Question

18. Prepare Accounting Equation on the basis of the following:
a. Kunal started business with cash ₹ 2,50,000
b. He purchased furniture for cash ₹ 35,000
c. He paid commission of ₹ 2,000
d. He sold good (costing ₹ 20,000) for ₹ 22,000
e. He purchased goods on credit ₹ 40,000
f. He gave loan to Anil ₹ 5,000

Answer 1

Answer:

EQUATION

S. No. 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: