Question

Preparation of accounting equations from the following transactions prepare an accounting equation
1) Mr Faisal started a business with cash 20,000Rs
2) he took bank loan rupees 100000
3) he purchased goods for rupees 15000
4) he sold 50 % of goods at a profit of 20% on cost
5) he sold 10% of the remaining goods at a profit of 10 %
6) allowed interest on capital rupees 1000




I want my point no.6 to be cleared as in my book it's adding rs 1000 on capital column and also deducting it from capital

Answer 1

the treatment of the transaction of interest on capital is the amount given is add and subtract from the capital
so that's why in the it is add and subtract from the capital