Question

Based on the accounting equation, how will the following transactions appear? Give sequential changes in the entries under the equation:
a. P contributed Rs. 5 lakh as share capital for starting P Ltd. b. Machinery worth Rs. 3 lakh was bought by P Ltd. c. P Ltd. secured a loan of Rs.10 lakh from ICICI Bank d. More machinery worth Rs. 5 lakhs were bought e. An amount of Rs.1.5 lakh in the loan account was repaid

Answer 1

Answer:

a. Cash a/c Dr. 500000

To Share Capital a/c. 500000

(Being Business commenced with cash)

b. Machinery a/c Dr. 300000

To Cash a/c. 300000

(Being Machinery purchased for cash)

c. Bank a/c Dr. 1000000

To ICICI Loan a/c. 1000000

(Being took loan from ICICI Bank)

d. Machinery a/c Dr. 500000

To Cash a/c. 500000

(Being Machinery purchased for cash)

e. ICICI Loan a/c Dr. 150000

To Bank a/c. 150000

(Being an amount of loan repaid)

*instead of cash a/c there can also be bank a/c