# Show the accounting equation on the basis of the following transaction:       (a) Udit started business with: Rs   (i) Cash 5,00,000   (ii) Goods 1,00,000 (b) Purchased building for cash 2,00,000 (c) Purchased goods from Himani  50,000 (d) Sold goods to Ashu (Cost Rs 25,000)  36,000 (e) Paid insurance premium  3,000 (f) Rent outstanding  5,000 (g) Depreciation on building  8,000 (h) Cash withdrawn for personal use  20,000 (i) Rent received in advance  5,000 (j) Cash paid to Himani on account  20,000 (k) Cash received from Ashu  30,000

 S.No. Explanation Assets = Liabilities + Capital Cash + Stock + Building + Debtors Creditors + Outstanding Expenses + Unaccrued Income (a) Increase in cash 5,00,000 Increase in stock 1,00,000 Increase in capital 6,00,000 5,00,000 + 1,00,000 = NIL + 6,00,000 (b) Increase in building 2,00,000 Decrease in cash (2,00,000) = 3,00,000 + 1,00,000 + 2,00,000 = NIL + 6,00,000 (c) Increase in stock 50,000 Increase in creditors = 50,000 3,00,000 + 1,50,000 + 2,00,000 = 50,000 + 6,00,000 (d) Increase in debtors 36,000 Decrease in stock (25,000) Increase in capital (Profit) 11,000 3,00,000 + 1,25,000 + 2,00,000 + 36,000 = 50,000 + 6,11,000 (e) Decrease in cash (3,000) Decrease in capital (Expense) (3,000) 2,97,000 + 1,25,000 + 2,00,000 + 36,000 = 50,000 + + 6,08,000 (f) Decrease in capital (Expense) 5,000 Increase in liabilities (5,000) 2,97,000 + 1,25,000 + 2,00,000 + 36,000 = 50,000 + 5,000 + 6,03,000 (g) Decrease in building (8,000) Decrease in capital (8,000) 2,97,000 + 1,25,000 + 1,92,000 + 36,000 = 50,000 + 5,000 + 5,95,000 (h) Decrease in cash (20,000) Decrease in capital (20,000) 2,97,000 + 1,25,000 + 1,92,000 + 36,000 = 50,000 + 5,000 + 5,75,000 (i) Increase in cash 5,000 Increase in liability 5,000 2,82,000 + 1,25,000 + 1,92,000 + 36,000 = 50,000 + 5,000 + 5,000 + 5,75,000 (j) Decrease in creditors (20,000) Decrease in cash (20,000) 2,62,000 + 1,25,000 + 1,92,000 + 36,000 = 30,000 + 5,000 + 5,000 + 5,75,000 (k) Increase in cash 30,000 Decrease in debtors (30,000) 2,92,000 + 1,25,000 + 1,92,000 + 6,000 = 30,000 + 5,000 + 5,000 + 5,75,000

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