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Prove that the accounting equation is satisfied in all the following transactions of samson:

 

​(a)Started business with cash 100000 and goods 40000.
(b)Bought goods for cash 30000 and on credit for 20000.
(c)Goods costing 48000 at a profit of 33 1/3%.Half the payment received in cash.
(d)Purchased furniture for office use 12000. and for household use of samson 8000.

 

 

S. No. Transaction Assets = Liabilities + Capital
Cash + Stock + Debtors + Furniture = Creditors    
(i) Started business with cash 100000 and goods 40000. 1,00,000 + 40,000   -   -   -   1,40,000
    1,00,000 + 40,000         =     1,40,000
(ii) Bought goods for cash 30000 and on credit for 20000. (30,000) + 50,000   -   -   20,000    
    70,000 + 90,000         = 20,000 + 1,40,000
(iii) Goods costing 48000 at a profit of 33 1/3%.Half the payment received in cash. 32,000 + (48,000) + 32,000   -   -   16,000
    1,02,000 + 42,000 + 32,000     = 20,000 + 1,56,000
(iv) Purchased furniture for office use 12000. and for household use of samson 8000. (20,000)         + 12,000     + (8,000)
    82,000 + 42,000 + 32,000 + 12,000 = 20,000 + 1,48,000

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yes it satisfies all the transactions
  1. when a business is started with cash and goods then the assets side is debited and capital side is credited.
  2. when goods are bought for cash and credit the goods bought for cash has its effect only on its debit side i.e,decrease in cash and increase in goods and for credit purchase of goods it increases in goods as well as on credit side in liabilities as creditor.
  3. after calculating the profit.we should subtract the goods of value 48000 from assets side and increase cash asset by the value of cash received and the remaining is debited as debtor in assets side.
  4. the furniture purchased for office use has its effect only on debit side i.e, decrease in cash and increase in assets as furniture,the furniture purchase for household purpose is decreased from both the cash and capital. 
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