Prepare Accounting Equation from the following Information : (1) Started business with cash 1,00,000, goods 40,000 and furniture 60,000. (2) Purchased goods for cash 20,000 and on credit 30,000. (3) Goods costing 24,000 sold at a profit of 25% and only 60% amount received in cash. (4) Furniture costing 20,000 sold at a loss of 10%. (5) Amount paid to creditors Rs. 18,000 in full settlement of Rs. 20,000. (6) Amount received from debtors 4,000 in full settlement of 5,000. (7) Salary paid 5,000 and outstanding salary 4,000. (8) Insurance premium paid 12,000 (Including 3,000 in advance) (9) Additional capital introduced 25,000 (10) Depreciation charged on furniture 8,000. (11) Goods withdrawn for personal use 5,000.
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Explanation:
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
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