Develop an Accounting equation.
1. Keshav started business with cash 100000, stock 50000 and furniture 10000.
2. Purchased a plant for 20000.
3. Purchased goods for cash 35000 and on credit from X 25000.
4. Sold goods for 21000 (cost 19000).
5. Purchased securities for 12000.
6. Sold furniture costing 4000 for 3500.
7. Sold good to Mohan for 15000( cost 12000 ).
8. Purchased a house for 25000 paying 10000 for cash and balance through a loan.
9. Goods purchased from A for 4000.
10. 50%of goods purchased from A sold for 2500.
11. Sold securities for 9000 ( cost 8000 ).
12. Received interest on securities 600.
13. Rent @200 per month. Rent is paid on 1st day on next month.
14. Salaries paid 3000 and outstanding 600.
Dear Student,
The solution to your query is provided below:
*Since rent is paid on the first day of the next month, the rent for Dec/Mar (depending upon the accounting year) will be paid on Jan 1/April 1. Thus, cash will be reduced only to the extent of rent of 11 months and 1 month rent will be considered outstanding at the end of accounting year.
Hope this answers your query.
Keep posting!!
The solution to your query is provided below:
S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||||||||||||||||
Cash | + | Plant | + | Stock | + | Furniture | + | Securities | Mohan | House | = | Creditors | + | House Loan | O/s Expense | |||||||||||
(i) | Commenced business | 1,00,000 | 50,000 | 10,000 | = | 1,60,000 | ||||||||||||||||||||
1,00,000 | 50,000 | 10,000 | = | 1,60,000 | ||||||||||||||||||||||
(ii) | Purchased a plant | (-) 20,000 |
(+) 20,000 | |||||||||||||||||||||||
80,000 | 20,000 | 50,000 | 10,000 | = | 1,60,000 | |||||||||||||||||||||
(iii) | Purchased goods | (-) 35,000 | (+) 60,000 | (+) 25,000 | ||||||||||||||||||||||
45,000 | 20,000 | 1,10,000 | 10,000 | = | 25,000 | 1,60,000 | ||||||||||||||||||||
(iv) | Sold Goods | 21,000 | (-) 19,000 | (+) 2,000 Profit | ||||||||||||||||||||||
66,000 | 20,000 | 91,000 | 10,000 | = | 25,000 | 1,62,000 | ||||||||||||||||||||
(v) | Purchased Securities | (-) 12,000 | (+) 12,000 | |||||||||||||||||||||||
54,000 | 20,000 | 91,000 | 10,000 | 12,000 | = | 25,000 | 1,62,000 | |||||||||||||||||||
(vi) | Sold furniture | (+) 3,500 | (-) 4,000 | (-) 500 Loss | ||||||||||||||||||||||
57,500 | 20,000 | 91,000 | 6,000 | 12,000 | = | 25,000 | 1,61,500 | |||||||||||||||||||
(vii) | Sold Goods to Mohan | (-) 12,000 |
(+) 15,000 | (+) 3,000 Profit |
||||||||||||||||||||||
57,500 | 20,000 | 79,000 | 6,000 | 12,000 | 15,000 | = | 25,000 | 1,64,500 | ||||||||||||||||||
(viii) | Purchased house | (-) 10,000 | (+) 25,000 | (+) 15,000 | ||||||||||||||||||||||
47,500 | 20,000 | 79,000 | 6,000 | 12,000 | 15,000 | 25,000 | = | 25,000 | 15,000 | 1,64,500 | ||||||||||||||||
(ix) | Goods purchased from A | (+) 4,000 | (+) 4,000 | |||||||||||||||||||||||
47,500 | 20,000 | 83,000 | 6,000 | 12,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 1,64,500 | ||||||||||||||||
(x) | Sold 50% goods purchased from A | (+) 2,500 | (-) 2,000 | (+) 500 Profit | ||||||||||||||||||||||
50,000 | 20,000 | 81,000 | 6,000 | 12,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 1,65,000 | ||||||||||||||||
(xi) | Sold securities | (+) 9,000 | (-) 8,000 | (+) 1,000 Profit | ||||||||||||||||||||||
59,000 | 20,000 | 81,000 | 6,000 | 4,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 1,66,000 | ||||||||||||||||
(xii) | Received interest on securities | (+) 600 | (+) 600 Interest | |||||||||||||||||||||||
59,600 | 20,000 | 81,000 | 6,000 | 4,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 1,66,600 | ||||||||||||||||
(xiii) | Rent paid @ Rs 200 per month* | (-) 2,200 | (+) 200 | (-) 2,400 Expense | ||||||||||||||||||||||
57,400 | 20,000 | 81,000 | 6,000 | 4,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 200 | 1,64,200 | |||||||||||||||
(xiv) | Salaries paid and outstanding | (-) 3,000 | (+) 600 | (-) 3,600 | ||||||||||||||||||||||
54,400 | 20,000 | 81,000 | 6,000 | 4,000 | 15,000 | 25,000 | = | 29,000 | 15,000 | 800 | 1,60,600 | |||||||||||||||
*Since rent is paid on the first day of the next month, the rent for Dec/Mar (depending upon the accounting year) will be paid on Jan 1/April 1. Thus, cash will be reduced only to the extent of rent of 11 months and 1 month rent will be considered outstanding at the end of accounting year.
Hope this answers your query.
Keep posting!!