Question

8. Show the effect of following transactions on accounting equations ;
(i) Sukhbir started business with bank balance 70,000
(ii) Taxes collected from the customers 15,000
(iii) Bank charges 1,000
(iv) Collected taxes deposited with the Government 12,000
(v) Income tax paid by cheque 9,000
(vi) Life insurance premium paid in cash 2,000
Hints. (a) Taxes collected is a liability of the business.
(6) Bank charges are normally deducted from the bank account of the customer (not paid in
cash)
(e) Income tax and life insurance premium are the personal expenses of the proprietor i.e.
drawings​

Answer 1

Answer:

The answer is in the explanation section.

Explanation:

Accounting equation =

Capital = Assets - Liabilities

1. 70000 = 70000 - 0

2. 55000 = 70000 - 15000

3. 54000 = 69000 - 15000

4. 66000 = 69000 - 3000

5. 57000 =  60000 - 3000

6. 55000 = 58000 - 3000