Rohit has the following transactions:
Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.
| (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.No | Explanation | Asset | Asset | Asset | Liabilities | Capital | ||||
| Cash | + | Machinery | + | Stock | = | Creditors | + | Unaccrued Income | ||
| (a) | Increase in cash | 1,50,000 | ||||||||
| 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 |