Question

Question 10.
Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. Also prepare a Balance Sheet.
(i) Commenced business with cash ₹ 60,000.
(ii) Paid Rent in Advance ₹ 500.
(iii) Purchased goods for Cash ₹ 30,000 and Credit ₹ 20,000.
(iv) Sold goods for Cash ₹ 30,000 Costing ₹ 20,000.
(v) Paid Salary ₹ 500 and Salary Outstanding being ₹ 100.
(vi) Bought motorcycle for personal use ₹ 5,000.

Answer 1

Total balance 74900

Explanation :

1.

60000 increase in cash on assets side

60000 increase in capital on laiblity side

Total balance 60000.

2.

500 decrease in cash on asset side

500 increase in rent in advance on asset side

Total balance 60000.

3.

30,000 decrease in cash on asset side 30000 increase in stock on a asset side

20000 increase in stock on the asset side 20,000 increase in creditors on the liability side

Total balance 80000.

4.

Decrease cash by 600 on asset side

Increase salary by 500 on assets side decrease outstanding balance by 100 on the laiblity side

Total balance 79900.

5.

5000 decrease in cash on the asset side

5,000 decrease from capital on the liability side

Total balance 74900.