Question

Mr. X commenced his business on 1st April, 2008 by introducing capital of Rs. 50,000. During the year, following transactions had taken placeAmount Rs. (a) Bought Machine for cash. ` 20,000 (b) Purchased goods for 24,000 (c) Sold goods (costing Rs. 9,500) to Om for cash. 20,000 (d) Purchased goods from Azhar. 14,000 (e) Introduced additional capital. 16,000 (f) Commission received in advance. 2,000 (g) Paid to Creditors Rs. 10,500 in full settlement. (h) Bought Computer for his personal use. 10,000 (i) Rent paid for the year. 10,000 (j) Payment for stationery 400 (k) Sold goods (costing Rs 12,000) for Rs 16,000. Out of which Rs. 2,000 received in cash ​Show the above transactions in accounting equations.

Answer 1

The basic accounting equation is assets = capital + liability

Business is starting with capital of 50,000 that means initial accounting equation is 50000(assets/cash)= 50000(capital) + 0( liability)

a) machinery purchased, cash will go out and machine will come in of 20000

b)inventory purchased, goods will come in of 24000 and there will be creditors of 24,000

74,000= 50,000+ 24,000

c) 74000-9500(goods) + 20,000(cash)=50000+10500(profit) + 24000

84500=60500+24000

d) 84500+14000(goods purchased)= 60500+24000+14000(on credit so creditors will increase)

98500=60500+38000

e) 98500+16000(cash)= 60500+16000( additional cap)+38000

114500=76500+38000

f) 114500+2000(commission)=76500+38000+2000( in advance, so it's liability)

116500=76500+40000

g)116500-10500(cash paid to creditors)=76500+27500(profit on settlement)+40000-38000(total purchase liability)

106000=104000+2000

h)106000-10000(drawings)=104000-10000+2000

96000=94000+2000

i)96000-10000(rent)=94000-10000+2000

86000=84000+2000

j) 86000-400=84000-400+2000

85600=83600+2000

k)85600-12000(goods)+14000(debtors)+2000(cash)= 83600+4000(profit)+2000

89600=87600+2000

Answer 2

1.Bought Machine for cash. -20,000

2. Purchased goods for 24,000

3.Sold goods (costing Rs. 9,500) to Om for cash. 20,000

4.Purchased goods from Azhar. 14,000

5.Introduced additional capital. 16,000.

6.Commission received in advance. 2,000 .

7.Paid to Creditors Rs. 10,500

8.Bought Computer for his personal use. 10,000

9.Rent paid for the year. 10,000 10.Payment for stationery 400 Sold goods (costing Rs 12,000) for Rs 16,000