Question

Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet: − 1. Started business with Cash ₹ 1,20,000. 2. Purchased a typewriter for Cash for ₹ 8,000 for office use. 3. Purchased goods for ₹ 50,000 for cash. 4. Purchased goods for ₹ 40,000 on credit. 5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit. 6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000. 4 7. Received ₹ 800 for Commission. 8. Withdrew for private use ₹ 5,000 in cash.

Answer 1

Answer:

ACCOUNTING EQUATION

S. No. Transaction Assets = Liabilities + Capital

Cash + Typewriter + Stock + Debtors = Creditors

(i) Started business with cash +1,20,000 + 1,20,000

1,20,000 = 1,20,000

(ii) Purchased typewriter for office use –8,000 + 8,000

1,12,000 + 8,000 = 1,20,000

(iii) Purchased goods for cash –50,000 +50,000

62,000 + 8,000 + 50,000 = 1,20,000

(iv) Purchased goods on credit +40,000 40,000

62,000 + 8,000 + 90,000 = 40,000 + 1,20,000

(v) Goods costing Rs 60,000 sold for Rs 80,000 on credit –60,000 +80,000 +20,000 (Profit)

62,000 + 8,000 + 30,000 + 80,000 = 40,000 + 1,40,000

(vi) Paid rent Rs 1,500 and salaries Rs 2,000 –3,500 –3,500 (Expenses)

58,500 + 8,000 + 30,000 + 80,000 = 40,000 + 1,36,500

(vii) Commission received +800 +800 (Income)

59,300 + 8,000 + 30,000 + 80,000 = 40,000 + 1,37,300

(viii) Withdrew cash for private use –5,000 –5,000 (Drawings)

54,300 + 8,000 + 30,000 + 80,000 = 40,000 + 1,32,300

Balance Sheet of Rajaram

as on ……

Liabilities Amount (Rs) Assets Amount (Rs)

Creditors 40,000 Cash 54,300

Capital 1,32,300 Typewriter 8,000

Stock 30,000

Debtors 80,000

1,72,300 1,72,300

Answer 2

Answer:

Explanation:

Accounting Equation

1. Started Bussiness with Cash _   Cash =capital( 12000 = 120000)

2.Purchased Typewriter -

Cash + Typewriter

 -8000 +8000

3. Purchased goods on credit -

Cash  + stock  = Creditor

-50000 + 50000 = 4000

4. Purchased goods on cash  

stock  = Creditor

40000 = 40000

5. Goods costing Rs. 60000 sold for  Rs 80000 on credit

stock+ Debtor =  capital

-60000 + 80000 = +20000

6.Paid for rent

Cash = capital

-3500   = -3500

7. Commission Received

Cash = capital

+800 = +800

8.Cash withdrawal

cash + capital

-5000 = -5000

Cash + Typewriter + stock+ Debtor = Creditor + capital

54300 +8000 +30000 + 80000 = 40000+ 132300

BALANCE SHEET

Liabilities        Amount                            Assets                        Amount

Creditors        40000                           cash                          54300

Capital           132000                             Typewriter                 8000

                                                            Stock                          30000

                                                             Debtor                       80000

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                         172300                                                         172300