Question

Prepare Accounting Equation from the following : (i) Ram started business (ii) Furniture purchased (iii) Rent paid (iv) Wages paid (v) Goods purchased on credit from X (vi) Goods sold on credit to Y cost Rs 4,00​

Answer 1

Answer:

ACCOUNTING EQUATION

S. No. Transaction Assets = Liabilities + Capital

Cash + Furniture + Stock = Creditors

(i) Sandeep started business with cash 1,00,000 + 1,00,000

1,00,000 = + 1,00,000

(ii) Purchased furniture for cash –5,000 +5,000

95,000 + 5,000 = + 1,00,000

(iii) Purchased goods for cash –20,000 +20,000

75,000 + 5,000 + 20,000 = + 1,00,000

(iv) Purchased goods on credit +36,000 +36,000

75,000 + 5,000 + 56,000 = 36,000 + 1,00,000

(v) Rent paid -700 –700

74,300 + 5,000 + 56,000 = 36,000 + 99,300

(vi) Goods costing Rs 40,000 sold at a profit of 20% for cash +48,000 -40,000 +8,000

1,22,300 + 5,000 + 16,000 = 36,000 + 1,07,300

Working Note:

WN1 Calculation of Sale Price

cost of goods sold=40,000

Add: Profit 20 of $40,000=8,000

selling price=48,000.