Question

Pankaj started business cash 20000 and goods 80000

Answer 1

In the books of Pankaj , Journal Entry :

Cash A/C  DR   RS.20,000

Purchases A/C  DR   RS 80,000

        To Capital A/C  RS 1,00,000

(being capital brought in the form of cash and goods)

Answer 2

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

Cash A/c - Real A/c , where money comes into the business therefore its debited

Purchases A/c - Real A/c , where goods comes into the business therefore its debited

Capital A/c- personal A/c , where owner giver of cash and goods to business therefore its credited

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Journal entry

Cash A/c           Dr   20000

Purchases A/c  Dr  80000

           To Capital A/c            100000

(being started business with cash and goods)

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If the question for accounting equation

Cash (asset ) will increase by 20000

Stock (asset ) will increase by  80000

and

capital will increase by 100000