Question

Use accounting equation to show the effect of the following transactions of
Ms Royal Traders:
Started business with cash
31.20,000
Purchased goods for cash
10,000
Rent received
*5,000
Salary outstanding
*2.000
l Prepaid Insurance
1.000
Received interest
*700
Sold goods for cash(costing *5000)
*7000
Goods destroyed by fire
*500​

Answer 1

Answer:

1. Cash Dr

To capital Cr

2. Purchase Dr

To Cash Cr

3. cash/ Bank Cr

To Rent Cr

4. Salary Dr

To o/s salary Cr

5. Prepaid Insurance Dr

To cash / Bank Cr

6. Bank Dr

To interest Cr.

7. cash Dr

To Sales Cr

To Profit on sale Cr

8 Goods destroyed by fire Dr

To Purchase Cr