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



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Svtuition: Solution of Accounting Equation Problem
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