What will be the effect of the following on the Accounting Equation? (i) Harish started business with cash 1,80,000. (ii) Purchased goods for cash 60,000 and on credit 30,000. (iii) Sold goods for cash 40,000; costing 24,000. (iv) Rent paid 5,000; and rent outstanding 2,000. (v) Sold goods on credit 50,000 (costing 38,000). (vi) Salary paid in advance 3,000.
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Assets = Liabilities + Capital
Cash + Furniture + Stock = Creditors
(i) Sandeep started business with cash 1,00,000 + 1,00,000
1,00,000 = + 1,00,000
(ii) Purchased furniture for cash –5,000 +5,000
95,000 + 5,000 = + 1,00,000
(iii) Purchased goods for cash –20,000 +20,000
75,000 + 5,000 + 20,000 = + 1,00,000
(iv) Purchased goods on credit +36,000 +36,000
75,000 + 5,000 + 56,000 = 36,000 + 1,00,000
(v) Rent paid -700 –700
74,300 + 5,000 + 56,000 = 36,000 + 99,300
(vi) Goods costing Rs 40,000 sold at a profit of 20% for cash +48,000 -40,000 +8,000
1,22,300 + 5,000 + 16,000 = 36,000 + 1,07,300
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