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Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet: − 1. Started business with Cash ₹ 1,20,000. 2. Purchased a typewriter for Cash for ₹ 8,000 for office use. 3. Purchased goods for ₹ 50,000 for cash. 4. Purchased goods for ₹ 40,000 on credit. 5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit. 6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000. 4 7. Received ₹ 800 for Commission. 8. Withdrew for private use ₹ 5,000 in cash. |
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Answer» ACCOUNTING EQUATIONS. No. Transaction ASSETS = Liabilities + CapitalCash + Typewriter + Stock + Debtors = Creditors (i) STARTED business with cash +1,20,000 + 1,20,000 1,20,000 = 1,20,000(ii) Purchased typewriter for office USE –8,000 + 8,000 1,12,000 + 8,000 = 1,20,000(iii) Purchased goods for cash –50,000 +50,000 62,000 + 8,000 + 50,000 = 1,20,000(iv) Purchased goods on credit +40,000 40,000 62,000 + 8,000 + 90,000 = 40,000 + 1,20,000(v) Goods costing Rs 60,000 sold for Rs 80,000 on credit –60,000 +80,000 +20,000 (Profit) 62,000 + 8,000 + 30,000 + 80,000 = 40,000 + 1,40,000(vi) Paid rent Rs 1,500 and salaries Rs 2,000 –3,500 –3,500 (Expenses) 58,500 + 8,000 + 30,000 + 80,000 = 40,000 + 1,36,500(vii) Commission received +800 +800 (Income) 59,300 + 8,000 + 30,000 + 80,000 = 40,000 + 1,37,300(viii) Withdrew cash for private use –5,000 –5,000 (Drawings) 54,300 + 8,000 + 30,000 + 80,000 = 40,000 + 1,32,300 Balance Sheet of Rajaramas on ……Liabilities AMOUNT (Rs) Assets Amount (Rs)Creditors 40,000 Cash 54,300Capital 1,32,300 Typewriter 8,000 Stock 30,000 Debtors 80,000 1,72,300 1,72,300 |
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