What will be the effect of the following on the Accounting Equation? (

1.	What will be the effect of the following on the Accounting Equation? (i) Harish started business with cash 1,80,000. (ii) Purchased goods for cash 60,000 and on credit 30,000. (iii) Sold goods for cash 40,000; costing 24,000. (iv) Rent paid 5,000; and rent outstanding 2,000. (v) Sold goods on credit 50,000 (costing 38,000). (vi) Salary paid in advance 3,000.
Answer» Answer: Assets = Liabilities + Capital Cash + Furniture + Stock = Creditors (i) Sandeep started BUSINESS with cash 1,00,000 + 1,00,000 1,00,000 = + 1,00,000 (ii) Purchased furniture for cash –5,000 +5,000 95,000 + 5,000 = + 1,00,000 (iii) Purchased GOODS for cash –20,000 +20,000 75,000 + 5,000 + 20,000 = + 1,00,000 (iv) Purchased goods on credit +36,000 +36,000 75,000 + 5,000 + 56,000 = 36,000 + 1,00,000 (v) Rent PAID -700 –700 74,300 + 5,000 + 56,000 = 36,000 + 99,300 (VI) Goods costing Rs 40,000 sold at a profit of 20% for cash +48,000 -40,000 +8,000 1,22,300 + 5,000 + 16,000 = 36,000 + 1,07,300

What will be the effect of the following on the Accounting Equation? (i) Harish started business with cash 1,80,000. (ii) Purchased goods for cash 60,000 and on credit 30,000. (iii) Sold goods for cash 40,000; costing 24,000. (iv) Rent paid 5,000; and rent outstanding 2,000. (v) Sold goods on credit 50,000 (costing 38,000). (vi) Salary paid in advance 3,000.

Answer»

Answer:

Assets = Liabilities + Capital

Cash + Furniture + Stock = Creditors

(i) Sandeep started BUSINESS with cash 1,00,000 + 1,00,000

1,00,000 = + 1,00,000

(ii) Purchased furniture for cash –5,000 +5,000

95,000 + 5,000 = + 1,00,000

(iii) Purchased GOODS for cash –20,000 +20,000

75,000 + 5,000 + 20,000 = + 1,00,000

(iv) Purchased goods on credit +36,000 +36,000

75,000 + 5,000 + 56,000 = 36,000 + 1,00,000

(v) Rent PAID -700 –700

74,300 + 5,000 + 56,000 = 36,000 + 99,300

(VI) Goods costing Rs 40,000 sold at a profit of 20% for cash +48,000 -40,000 +8,000

1,22,300 + 5,000 + 16,000 = 36,000 + 1,07,300