Solution of Accounting Equation Problem

1 Harish started business with cash rs.15000
2 he purchased goods on credit rs. 7000

3 he purchased furniture for cash rs. 500

4 he deposited into bank rs. 2000

5 he sold goods on credit to satish costing rs. 4000 for rs. 6000

6 he withdrew cash for private use rs. 200

7he paid salaries rs. 300



[  Ans   Assets rs. 23500 ; Liabilities rs. 7000 ; Capital rs. 16500]


Assi Prince from India






















Assi Prince! This problem is relating to accounting equation.


Accounting equation means assets always equal to liabilities.


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Total Assets = Total Capital + Total Outside Liabilities



Capital  +  Outside
Liabilities =
Assets


1.  Harish started business with cash rs.15000


Capital 15000  Cash 15000

2. he purchased goods on credit rs. 7000
Capital 15000 Cash 15000

Creditor
7000
Stock
7000


3 . He purchased furniture for cash rs. 500


Capital 15000 cash - cash payment for F. 15000 -
500 = 14500

Creditor
7000
furniture
500
stock 7000


4 . He deposited into bank rs. 2000


Capital 15000 cash - deposit in bank 14500 - 2000= 12500

Creditor
7000 furniture 500
stock 7000
Bank 2000


5 . He sold goods on credit to satish costing rs. 4000 for rs. 6000 


Capital
+ profit from sales
15000
+ 2000
= 17000
cash  12500

Creditor
7000 furniture 500
stock
- sale of stock (cost)
7000
- 4000
= 3000
Bank 2000

Debtors for sold stock
6000


6.  He withdrew cash for private use rs. 200


Capital
+ profit from sales -
drawing
17000
- 200
= 16800
cash - cash payment for
drawing
12500 -200 = 12300

Creditor
7000 furniture 500
stock
- sale of stock (cost)
7000
- 4000
= 3000
Bank 2000

Debtors for sold stock
6000


7 . He paid salaries rs. 300


Capital
+ profit from sales -
drawing
-
expenses of salary
16800
- 300
= 16500
cash -
payment of salary exp.
12300-
300 = 12000

Creditor
7000 furniture 500
stock
- sale of stock (cost)
7000
- 4000
= 3000
Bank 2000

Debtors for sold stock
6000
Capital + Liabilities
16500 + 7000 = Total of Assets 23500



Vinod Kumar

Educator

Prof. Vinod Kumar is an Indian Educator, Motivational Speaker, Naturopathic Practitioner and Entrepreneur . He is the founder of Svtuition... read more »

2 comments:

  1. Hello,

    Am a diploma student interested in your services of free world class education.

    kind regards

    ReplyDelete
    Replies
    1. Sold goods (costing Rs 12,000) for Rs 16,000. Out of
      which Rs. 2,000 received in cash. how do i do this?

      Delete