Show the effect of the following transactions on Assets, Liabilities and
Capital through accounting equation:
Rs. 1,20,000
(a) Started business with cash
Rs. 10,000
(b) Rent received
Rs. 50,000
(c) Invested in shares
(d) Received dividend
Rs. 5,000
(e) Purchase goods on credit from Ragani
Rs. 35.000
(f) Paid cash for house hold Expenses
Rs. 7,000
(g) Sold goods for cash (costing Rs.10,000)
Rs. 14,000
(h) Cash paid to Ragani
Rs. 35.000
(i) Deposited into bank
Rs. 20,000
Answers
Answer:
Effects on
Journal entry Assets Liabilities
a) Cash A/c Dr 10000.00
To Capital A/c 10000.00 Cash will increase Capital will be 10000
b) Bank / Cash A/c Dr 50000.00
To Rent account Cash/Bank will increase Income will increase
c) Investment (shares) A/c Dr
To Bank/Cash Investment is assets Cash/Bank balance will decrease
d) Bank A/c Dr 5000.00
To Dividend A/c Bank balance will increase Income will increase
e) Purchase A/c Dr 35000.00
To Ragani Stock A/c will be added Creditors (Liabilities)
will increase
f) Household expense Dr
To cash Profit will be less
Cash balanced will decrease
g) Cash A/c Dr 10000.00 Closing stock will decrease
To sales
cash will increase
h) Ragini A/c Dr 35000.00
To cash Cash will decrease Creditors will decrease
i) Bank A/c Dr 20,0000 bank balance will increase
To cash Cash will decrease