 20000 90000
(b) 20000 20000
(c) ( 20000) 25000 5000
(d) (4000) 1000 (5000)
(e) 12250 12250 (25000) (500)
(f) 5000 1000 4000
43250 12250 40000 20000 0 1000 1000 20000 93500