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Question
For the following transactions, show the effect on the accounting equation.
- Raj started business with cash - ₹ 40,000
- Opened bank account with a deposit of - ₹ 30,000
- Bought goods from Hari on credit for - ₹ 12,000
- Raj withdrew cash for personal use - ₹ 1,000
- Bought furniture by using debit card for - ₹ 10,000
- Sold goods to Murugan and cash received - ₹ 6,000
- Money withdrawn from bank for office use - ₹ 1,000
Ledger
Solution
| Transaction | Assets | Capital ₹ | Creditors ₹ | |||||
| Cash ₹ | Stock ₹ | Furniture ₹ | Debtors ₹ | Bank ₹ | ||||
| a. Raj started business with cash | + 40,000 | + 40,000 | ||||||
| Equation | + 40,000 | + 30,000 | = | + 40,000 | ||||
| b. Opened bank account | − 30,000 | + 30,000 | = | + 40,000 | ||||
| Equation | + 10,000 | + 30,000 | = | + 40,000 | ||||
| c. Bought goods from Hari on credit | + 12,000 | + 12,000 | ||||||
| Equation | + 10,000 | + 12,000 | + 30,000 | = | + 40,000 | + 12,000 | ||
| d. Raj withdrew cash for personal use | − 1,000 | − 1,000 | ||||||
| Equation | + 9,000 | + 12,000 | + 30,000 | = | + 39,000 | + 12,000 | ||
| e. Bought furniture by using debit card for | + 10,000 | − 10,000 | ||||||
| Equation | + 9,000 | + 12,000 | + 10,000 | + 20,000 | = | + 39,000 | + 12,000 | |
| f. Sold goods to Murugan for cash | + 6,000 | − 6,000 | ||||||
| Equation | + 15,000 | + 6,000 | + 10,000 | + 20,000 | = | + 39,000 | + 12,000 | |
| g. Money withdrawn from bank for office use | + 1,000 | − 1,000 | ||||||
| Equation | + 16,000 | + 6,000 | + 10,000 | + 19,000 | = | + 39,000 | + 12,000 | |
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Approaches of Recording Transactions
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Chapter 3: Books of Prime Entry - Exercises [Page 59]
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Create an accounting equation on the basis of the following transactions:
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