Question 17.
Prepare Accounting Equation from the following:
(a) Started business with cash ₹ 1,00,000.
(b) Purchase goods for cash ₹ 20,000 and on credit ₹ 30,000.
(c) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%.
(d) Paid salaries ₹ 8,000.
Answers
These entries are very easy if we understand the golden rules of accounting which help in understanding the debit and the credit natures of each account, be it personal, real or nominal.
Explanation:
S.No Transactions Cash Stock Debtors Creditors Capitals
1 Started business with Rs. 100,000 100000 100000
2 Purchased goods on cash 20000 and om credit 30000 -20000 50000 30000
3 Sold goods for cash costing 10000 and on credit costing 15000 on 20 % profit 12000 -10000 2000
-15000 18000 3000
Total 92000 25000 18000 30000 105000
To know more:
prepare Accounting equation from the following transactions -
1) Started business with cash rupees 80000 and goods worth
rupees 50000.
2) Purchased goods on credit rupees 20000 from Kamal & Sons.
3) Sold goods costing rupees 20000 at a profit of rupees 4000.
4) Paid Rent rupees 5000 and rupees1000 is still outstanding.
5) Paid into bank rupees 35000.
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Prepare accounting equation from the following information.(1).business started with cash ₹175000.(2).purchased goods from rohit ₹50000.(3).sales goods on credit to manish(costing ₹17500) ₹20000.(4).purchased furniture for office use ₹10000.(5).cash paid to rohit in full settlement ₹48500.(6).cash received from manish ₹20000.(7).rent paid ₹1000.(8).cash withdraw for personal use ₹3000.
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