Question

2. Mahesh wants to start his business and for that he decides that he will take loan for Rupees 7 Lakhs from the Bank of Baroda. He also decides to use his saving worth 3 lakhs in the bank account to start the business. Discuss how these two transactions will be recorded in the books of accounts by passing the relevant journal entries? How these transactions will be reflected in the Books of accounts (that is in the financial statements)? Lastly, conclude your answer by stating the applicability of which accounting assumption/s you did the above mentioned accounting treatment recognition and presentation in the books of accounts.
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Answer 1

Answer:

.bank loan a/c = 700000

to capital a/c =300000

Bank a/c Dr. =1000000

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Answer 2

Answer:

The Journal entry is as follows:

Explanation:

Bank loan a/c = 700000

To capital a/c =300000

Bank a/c Dr. =1000000