Question

Show the accounting equation on the basis of the following transactions and present a Balance Sheet of the last new equation balance:
(₹)
(i) Mohan commenced business with 70,000
(ii) Purchased goods on Credit 14,000
(iii) Withdrew for private use 1,700
(iv) Purchased goods for Cash 10,000
(v) Paid wages 300
(vi) Paid to Creditors 10,000
(vii) Sold goods on Credit at par 15,000
(viii) Sold goods for Cash (cost price was ₹ 3,000) 4,000
(ix) Purchased furniture for cash 500
Solution
ACCOUNTING EQUATION
S. Assets = Liabilities + Capital
Transaction
No. Cash + Stock + Debtors + Furniture = Creditors
(i) Started business with +70,000 + 70,000
cash
70,000 = 70,000
(ii) Purchased goods on +14,000 +14,000
credit
70,000 + 14,000 = 14,000 + 70,000
(iii) Withdrew for private –1,700 –1,700 (Drawings)
use
68,300 + 14,000 = 14,000 + 68,300
(iv) Purchased goods for –10,000 +10,000
cash
58,300 + 24,000 = 14,000 + 68,300
(v) Wages paid –300 –300 (Expense)
58,000 + 24,000 = 14,000 + 68,000
(vi) Paid to creditors –10,000 –10,000
48,000 + 24,000 = 4,000 + 68,000
(vii) Sold goods on credit at –15,000 +15,000
par
48,000 + 9,000 + 15,000 = 4,000 + 68,000
(viii) Sold goods (costing Rs +4,000 –3,000 +1,000 (Profit)
3,000) for Rs 4,000
52,000 + 6,000 + 15,000 = 4,000 + 69,000
(ix) Furniture purchased –500 +500
51,500 + 6,000 + 15,000 + 500 = 4,000 + 69,000

Balance Sheet
as on ……
Liabilities Amount (Rs) Assets Amount (Rs)
Creditors 4,000 Cash 51,500
Capital 69,000 Stock 6,000
Debtors 15,000
Furniture 500
73,000 73,000

Suggest Corrections
Question

Show the Accounting Equation on the basis of the following transactions and present a Balance Sheet on the last new equation balance:
₹
(i) Raj commenced business with cash 70,000
(ii) Purchased goods on credit 14,000
(iii) Withdrew for Private use 1,700
(iv) Goods purchased for cash 10,000
(v) Paid wages 300
(vi) Paid to creditors 10,000
(vii) Sold goods on credit for 15,000
(viii) Sold goods for cash (cost price was Purchased 4,000
(ix) motorcycle for cash ₹ 3,000)
Purchased furniture for 500
Solution
Assets = Liabilities + Capital
S. No. Transactions Cash Stock Furniture Debtors Creditors
+ + + (Rs)
(Rs) (Rs) (Rs) (Rs) (Rs)
(i) Raj Commenced business 70,000 = 70,000
70,000 = 70,000
(ii) Purchased goods on credit 14,000 = 14,000
70,000 + 14,000 = 14,000 70,000
(iii) Withdraw for Private use – 1,700 = – 1,700
(Drawings)
68,300 + 14,000 = 14,000 + 68,300
(iv) Goods purchased for Cash – 10,000 + 10,000
58,300 + 24,000 = 14,000 + 68,300
(v) Paid Wages – 300 = – 300
(Expense)
58,000 + 24,000 = 14,000 + 68,000
(vi) Paid to Creditors – 10,000 = – 10,000
48,000 + 24,000 = 4,000 + 68,000
(vii) Sold goods on credit – + 15,000 =
15,000
48,000 + 9,000 + 15,000 = 4,000 + 68,000
(viii) Sold goods for cash (costing Rs 4,000 – 3,000 1,000
3,000) (Profit)
52,000 + 6,000 + 15,000 = 4,000 + 69,000
(ix) Purchased Furniture – 500 500
51,500 + 6,000 + 500 + 15,000 = 4,000 + 69,000
Balance Sheet
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 69,000 Cash 51,500
Creditors 4,000 Stock 6,000
Furniture 500
Debtors 15,000
73,000 73,000

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Question

Develop an Accounting Equation from the following transactions:

₹
(i) Mohan commenced business with cash 50,000
(ii) Purchased goods for cash 30,000
(iii) Purchased goods on credit 20,000
(iv) Sold goods (costing ₹ 10,000) for 12,000
(v) Bought furniture on credit 2,000
(vi) Paid cash to a creditor 15,000
(vii) Salary paid 1,000
Solution
Assets = Liabilities + Capital
S. No. Transaction Cash Stock Furniture Creditors (Rs)
+ + =
(Rs) (Rs) (Rs) (Rs)
(i) Mohan commenced business with cash 50,000 = 50,000
50,000 = 50,000
(ii) Purchased goods for cash – 30,000 + 30,000 =
20,000 + 30,000 = 50,000
(iii) Purchased goods on credit 20,000 = 20,000
20,000 + 50,000 = 20,000 + 50,000
(iv) Sold goods costing Rs 10,000 for Rs 12,000 + – 10,000 = 2,000
12,000 (profit)
32,000 + 40,000 = 20,000 + 52,000
(v) Bought furniture on credit 2,000 = 2,000
32,000 + 40,000 + 2,000 = 22,000 + 52,000
(vi) Paid cash to a creditor – 15,000 = – 15,000
17,000 + 40,000 + 2,000 = 7,000 + 52,000
(vii) Salary Paid – 1,000 = – 1,000
(expenses)
16,000 + 40,000 + 2,000 = 7,000 + 51,000
Assets = 16,000 + 40,000 + 2,000
= Rs 58,000
Liabilities = Rs 7,000
Capital = Rs 51,000