Rohit has the following transactions: (a) Commenced business with cash ₹ 1,50,000 (b) Purchased machinery on credit ₹ 40,000 (c) Purchased goods for cash ₹ 20,000 (d) Purchased car for - Accountancy

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   Rohit has the following transactions:

(a)Commenced business with cash₹ 1,50,000
(b)Purchased machinery on credit₹ 40,000
(c)Purchased goods for cash₹ 20,000
(d)Purchased car for personal use₹ 80,000
(e)Paid to creditors in full settlement₹ 38,000
(f)Sold goods for cash costing ₹ 5,000₹ 4,500
(g)Paid rent₹ 1,000
(h)Commission received in advance₹ 2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.




S.NoExplanationAssetAssetAssetLiabilitiesCapital
  Cash+Machinery+Stock=Creditors+Unaccrued Income
(a)Increase in cash1,50,000        
 Increase in capital        1,50,000
  1,50,000    =NIL+1,50,000
(b)Increase in machinery  40,000      
 Increase in creditors     =40,000+1,50,000
  1,50,000+40,000  =40,000+1,50,000
(c)Increase in stock    20,000    
 Decrease in cash(20,000)        
  1,30,000+40,000+20,000=40,000+1,50,000
(d)Decrease in cash(80,000)        
 Decrease in capital (Drawing)        (80,000)
  50,000+40,000+20,000=40,000+70,000
(e)Decrease in creditors      (40,000)  
 Decrease in cash(38,000)        
 Increase in capital (Discount received         



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