Question

Vanishka had the follow ing transactions. Use accounting equation to show their effect on his
assets, liabilities, and capital:
i. Invested Rs 30,000 in cash as capital.
ii. Purchased furniture for cash Rs 15,000.
iii. Purchased a building for Rs 30,000, giving Rs 10,000 in cash and the balance through a loan.
iv. Sold furniture costing Rs 2,000 for Rs 3,000.
v. Purchased an old car for Rs 5,600 cash.
vi. Received cash as rent Rs 7,200.
vii. Paid cash Rs 1,000 for loan and Rs 600 for interest.
viii. Paid cash for household expenses Rs 600.
ix. Received cash for dividend on securities Rs 400.

Answer 1

Profit = Closing capital - Opening capital

i.e 5,000 = 30,000 - Opening capital