Page 39 - ISCDEBK-XI

Accounting Equation 6.5

Illustration 4.
Show the accounting equation on the basis of the following transactions and also the Balance
Sheet of Rahul:

(i) Commenced business with cash ` 2,00,000.
(ii) Purchased goods from Ms. Neha ` 50,000.
(iii) Withdrew goods costing ` 10,000 for personal use.

(iv) Sold goods for cash (cost ` 35,000) ` 60,000.
(v) Introduced fresh capital 50,000.
(vi) Paid telephone bills amounting to ` 3,000.
(vii) Goods costing ` 2,000 sold at a profit of 25% on cost.

(viii) Motorcycle purchased for personal use ` 18,000.
(ix) Paid Rent ` 18,000.

(x) Paid Salaries ` 12,000.
Solution: Refer to Page No. 6.6.

Advanced Level Question

Illustration 5.

Use Accounting Equation to show the effect of following transactions on assets, liabilities and
capital and also show the Balance Sheet:

Transactions
(i) Mohan started business with cash of ` 3,60,000, Goods ` 1,00,000, Debtors ` 20,000,
Furniture ` 20,000 and Creditors ` 40,000.
(ii) Goods costing ` 12,000 sold to Ram at a loss of 10%, out of which ` 4,000 received
in cash.
(iii) Cash deposited into bank ` 40,000.

(iv) Outstanding Rent ` 10,000.
(v) Received cheque from Ram ` 6,400 in full settlement of ` 6,800. Cheque deposited on the
same date.
(vi) Prepaid Insurance ` 2,000.

(vii) Paid to creditors ` 36,000 by cheque in full settlement of their accounts.
(viii) Depreciation on Furniture @ 10%.
(ix) Unearned Commission ` 4,000.
Solution: Refer to Page Nos. 6.7 and 6.8.