Question

Anil had the following transactions:

1. Commenced business with cash 50,000.
2. Purchased goods for cash 20,000 and credit 30,000.
3. Sold goods for cash 40,000, costing 30,000.
4. Rent paid 500, salaries 5,000.
5. Rent outstanding 100, salaries outstanding 1,000.
6. Bought furniture 5,000 on credit.
7. Bought refrigerator for personal use 5,000.
8. Purchased computer for cash 20,000.
9. Cash withdrawn for personal use 10,000.
10. Interest on drawings charged 500 and the interest on capital 1,000.


Use Accounting Equation to show the effect of the above transactions on

his assets, liabilities and capital and also show his balance sheet.​

Answer 1

Answer:

74,500 assets= 74,500 liabilities+ owners equity

Explanation:

1. interest on drawings is an expense to owner and income to business so we add and subtract the amount thus cancelling the entire amount. This is similar to Interest on capital.

2.Outstanding salary and rent are liabilities and are reduced from owners equity as it is an expense to the business.