Question

Transactions of Mohan traders are given below. Show the effects of these transaction on assets, liabilities and capital with the help of accounting equation. a. Business started with cash RS1,00,000 b. Cash purchase RS 50,000. c. Cash sale of RS 60,000 (cost 40,000) . d. Purchased furniture for cash RS 5,000 . e. Paid rent RS 4,000. f. Bought from Ratan RS 8,000.

Answer 1

Answer:

1) Capital A/c ..........Dr Rs 100000

To Cash A/c Rs 100000

( Being capital introduced)

2) Cash Purchase A/c .......Dr Rs 50000

To Cash A/c Rs 50000

(Being Cash purchases)

4) Furniture a/c .........Dr Rs 5000

To Cash A/c Rs 5000

( Being furniture purchased in cash)

5) Rent A/c .............Dr Rs 4000

To Bank A/c OR Cash a/c Rs 4000

(Bening rent paid )

6) Loan And Advanced a/c .....Dr Rs 8000

To Rohan a/c Rs 8000

(Being loan taken from Rohan)

Answer 2

The accounting equation is Assets = Liabilities + Capital


Cash + Stock + Furniture = Creditors + Capital

Here; cash, stock, furniture are assets

Creditors is Liabilities

And Capital is Capital


And also, assuming that b,c, and f are goods transactions here is the answer: