5. Arvind has the following transactions. Use accounting equations to show theieffect on his assets, liabilities and capital :(i) Commenced business with cash 90,000 and bank balance * 40,000.(ii) Travelling expenses paid by cheque * 7,500(iii) Salary due but not paid * 5,500(iv) Rent paid for next year by cheque * 6,000(v) Interest received * 12,000
Answers
Answer:
Asset's = Liabilities + Capital
i). cash+bank+
prepaid rent
90000+40000 =. 0+ 1,30,000
ii) (7500) (7500)
N.E 90000+32500 = 0+ 1,22,500
iii) 90000+32,500 = 5500+ (5500)
N.E. 90000+32,500 = 5500 + 1,17,000
iv (6000) +32,500+ = 5500+1,17,000
6,000
N.E 84000+32,500+6000=5500+1,17,000
v). +12000 12,000
N.E.
96000+32,500+6,000 = 5,500+1,29,000
1,34,500 = 1,34,500
Explanation:
prepaid rent is our asset. so cash balance deduct when paid and new column add of prepaid rent on asset side.
outstanding salary is our liability but same is reduce profits in future. so add on liability side and deduct from capital.