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Question -

Rohit has the following transactions:

 

 

Rs

(a)

Commenced business with cash

1,50,000

(b)

Purchased machinery on credit

 40,000

(c)

Purchased goods for cash

 20,000

(d)

Purchased car for personal use

 80,000

(e)

Paid to creditors in full settlement

38,000

(f)

Sold goods for cash costing Rs 5,000

4,500

(g)

Paid rent

 1,000

(h)

Commission received in advance

2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.



Answer -

S.No.

Explanation

Assets

 

Liabilities

+

Capital

Cash

+

Machinery

+

Stock

=

Creditors

+

Unaccrued Income

 

 

(a)

Increase in cash

1,50,000

 

 

 

 

 

 

 

 

 

 

 

Increase in capital

 

 

 

 

 

 

 

 

 

 

1,50,000

 

 

1,50,000

 

 

 

 

=

NIL

 

 

+

1,50,000

(b)

Increase in machinery

 

 

40,000

 

 

 

 

 

 

 

 

 

Increase in creditors

 

 

 

 

 

=

40,000

 

 

 

 

 

 

1,50,000

+

40,000

 

 

=

40,000

 

 

+

1,50,000

(c)

Increase in stock

 

 

 

 

20,000

 

 

 

 

 

 

 

Decrease in cash

(20,000)

 

 

 

 

 

 

 

 

 

 

 

 

1,30,000

+

40,000

+

20,000

=

40,000

 

 

+

1,50,000

(d)

Decrease in cash

(80,000)

 

 

 

 

 

 

 

 

 

 

 

Decrease in capital (Drawings)

 

 

 

 

 

 

 

 

 

 

(80,000)

 

 

50,000

+

40,000

+

20,000

=

40,000

 

 

+

70,000

(e)

Decrease in creditors

 

 

 

 

 

 

(40,000)

 

 

 

 

 

Decrease in cash

(38,000)

 

 

 

 

 

 

 

 

 

 

 

Increase in capital

(Discount received)

 

 

 

 

 

 

 

 

 

 

2,000

 

 

12,000

+

40,000

+

20,000

=

NIL

 

 

+

72,000

(f)

Increase in cash

4,500

 

 

 

 

 

 

 

 

 

 

 

Decrease in stock

 

 

 

 

(5,000)

 

 

 

 

 

 

 

Decrease in capital (Loss)

 

 

 

 

 

 

 

 

 

 

(500)

 

 

16,500

+

40,000

+

15,000

=

NIL

 

 

+

71,500

(g)

Decrease in cash

(1,000)

 

 

 

 

 

 

 

 

 

 

 

Decrease in capital (Expense)

 

 

 

 

 

 

 

 

 

 

(1,000)

 

 

15,500

+

40,000

+

15,000

=

NIL

 

 

+

70,500

(h)

Increase in cash

2,000

 

 

 

 

 

 

 

 

 

 

 

Increase in unaccrued income

 

 

 

 

 

=

 

 

2,000

 

 

 

 

17,500

+

40,000

+

15,000

=

NIL

+

2,000

+

70,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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