Question

7. Show the Accounting Equation on the basis of following transaction:

i) Commenced business with cash 20,000 ; Goods 50,000 and Furniture 30,000
ii) Purchased goods from Gopalon credit 40,000.
iii) Sold goods for cash 40,000 ( costing 50,000)
iv) Sold goods to Ram on credit 65,000 ( costing 50,000)
Withdrew for personal use goods costing 5,000
vi) Purchased typewriter for personal use for proprietor 20,000
vii) Purchased chairs for office use for cash 10,000
viii) Paid for printing 500 and received Commission 1,200
ix) Introduced fresh capital 40,000
x) Paid to Gopal* 30,000.
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Answer 1

Answer:aseets=liabilities+capital

total after every transaction it must be equal

Explanation:

1)cash +20000 goods+50000 furniture+30000=capital+1,00,000

2)goods-40000 = liab+40000

3)goods-50000  cash+40000=capital-10000 (loss)

4)a)goods-50000 debtor+65000=capital+15000(profit)

5)goods-5000 =capital+5000 (personal use of owner so capital affected)

6)cash-20000=capital+20000(typewriter is not for business use so wont be recorded)

7)chair+10000 cash-10000=0

8)cash-500+12000=capital-500+1200  (exp and loss - capital and income and gain + in capital)

9)cash+40000=capital+40000

10)cash-30000=liab-30000(creditor gopal is now less)