Question

Q.2. Mr. Rahul started business with cash * 65,000 on 1st April, 2008 including cash borrowed
25,000 from his brother Mr. Mehul. His transactions for the month April, 2008 are given
below. Prepare a cash book with cash and bank columns.
April
​

Answer 1

Answer:

(i) Journal entries

Cash a/c Dr.         65,000

      To Capital a/c                     40,000

      To Loan from Mehul a/c     25,000

(Being introduction of capital to business)

Explanation:

Answer 2

Rahul has started business with cash so his cash will increase and capital will increase as well as liability.

• Cash and capital is increasing as well liability because he has borrowed from his brother.
• Accounting Equation will be -
• Cash = Capital + Liability
• 65,000 = 40,000 + 25,000

Journal Entry will be

Cash A/C DR 65,000

        To Capital A/C  40,000

         To Mehul A/C  25,000

( Being business started with cash and liability )

Coorect question is Mr. Rahul has started business and show this with accounting equation and journal.