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Page No 6.25:
Question 1:
Prepare Accounting Equation from the following:-
|
|
(₹) |
|
| 1. |
Sandeep started business with Cash |
1,00,000 |
| 2. | Purchased furniture for cash | 5,000 |
| 3. | Purchased goods for cash | 20,000 |
| 4. | Purchased goods on credit | 36,000 |
| 5. | Paid for rent | 700 |
| 6. |
Goods costing ₹ 40,000 sold at a profit of 20% for cash |
|
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Furniture | + | Stock | = | Creditors | ||||
| (i) | Sandeep started business with cash | 1,00,000 | + | 1,00,000 | ||||||
| 1,00,000 | = | + | 1,00,000 | |||||||
| (ii) | Purchased furniture for cash | –5,000 | +5,000 | |||||||
| 95,000 | + | 5,000 | = | + | 1,00,000 | |||||
| (iii) | Purchased goods for cash | –20,000 | +20,000 | |||||||
| 75,000 | + | 5,000 | + | 20,000 | = | + | 1,00,000 | |||
| (iv) | Purchased goods on credit | +36,000 | +36,000 | |||||||
| 75,000 | + | 5,000 | + | 56,000 | = | 36,000 | + | 1,00,000 | ||
| (v) | Rent paid | -700 | –700 | |||||||
| 74,300 | + | 5,000 | + | 56,000 | = | 36,000 | + | 99,300 | ||
| (vi) | Goods costing Rs 40,000 sold at a profit of 20% for cash | +48,000 | -40,000 | +8,000 | ||||||
| 1,22,300 | + | 5,000 | + | 16,000 | = | 36,000 | + | 1,07,300 | ||
Working Note:
WN1 Calculation of Sale Price
Page No 6.25:
Question 2(A):
Show the Accounting Equation on the basis of the following and present a balance sheet on the last new equation balances:
|
|
(₹) |
|
| (i) |
Manu started business with cash |
50,000 |
| (ii) | Bought furniture for | 500 |
| (iii) | Purchased goods on credit | 4,000 |
| (iv) | Sold goods on cash (cost ₹ 500) for | 700 |
| (v) | Received rent | 200 |
| (vi) | Purchased goods for cash | 1,000 |
| (vii) | Withdrew for personal use | 700 |
| (viii) | Paid to creditors | 400 |
| (ix) |
Paid for salaries |
200 |
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Furniture | + | Stock | = | Creditors | ||||
| (i) | Manu started business with cash | +50,000 | +50,000 | |||||||
| 50,000 | = | + | 50,000 | |||||||
| (ii) | Purchased Furniture | –500 | +500 | |||||||
| 49,500 | + | 500 | + | 50,000 | ||||||
| (iii) | Purchased goods on credit | +4,000 | +4,000 | |||||||
| 49,500 | + | 500 | + | 4,000 | = | 4,000 | + | 50,000 | ||
| (iv) | Sold goods costing Rs 500 for Rs 700 | +700 | –500 | +200 (Profit) | ||||||
| 50,200 | + | 500 | + | 3,500 | = | 4,000 | + | 50,200 | ||
| (v) | Rent received | +200 | +200 (Income) | |||||||
| 50,400 | + | 500 | + | 3,500 | = | 4,000 | + | 50,400 | ||
| (vi) | Purchased goods for cash | –1,000 | +1,000 | |||||||
| 49,400 | + | 500 | + | 4,500 | = | 4,000 | + | 50,400 | ||
| (vii) | Withdrew for personal use | –700 | –700 (Drawings) | |||||||
| 48,700 | + | 500 | + | 4,500 | = | 4,000 | + | 49,700 | ||
| (viii) | Paid to creditors | –400 | –400 | |||||||
| 48,300 | + | 500 | + | 4,500 | = | 3,600 | + | 49,700 | ||
| (ix) | Salaries paid | –200 | -200 | |||||||
| 48,100 | + | 500 | + | 4,500 | = | 3,600 | + | 49,500 | ||
|
|
||||||||||
| Balance Sheet as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 3,600 | Cash | 48,100 |
| Capital | 49,500 | Furniture | 500 |
| Stock | 4,500 | ||
| 53,100 | 53,100 | ||
Page No 6.25:
Question 2(B):
Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet:−
1. Started business with Cash ₹ 1,20,000.
2. Purchased a typewriter for Cash for ₹ 8,000 for office use.
3. Purchased goods for ₹ 50,000 for cash.
4. Purchased goods for ₹ 40,000 on credit.
5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit.
6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000.
7. Received ₹ 800 for Commission.
8. Withdrew for private use ₹ 5,000 in cash.
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Typewriter | + | Stock | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash | +1,20,000 | + | 1,20,000 | ||||||||
| 1,20,000 | = | 1,20,000 | ||||||||||
| (ii) | Purchased typewriter for office use | –8,000 | + | 8,000 | ||||||||
| 1,12,000 | + | 8,000 | = | 1,20,000 | ||||||||
| (iii) | Purchased goods for cash | –50,000 | +50,000 | |||||||||
| 62,000 | + | 8,000 | + | 50,000 | = | 1,20,000 | ||||||
| (iv) | Purchased goods on credit | +40,000 | 40,000 | |||||||||
| 62,000 | + | 8,000 | + | 90,000 | = | 40,000 | + | 1,20,000 | ||||
| (v) | Goods costing Rs 60,000 sold for Rs 80,000 on credit | –60,000 | +80,000 | +20,000 (Profit) | ||||||||
| 62,000 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,40,000 | ||
| (vi) | Paid rent Rs 1,500 and salaries Rs 2,000 | –3,500 | –3,500 (Expenses) | |||||||||
| 58,500 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,36,500 | ||
| (vii) | Commission received | +800 | +800 (Income) | |||||||||
| 59,300 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,37,300 | ||
| (viii) | Withdrew cash for private use | –5,000 | –5,000 (Drawings) | |||||||||
| 54,300 | + | 8,000 | + | 30,000 | + | 80,000 | = | 40,000 | + | 1,32,300 | ||
|
|
||||||||||||
| Balance Sheet of Rajaram as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 40,000 | Cash | 54,300 |
| Capital | 1,32,300 | Typewriter | 8,000 |
| Stock | 30,000 | ||
| Debtors | 80,000 | ||
| 1,72,300 | 1,72,300 | ||
Page No 6.26:
Question 3:
Prepare Accounting Equation from the following:
(a) Started business with Cash ₹ 2,00,000.
(b) Purchased goods for Cash ₹ 60,000 and on Credit ₹ 1,50,000.
(c) Sold goods for Cash costing ₹ 40,000 at a profit of 20% and on Credit costing ₹ 72,000 at a profit of 25%.
(d) Paid for Rent ₹ 5,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash | +2,00,000 | +2,00,000 | |||||||
| 2,00,000 | = | 2,00,000 | ||||||||
| (ii) | Purchased Goods for Cash Rs 60,000 and on credit Rs 1,50,000 | –60,000 | +2,10,000 | +1,50,000 | ||||||
| +1,40,000 | + | 2,10,000 | = | 1,50,000 | + | 2,00,000 | ||||
| (iii) | Sold goods for cash costing Rs 40,000 at a profit of 20% and on credit Rs 72,000 at a profit of 25% | +48,000 | –1,12,000 | +90,000 | +26,000 (Profit) | |||||
| +1,88,000 | + | 98,000 | + | 90,000 | = | 1,50,000 | + | 2,26,000 | ||
| (iv) | Rent paid | –5,000 | –5,000 (Expenses) | |||||||
| +1,83,000 | + | 98,000 | + | 90,000 | = | 1,50,000 | + | 2,21,000 | ||
Working Note:
WN1 Calculation of Selling Price of Goods Sold
Total Cost of Goods Sold = 40,000 + 72,000 = Rs 1,12,000
Page No 6.26:
Question 4:
Prepare Accounting Equation from the following:
|
|
(₹) |
|
| (a) |
Kunal started business with cash |
2,50,000 |
| (b) | He purchased furniture for cash | 35,000 |
| (c) | He paid commission | 2,000 |
| (d) | He purchased goods on credit | 40,000 |
| (e) |
He sold goods (Costing ₹ 20,000) for cash |
26,000 |
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Furniture | + | Stock | = | Creditors | ||||
| (i) | Kunal started business with cash | +2,50,000 | + | 2,50,000 | ||||||
| 2,50,000 | = | 2,50,000 | ||||||||
| (ii) | Purchased furniture for cash | –35,000 | +35,000 | |||||||
| 2,15,000 | + | 35,000 | = | 2,50,000 | ||||||
| (iii) | Commission paid | –2,000 | -2,000 (Expense) | |||||||
| 2,13,000 | + | 35,000 | = | + | 2,48,000 | |||||
| (iv) | Purchased goods on credit | +40,000 | +40,000 | |||||||
| 2,13,000 | + | 35,000 | + | 40,000 | = | 40,000 | + | 2,48,000 | ||
| (iv) | Sold goods costing Rs 20,000 for Rs 26,000 | +26,000 | –20,000 | +6,000 (Profit) | ||||||
| 2,39,000 | + | 35,000 | + | 20,000 | = | 40,000 | + | 2,54,000 | ||
Page No 6.26:
Question 5:
Mohit has the following transactions, prepare Accounting Equation:
|
|
(₹) |
|
| (a) | Business started with cash | 1,75,000 |
| (b) | Purchased goods from Rohit | 50,000 |
| (c) | Sold goods on credit to Manish (costing ₹ 17,500) | 20,000 |
| (d) | Purchased furniture for office use | 10,000 |
| (e) | Cash paid to Rohit in full settlement | 48,500 |
| (f) | Cash received from Manish | 20,000 |
| (g) | Rent paid | 1,000 |
| (h) | Cash withdrew for personal use |
3,000 |
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock |
+
|
Debtors | Furniture | = | Creditors | |||||
| (i) | Started business with cash | +1,75,000 | + | 1,75,000 | ||||||||
| 1,75,000 | = | + | 1,75,000 | |||||||||
| (ii) | Purchased goods from Rohit | +50,000 | +50,000 | |||||||||
| 1,75,000 | + | 50,000 | = | 50,000 | + | 1,75,000 | ||||||
| (iii) | Sold goods costing Rs 17,500 for Rs 20,000 to Manish | –17,500 | +20,000 | +2,500 (Profit) | ||||||||
| 1,75,000 | + | 32,500 | + | 20,000 | = | 50,000 | + | 1,77,500 | ||||
| (iv) | Purchased furniture for office use | –10,000 | +10,000 | |||||||||
| 1,65,000 | + | 32,500 | + | 20,000 | + | 10,000 | = | 50,000 | + | 1,77,500 | ||
| (v) | Cash paid in full settlement to Rohit | –48,500 | –50,000 | +1,500 (Gain) | ||||||||
| 1,16,500 | + | 32,500 | + | 20,000 | + | 10,000 | = | 0 | + | 1,79,000 | ||
| (vi) | Cash received from Manish | +20,000 | –20,000 | |||||||||
| 1,36,500 | + | 32,500 | + | 0 | + | 10,000 | = | + | 1,79,000 | |||
| (vii) | Rent paid | –1,000 | –1,000 (Expense) | |||||||||
| 1,35,500 | + | 32,500 | + | + | 10,000 | = | + | 1,78,000 | ||||
| (viii) | Withdrew cash for private use | –3,000 | –3,000 (Drawings) | |||||||||
| 1,32,500 | + | 32,500 | + | + | 10,000 | = | + | 1,75,000 | ||||
Page No 6.26:
Question 6:
What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash ₹ 1,80,000.
(ii) Purchased goods for cash ₹ 60,000 and on credit ₹ 30,000.
(iii) Sold goods for cash ₹ 40,000; costing ₹ 24,000.
(iv) Rent paid ₹ 5,000; and rent outstanding ₹ 2,000.
(v) Sold goods on credit ₹ 50,000 (costing ₹ 38,000).
(vi) Salary paid in advance ₹ 3,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||||
| Cash | + | Stock | + | Debtors | Prepaid Salary | = | Creditors | + | Outstanding Rent | |||||
| (i) | Harish started business with cash | +1,80,000 | + | 1,80,000 | ||||||||||
| 1,80,000 | = | 1,80,000 | ||||||||||||
| (ii) | Purchased goods for cash Rs 60,000 and on credit Rs 30,000 | –60,000 | +90,000 | +30,000 | ||||||||||
| 1,20,000 | + | 90,000 | = | 30,000 | + | 1,80,000 | ||||||||
| (iii) | Sold goods costing Rs 24,000 for Rs 40,000 | +40,000 | –24,000 | +16,000 (Profit) | ||||||||||
| 1,60,000 | + | 66,000 | = | 30,000 | + | 1,96,000 | ||||||||
| (iv) | Rent paid Rs 5,000 and outstanding Rs 2,000 | –5,000 | +2,000 | –7,000 (Expense) | ||||||||||
| 1,55,000 | + | 66,000 | = | 30,000 | + | 2,000 | + | 1,89,000 | ||||||
| (v) | Goods costing Rs 38,000 sold on credit for Rs 50,000 | –38,000 | +50,000 | +12,000 (Profit) | ||||||||||
| 1,55,000 | + | 28,000 | + | 50,000 | = | 30,000 | + | 2,000 | + | 2,01,000 | ||||
| (vi) | Salary paid in advance | –3,000 | +3,000 | |||||||||||
| 1,52,000 | + | 28,000 | + | 50,000 | + | 3,000 | = | 30,000 | + | 2,000 | + | 2,01,000 | ||
Page No 6.26:
Question 7:
Use Accounting Equation to show the effect of the following transactions of M/s Royal Traders:
|
|
(₹) |
|
| (a) | Started Business with Cash | 1,20,000 |
| (b) | Purchased goods for cash | 10,000 |
| (c) | Rent received | 5,000 |
| (d) | Salary outstanding | 2,000 |
| (e) | Received interest | 700 |
| (f) | Sold goods for cash (costing ₹ 5,000) | 7,000 |
| (g) | Goods destroyed by fire |
500 |
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock |
|
= | Outstanding Salary | |||||
| (a) | Started business with cash | +1,20,000 | + | 1,20,000 | ||||||
| 1,20,000 | = | 1,20,000 | ||||||||
| (b) | Purchased goods for cash | –10,000 | +10,000 | |||||||
| 1,10,000 | + | 10,000 | = | 1,20,000 | ||||||
| (c) | Rent received | +5,000 | +5,000 (Income) | |||||||
| 1,15,000 | + | 10,000 | = | 1,25,000 | ||||||
| (d) | Outstanding salary | +2,000 | –2,000 (Expense) | |||||||
| 1,15,000 | + | 10,000 | = | 2,000 | + | 1,23,000 | ||||
| (e) | Interest received | +700 | +700 (Income) | |||||||
| 1,15,700 | + | 10,000 | = | 2,000 | + | 1,23,700 | ||||
| (f) | Sold goods costing Rs 5,000 for Rs 7,000 | +7,000 | –5,000 | +2,000 (Profit) | ||||||
| 1,22,700 | + | 5,000 | = | 2,000 | + | 1,25,700 | ||||
| (g) | Goods destroyed by fire | –500 | –500 | |||||||
| 1,22,700 | + | 4,500 | = | 2,000 | + | 1,25,200 | ||||
Page No 6.27:
Question 8(A):
Prepare Accounting Equation from the following :−
1. Started business with cash ₹ 75,000 and goods ₹ 25,000.
2. Paid for Rent ₹ 2,000.
3. Bought goods for cash ₹ 30,000 and on credit for ₹ 44,000.
4. Goods costing ₹ 50,000 sold at a profit of 25%, out of which ₹ 27,500 received in Cash.
5. Purchased a Motor-cycle for personal use ₹ 20,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash and goods | +75,000 | + | 25,000 | = | + | 1,00,000 | |||
| 75,000 | + | 25,000 | = | 1,00,000 | ||||||
| (ii) | Rent paid | –2,000 | –2,000 (Expense) | |||||||
| 73,000 | + | 25,000 | = | 98,000 | ||||||
| (iii) | Bought goods for cash and on credit | –30,000 | +74,000 | +44,000 | ||||||
| 43,000 | + | 99,000 | = | 44,000 | + | 98,000 | ||||
| (iv) | Goods costing Rs 50,000 sold at a profit of 25% out of which Rs 27,500 received in cash | +27,500 | –50,000 | +35,000 | +12,500 (Profit) | |||||
| 70,500 | + | 49,000 | + | 35,000 | = | 44,000 | + | 1,10,500 | ||
| (v) | Purchased motor cycle for personal use | –20,000 | –20,000 (Drawings) | |||||||
| 50,500 | + | 49,000 | + | 35,000 | = | 44,000 | + | 90,500 | ||
Working Note:
WN1 Calculation of Selling Price
Page No 6.27:
Question 8(B):
Prepare Accounting Equation from the following and also prepare a Balance Sheet:-
1. Raghu started business with Cash ₹1,50,000.
2. Bought goods for cash ₹80,000 and on credit for ₹40,000.
3. Goods costing ₹75,000 sold at a profit of 33%. Half the payment received in cash.
4. Goods costing ₹10,000 sold for ₹12,000 on credit.
5. Paid for Rent ₹2,000 and for salaries ₹4,000.
6. Goods costing ₹20,000 sold for ₹18,500 for Cash.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock |
+ |
Debtors | = | Creditors | ||||
| (i) | Raghu started business with cash | +1,50,000 | + | 1,50,000 | ||||||
| 1,50,000 | = | + | 1,50,000 | |||||||
| (ii) | Purchase goods for cash and on credit | –80,000 | +1,20,000 | +40,000 | ||||||
| 70,000 | + | 1,20,000 | = | 40,000 | + | 1,50,000 | ||||
| (iii) | Goods costing Rs 75,000 sold at a profit of . Half amount was received in cash. | +50,000 | –75,000 | +50,000 | +25,000 (Profit) | |||||
| 1,20,000 | + | 45,000 | + | 50,000 | = | 40,000 | + | 1,75,000 | ||
| (iv) | Goods costing Rs 10,000 sold for Rs 12,000 on credit | –10,000 | +12,000 | +2,000 (Profit) | ||||||
| 1,20,000 | + | 35,000 | + | 62,000 | = | 40,000 | + | 1,77,000 | ||
| (v) | Rent and salaries paid | –6,000 | –6,000 (Expense) | |||||||
| 1,14,000 | + | 35,000 | + | 62,000 | = | 40,000 | + | 1,71,000 | ||
| (vi) | Goods costing Rs 20,000 sold for Rs 18,500 cash | +18,500 | –20,000 | –1,500 (Loss) | ||||||
| 1,32,500 | + | 15,000 | + | 62,000 | = | 40,000 | + | 1,69,500 | ||
Working Note:
WN1 Calculation of Selling Price
| Balance Sheet of Raghu as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 40,000 | Cash | 1,32,500 |
| Capital | 1,69,500 | Stock | 15,000 |
| Debtors | 62,000 | ||
| 2,09,500 | 2,09,500 | ||
Page No 6.27:
Question 9:
If the Capital of a business is ₹ 1,20,000 and Outside liabilities are ₹ 20,000, calculate total assets of the business.
Answer:
| Assets | = | Liabilities + Capital |
| = | 20,000 + 1,20,000 | |
| = | Rs 1,40,000 |
Page No 6.27:
Question 10:
If total assets of a business are ₹ 1,30,000 and capital is ₹ 80,000, calculate creditors.
Answer:
| Assets | = | Liabilities + Capital |
| 1,30,000 | = | Liabilities + 80,000 |
| Liabilities | = | 1,30,000 – 80,000 |
| = | Rs 50,000 |
It is assumed that creditors are the only liability of the organisation, thus, Rs 50,000 are the creditors.
Page No 6.28:
Question 11:
'A' commenced his cloth business on 1st April, 2011 with a capital of ₹ 3,00,000. On 31st March, 2012 his assets were worth ₹ 5,00,000 and liabilities ₹ 1,00,000. Find out his closing capital and profits earned during the year.
Answer:
Opening Capital (Capital as on March 31, 2011) = Rs 3,00,000
Page No 6.28:
Question 12(A):
Yogesh commenced business on 1st April, 2011 with a Capital of ₹ 5,00,000 and a loan of ₹ 1,00,000 borrowed from Citi Bank. On 31st March, 2012, his assets were ₹ 8,00,000. Calculate his closing capital and profits earned during the year.
Answer:
Opening Capital (Capital as on 1st April, 2011) = Rs 5,00,000
*It is assumed that loan borrowed from Citi Bank has not been paid till the end of the accounting year.
Page No 6.28:
Question 12(B):
If in the above case, the proprietor had introduced fresh capital of ₹ 40,000 and had withdrawn ₹ 10,000 for personal purposes, calculate his profits.
Answer:
Opening Capital (Capital as on 1st April, 2011) = Rs 5,00,000
Page No 6.28:
Question 13:
Give one example of each of the following transactions:
(i) Increase in an asset and a liability.
(ii) Decrease in an asset and a liability.
(iii) Increase in assets and capital.
(iv) Decrease in assets and capital.
Answer:
| Effect of Transaction | Example |
| (i) Increase in an asset and a liability | Goods purchased on credit |
| (ii) Decrease in an asset and a liability | Cash paid to creditors |
| (iii) Increase in assets and capital | Additional capital brought in by the proprietor |
| (iv) Decrease in assets and capital | Salary paid in Cash |
Page No 6.28:
Question 14:
On which side the increase in the following accounts will be recorded? Also mention the nature of account:−
| 1. Furniture | 5. Proprietor's Account |
| 2. Rent Paid | 6. Debtor |
| 3. Commission Received | 7. Creditor |
| 4. Salary Paid |
Answer:
| Accounts | Increase Recorded at Side | Nature |
| 1. Furniture | Debit | Asset |
| 2. Rent Paid | Debit | Expense |
| 3. Commission Received | Credit | Income |
| 4. Salary Paid | Debit | Expense |
| 5. Proprietor’s Account | Credit | Capital |
| 6. Debtor | Debit | Asset |
| 7. Creditor | Credit | Liability |
Page No 6.28:
Question 15:
On which side the decrease in the following accounts will be recorded? Also mention the nature of account:−
| 1. | Cash | 4. | Outstanding Rent |
| 2. | Bank Overdraft | 5. | Prepaid Insurance |
| 3. | Rent Paid | 6. | Manoj, Proprietor of the business |
Answer:
| Accounts | Decrease Recorded at Side | Nature |
| 1. Cash | Credit | Asset |
| 2. Bank Overdraft | Debit | Liability |
| 3. Rent Paid | Credit | Expense |
| 4. Outstanding Rent | Debit | Liability |
| 5. Prepaid Insurance | Credit | Asset |
| 6. Manoj, Proprietor of the business | Debit | Capital |
Page No 6.28:
Question 16:
From the following transactions, state the nature of accounts and state the accounts which will be debited and credited:
1. Ganesh started business with Cash ₹ 2,00,000.
2. Purchased goods for Cash ₹ 60,000.
3. Sold goods for cash ₹ 75,000.
4. Purchased goods from Nakul on Credit for ₹ 80,000.
5. Sold goods to Bhushan on Credit for ₹ 50,000.
6. Paid Cash to Nakul ₹ 20,000.
7. Received Cash from Bhushan ₹ 10,000.
8. Paid salary ₹ 20,000.
Answer:
|
Transactions |
Nature of Account |
| Ganesh started business with cash | Cash A/c- Debit (Asset) Capital A/c- Credit (Liability) |
| Purchased goods for cash |
Purchases- Debit (Expense) Cash A/c- Credit (Asset) |
| Sold goods for cash |
Cash A/c- Debit (Asset) Sales A/c- Credit (Revenue) |
| Purchased goods from Nakul on credit | Purchases A/c- Debit (Expense) Nakul A/c- Credit (Liability) |
| Sold goods to Bhushan on credit |
Bhushan A/c- Debit (Asset) Sales A/c- Credit (Revenue) |
| Paid cash to Nakul | Nakul A/c- Debit (Liability) Cash A/c- Credit (Asset) |
| Received Cash from Bhushan | Cash A/c- Debit (Asset) Bhushan A/c- Credit (Asset) |
| Paid salary | Salary A/c- Debit (Expense) Cash A/c- Credit (Asset) |
Page No 6.29:
Question 17:
Open 'T' shape account for Machinery and write the following on the proper side:
|
|
(₹) |
|
| 1. | Machinery purchased for |
5,00,000 |
| 2. | Machinery sold | 1,20,000 |
| 3. | Machinery discarded | 50,000 |
| 4. | New Machinery purchased | 2,00,000 |
| 5. | Machinery destroyed |
40,000 |
Answer:
As we know, Machinery Account is an asset, so, increase in machinery will be recorded on the debit side while decrease in machinery will be recorded on the credit side of the Machinery Account.
| Machinery Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record increase in Machinery on this side- | Record decrease in Machinery on this side- | ||||
| 1. Machinery purchased for | 5,00,000 | 2. Machinery sold | 1,20,000 | ||
| 4. New Machinery purchased | 2,00,000 | 3. Machinery discarded | 50,000 | ||
| 5. Machinery destroyed | 40,000 | ||||
| Total | 7,00,000 | Total | 2,10,000 | ||
| Balance | 4,90,000 | ||||
| 7,00,000 | 7,00,000 | ||||
Page No 6.29:
Question 18:
Open 'T' shape account of our creditor 'Raghubir' and write the following transactions on the proper side:−
1. Purchased goods from Raghubir on credit for ₹ 50,000.
2. Returned goods to Raghubir for ₹ 5,000.
3. Paid to Raghubir ₹ 30,000.
4. Purchased goods from Raghubir on credit for ₹ 16,000.
5. Paid to Raghubir ₹ 20,000.
Answer:
Raghubir is a creditor, which means, it is a liability for the business. As we know, increase in liability is recorded on the credit side while decrease in liability will be shown on the debit side of the concerned liability account.
| Raghubir Account (Creditors) | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) |
Particulars | Amount (Rs) |
||
| Record decrease in Creditors on this side- | Record increase in Creditors on this side- |
||||
| 2. Returned goods to Raghubir | 5,000 | 1. Purchased goods on credit from Raghubir | 50,000 | ||
| 3. Paid to Raghubir | 30,000 | 4. Purchased goods on credit from Raghubir | 16,000 | ||
| 5. Paid to Raghubir | 20,000 | ||||
| Total | 55,000 | Total | 66,000 | ||
| Balance | 11,000 | ||||
| 66,000 | 66,000 | ||||
Page No 6.29:
Question 19:
Put the following on the proper side of Cash account, Debtor's account and Creditor's account:
(a) Sold goods for cash ₹ 60,000.
(b) Sold goods to Hari on credit ₹ 20,000.
(c) Purchased goods from Krishan on credit ₹ 36,000.
(d) Purchased goods from Krishan for cash ₹ 10,000.
(e) Cash received from Hari ₹ 15,000.
(f) Cash paid to Krishan ₹ 28,000.
Answer:
Increase in Cash (being an asset) will be shown on the debit side and decrease in cash will be recorded on the credit side of the Cash Account.
|
Cash Account |
|||||
|
Dr. |
|
Cr. |
|||
|
Particulars |
Amount (Rs) |
Particulars |
Amount (Rs) |
||
|
Record increase in Cash on this side- |
|
Record decrease in Cash on this side- |
|
||
|
(a) Sold goods for cash |
60,000 |
(d) Purchased goods for cash |
10,000 |
||
|
(e) Cash received from Hari |
15,000 |
(f) Cash paid to Krishan |
28,000 |
||
|
Total |
75,000 |
Total |
38,000 |
||
|
|
|
Balance |
37,000 |
||
|
|
75,000 |
|
75,000 |
||
|
|
|
|
|
||
Increase in Debtors (being an asset) will be shown on the debit side and decrease in them will be recorded on the credit side of the Debtors Account.
| Debtors Account | ||||
| Dr. | Cr. | |||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | |
| Record increase in Debtors on this side- | Record decrease in Debtors on this side- | |||
| (b) Sold goods on credit | 20,000 | (e) Cash received from debtor | 15,000 | |
| Total | 20,000 | Total | 15,000 | |
| Balance | 5,000 | |||
| 20,000 | 20,000 | |||
Increase in Creditors (being a liability) will be shown on the credit side and decrease in the creditors will be recorded on the debit side of the Creditors Account.
| Creditors Account | ||||
| Dr. | Cr. | |||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | |
| Record decrease in Creditors on this side- | Record increase in Creditors on this side- | |||
| (f) Cash paid to creditor | 28,000 | (c) Purchased goods on credit | 36,000 | |
| Total | 28,000 | Total | 36,000 | |
| Balance | 8,000 | |||
| 36,000 | 36,000 | |||
Page No 6.29:
Question 20:
From the following transactions prepare the Proprietor's Account in 'T' shape:
|
2013 |
(₹) |
|
| April 1 | Commenced business with Cash |
5,00,000 |
| August 1 | Introduced additional Capital | 1,00,000 |
| Dec. 31 | Drawings | 40,000 |
| 2014 | ||
| Feb. 28 | Drawings | 20,000 |
| March 31 | Net Profit shown by Profit & Loss A/c |
1,25,000 |
Answer:
| Capital Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record decrease in Capital on this side- | Record increase in Capital on this side- | ||||
| Dec. 31: Drawings | 40,000 | April 01: Commenced business | 5,00,000 | ||
| Feb. 28: Drawings | 20,000 | Aug. 01: Introduced additional capital | 1,00,000 | ||
| March 31: Profit earned | 1,25,000 | ||||
| Total | 60,000 | Total | 7,25,000 | ||
| Balance | 6,65,000 | ||||
| 7,25,000 | 7,25,000 | ||||
Page No 6.30:
Question 21:
Prepare the Accounting Equation on the basis of the following:
(a) Started business with cash ₹ 1,40,000 and Stock ₹ 2,50,000.
(b) Sold goods (costing ₹ 50,000) at a profit of 25% on the cost.
(c) Deposited into bank account ₹ 1,80,000.
(d) Purchased goods from Mohan ₹ 80,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | + | Bank | = | Creditors | ||||
| (i) | Started business with cash and goods | +1,40,000 | +2,50,000 | +3,90,000 | ||||||
| 1,40,000 | + | 2,50,000 | = | 3,90,000 | ||||||
| (ii) | Goods (costing Rs 50,000) sold at a profit of 25% on cost | +62,500 | –50,000 | +12,500 (Profit) | ||||||
| 2,02,500 | + | 2,00,000 | = | 4,02,500 | ||||||
| (iii) | Deposited into bank | –1,80,000 | +1,80,000 | |||||||
| 22,500 | + | 2,00,000 | + | 1,80,000 | = | 4,02,500 | ||||
| (iv) | Purchased goods from Mohan | +80,000 | +80,000 | |||||||
| 22,500 | + | 2,80,000 | + | 1,80,000 | = | 80,000 | + | 4,02,500 | ||
Working Note:
WN1 Calculation of Selling Price
Page No 6.30:
Question 22:
Prepare Accounting Equation on the basis of the following transactions:
(a) Started business with cash ₹ 70,000.
(b) Credit purchase of goods ₹ 18,000.
(c) Payment made to creditors in full settlement ₹ 17,500.
(d) Purchase of machinery for cash ₹ 20,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | + | Machinery | = | Creditors | ||||
| (i) | Started business with cash | +70,000 | +70,000 | |||||||
| 70,000 | = | 70,000 | ||||||||
| (ii) | Purchased goods on credit | +18,000 | +18,000 | |||||||
| 70,000 | + | 18,000 | = | 18,000 | + | 70,000 | ||||
| (iii) | Payment to creditors in full settlement | –17,500 | –18,000 | +500 (Gain) | ||||||
| 52,500 | + | 18,000 | = | 0 | + | 70,500 | ||||
| (iv) | Purchased machinery for cash | –20,000 | + | 20,000 | ||||||
| 32,500 | + | 18,000 | + | 20,000 | = | 0 | + | 70,500 | ||
Page No 6.30:
Question 23:
Prepare accounting equation from the following:
(a) Started business with cash ₹ 50,000 and goods ₹ 30,000.
(b) Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000.
(c) Goods costing ₹ 40,000 were sold for ₹ 55,000 for cash.
(d) Withdrew cash for personal use ₹ 10,000.
(e) Rent outstanding ₹ 2,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | = | Creditors | + | Outstanding Rent | ||||
| (i) | Started business with cash and goods | +50,000 | +30,000 | +80,000 | ||||||
| 50,000 | + | 30,000 | = | + | 80,000 | |||||
| (ii) | Purchased goods for cash and on credit from Karan | –30,000 | +50,000 | +20,000 | ||||||
| 20,000 | + | 80,000 | = | 20,000 | + | 80,000 | ||||
| (iii) | Goods costing Rs 40,000 sold for Rs 55,000 | +55,000 | –40,000 | +15,000 (Profit) | ||||||
| 75,000 | + | 40,000 | = | 20,000 | + | 95,000 | ||||
| (iv) | Withdrew cash for personal use | –10,000 | –10,000 (Drawings) | |||||||
| 65,000 | + | 40,000 | = | 20,000 | + | 85,000 | ||||
| (v) | Outstanding Rent | +2,000 | –2,000 (Expense) | |||||||
| 65,000 | + | 40,000 | = | 20,000 | + | 2,000 | + | 83,000 | ||
Page No 6.30:
Question 24:
Show the accounting equation on the basis of the following transactions and present a Balance Sheet of the last new equation balance:
|
|
(₹) |
|
| (i) |
Mohan commenced business with |
70,000 |
| (ii) | Purchased goods on Credit | 14,000 |
| (iii) | Withdrew for private use | 1,700 |
| (iv) | Purchased goods for Cash | 10,000 |
| (v) | Paid wages | 300 |
| (vi) | Paid to Creditors | 10,000 |
| (vii) | Sold goods on Credit at par | 15,000 |
| (viii) | Sold goods for Cash (cost price was ₹ 3,000) | 4,000 |
| (ix) | Purchased furniture for cash | 500 |
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock | + | Debtors | + | Furniture | = | Creditors | ||||
| (i) | Started business with cash | +70,000 | + | 70,000 | ||||||||
| 70,000 | = | 70,000 | ||||||||||
| (ii) | Purchased goods on credit | +14,000 | +14,000 | |||||||||
| 70,000 | + | 14,000 | = | 14,000 | + | 70,000 | ||||||
| (iii) | Withdrew for private use | –1,700 | –1,700 (Drawings) | |||||||||
| 68,300 | + | 14,000 | = | 14,000 | + | 68,300 | ||||||
| (iv) | Purchased goods for cash | –10,000 | +10,000 | |||||||||
| 58,300 | + | 24,000 | = | 14,000 | + | 68,300 | ||||||
| (v) | Wages paid | –300 | –300 (Expense) | |||||||||
| 58,000 | + | 24,000 | = | 14,000 | + | 68,000 | ||||||
| (vi) | Paid to creditors | –10,000 | –10,000 | |||||||||
| 48,000 | + | 24,000 | = | 4,000 | + | 68,000 | ||||||
| (vii) | Sold goods on credit at par | –15,000 | +15,000 | |||||||||
| 48,000 | + | 9,000 | + | 15,000 | = | 4,000 | + | 68,000 | ||||
| (viii) | Sold goods (costing Rs 3,000) for Rs 4,000 | +4,000 | –3,000 | +1,000 (Profit) | ||||||||
| 52,000 | + | 6,000 | + | 15,000 | = | 4,000 | + | 69,000 | ||||
| (ix) | Furniture purchased | –500 | +500 | |||||||||
| 51,500 | + | 6,000 | + | 15,000 | + | 500 | = | 4,000 | + | 69,000 | ||
|
|
||||||||||||
| Balance Sheet as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 4,000 | Cash | 51,500 |
| Capital | 69,000 | Stock | 6,000 |
| Debtors | 15,000 | ||
| Furniture | 500 | ||
| 73,000 | 73,000 | ||
Page No 6.31:
Question 25:
Prove that the accounting equation is satisfied in the following transactions:−
|
(₹) |
||
| (a) | Brij Mohan commenced business with Cash | 1,00,000 |
| (b) | Bought goods for Cash | 60,000 |
| (c) | rd of the above goods sold at a profit of 20% on cost. Half the payment recieved in Cash | |
| (d) | Purchased typewritter for office use | 15,000 |
| (e) | Purchased goods on Credit from X | 25,000 |
| (f) | Paid to X | 15,000 |
| (g) | Paid Salary | 3,000 |
| (h) | Received commission | 500 |
| (i) | Sold goods for Cash (Cost ₹ 50,000) |
60,000 |
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock | + | Typewriter | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash | +1,00,000 | + | 1,00,000 | ||||||||
| 1,00,000 | = | 1,00,000 | ||||||||||
| (ii) | Purchased goods for cash | –60,000 | +60,000 | |||||||||
| 40,000 | + | 60,000 | = | 1,00,000 | ||||||||
| (iii) | 1/3rd of the goods sold at a profit of 20% on cost. Half payment received in cash | +12,000 | –20,000 | +12,000 | +4,000 (Profit) | |||||||
| 52,000 | + | 40,000 | + | 12,000 | = | + | 1,04,000 | |||||
| (iv) | Purchased typewriter for office use | –15,000 | +15,000 | |||||||||
| 37,000 | + | 40,000 | + | 15,000 | + | 12,000 | = | + | 1,04,000 | |||
| (v) | Purchased goods on credit from X | +25,000 | +25,000 | |||||||||
| 37,000 | + | 65,000 | + | 15,000 | + | 12,000 | = | 25,000 | + | 1,04,000 | ||
| (vi) | Paid to X | –15,000 | –15,000 | |||||||||
| 22,000 | + | 65,000 | + | 15,000 | + | 12,000 | = | 10,000 | + | 1,04,000 | ||
| (vii) | Paid salary | –3,000 | –3,000 (Expense) | |||||||||
| 19,000 | + | 65,000 | + | 15,000 | + | 12,000 | = | 10,000 | + | 1,01,000 | ||
| (viii) | Received commission | +500 | +500 | |||||||||
| 19,500 | + | 65,000 | + | 15,000 | + | 12,000 | = | 10,000 | + | 1,01,500 | ||
| (ix) | Sold goods (costing Rs 50,000) for cash | +60,000 | –50,000 | +10,000 (Profit) | ||||||||
| 79,500 | + | 15,000 | + | 15,000 | + | 12,000 | = | 10,000 | + | 1,11,500 | ||
Working Note:
WN1 Calculation of Selling Price
Page No 6.31:
Question 26:
Show the accounting equation on the basis of the following transactions and also show the Balance Sheet:
(i) Started business with Cash ₹ 60,000 and Goods ₹ 30,000.
(ii) Purchased goods for Cash ₹ 40,000 and on Credit ₹ 25,000.
(iii) Goods costing ₹ 48,000 sold at a profit of 33%. Three-fourth payment received in Cash
(iv) Goods costing ₹ 20,000 sold at a loss of 5%, out of which ₹ 12,000 received in Cash.
(v) Paid Rent ₹ 4,000 and Salary ₹ 6,000.
(vi) Received Cash from Debtors ₹ 15,000.
(vii) Paid telephone bill amounting to ₹ 800.
Answer:
| ACCOUNTING EQUATION | ||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||
| Cash | + | Stock | + | Debtors | = | Creditors | ||||
| (i) | Started business with cash and goods | +60,000 | +30,000 | +90,000 | ||||||
| 60,000 | + | 30,000 | = | 90,000 | ||||||
| (ii) | Purchased goods for cash and credit | –40,000 | +65,000 | +25,000 | ||||||
| 20,000 | + | 95,000 | = | 25,000 | + | 90,000 | ||||
| (iii) | Goods costing Rs 48,000 sold at a profit of . 3/4th payment received in cash | +48,000 | –48,000 | +16,000 | +16,000 | |||||
| 68,000 | + | 47,000 | + | 16,000 | = | 25,000 | + | 1,06,000 | ||
| (iv) | Goods costing Rs 20,000 sold at a loss of 5% out of which Rs 12,000 were received in cash | +12,000 | –20,000 | +7,000 | –1,000 (Loss) | |||||
| 80,000 | + | 27,000 | + | 23,000 | = | 25,000 | + | 1,05,000 | ||
| (v) | Paid rent and salary | –10,000 | –10,000 (Expense) | |||||||
| 70,000 | + | 27,000 | + | 23,000 | = | 25,000 | + | 95,000 | ||
| (vi) | Received cash from debtors | +15,000 | –15,000 | |||||||
| 85,000 | + | 27,000 | + | 8,000 | = | 25,000 | + | 95,000 | ||
| (vii) | Paid telephone bill | –800 | –800 (Expense) | |||||||
| 84,200 | + | 27,000 | + | 8,000 | = | 25,000 | + | 94,200 | ||
|
|
||||||||||
Working Note:
WN1 Calculation of Selling Price
WN2 Calculation of Selling Price
| Balance Sheet as on …… |
|||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Creditors | 25,000 | Cash | 84,200 |
| Capital | 94,200 | Stock | 27,000 |
| Debtors | 8,000 | ||
| 1,19,200 | 1,19,200 | ||
Page No 6.31:
Question 27:
Show the accounting equation on the basis of following transactions:
(i) Commenced business with Cash ₹ 20,000; Goods ₹ 50,000 and Furniture ₹ 30,000.
(ii) Purchased goods from Gopal on Credit ₹ 40,000.
(iii) Sold goods for Cash ₹ 40,000 (costing ₹ 30,000).
(iv) Sold goods to Ram on Credit ₹ 65,000 (costing ₹ 50,000).
(v) Withdrew for personal use goods costing ₹ 5,000.
(vi) Purchased typewriter for personal use of the proprietor ₹ 20,000.
(vii) Purchased chairs for office use for Cash ₹ 10,000.
(viii) Paid for printing ₹ 500 and received Commission ₹ 1,200.
(ix) Introduced fresh Capital ₹ 40,000.
(x) Paid to Gopal ₹ 30,000.
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock | + | Furniture | Debtors | = | Creditors | |||||
| (i) | Started business with cash, goods and furniture | +20,000 | +50,000 | +30,000 | + | 1,00,000 | ||||||
| 20,000 | + | 50,000 | + | 30,000 | = | 1,00,000 | ||||||
| (ii) | Purchased goods on credit from Gopal | +40,000 | +40,000 | |||||||||
| 20,000 | + | 90,000 | + | 30,000 | = | 40,000 | + | 1,00,000 | ||||
| (iii) | Sold goods (costing Rs 30,000) for cash Rs 40,000 | +40,000 | –30,000 | +10,000 (Profit) | ||||||||
| 60,000 | + | 60,000 | + | 30,000 | = | 40,000 | + | 1,10,000 | ||||
| (iv) | Sold goods (costing Rs 50,000) to Ram for Rs 65,000 | –50,000 | +65,000 | +15,000 (Profit) | ||||||||
| 60,000 | + | 10,000 | + | 30,000 | + | 65,000 | = | 40,000 | + | 1,25,000 | ||
| (v) | Goods withdrawn for personal use | –5,000 | –5,000 (Drawings) | |||||||||
| 60,000 | + | 5,000 | + | 30,000 | + | 65,000 | = | 40,000 | + | 1,20,000 | ||
| (vi) | Purchased typewriter for personal use | –20,000 | –20,000 (Drawings) | |||||||||
| 40,000 | + | 5,000 | + | 30,000 | + | 65,000 | = | 40,000 | + | 1,00,000 | ||
| (vii) | Purchased chairs for office use | –10,000 | +10,000 | |||||||||
| 30,000 | + | 5,000 | + | 40,000 | + | 65,000 | = | 40,000 | + | 1,00,000 | ||
| (viii) | Paid for printing Rs 500 and received commission Rs 1,200 | –500 +1,200 | –500 (Expense) +1,200 (Income) | |||||||||
| 30,700 | + | 5,000 | + | 40,000 | + | 65,000 | = | 40,000 | + | 1,00,700 | ||
| (ix) | Introduced additional capital | +40,000 | +40,000 (Fresh Capital) | |||||||||
| 70,700 | + | 5,000 | + | 40,000 | + | 65,000 | = | 40,000 | + | 1,40,700 | ||
| (x) | Paid to Gopal | –30,000 | –30,000 | |||||||||
| 40,700 | + | 5,000 | + | 40,000 | + | 65,000 | = | 10,000 | + | 1,40,700 | ||
Page No 6.32:
Question 28:
X started a business on 1st April, 2013 with a Capital of ₹ 1,00,000 and a loan of ₹ 50,000 from the bank. On 31st March, 2014, his assets were ₹ 1,75,000. Find out his Capital as on 31st March, 2014 and profit earned during the year 2013-14.
Answer:
Opening Capital (Capital as on 1st April, 2013) = Rs 1,00,000
Page No 6.32:
Question 29:
Y started a business on 1st April, 2013 with a Capital of ₹ 2,00,000 and a loan of ₹ 75,000 from the bank. During the year, he had introduced additional capital of ₹ 60,000 and had withdrawn ₹ 36,000 for personal purposes. On 31st March, 2014 his assets were ₹ 3,80,000. Find out his Capital as on 31st March, 2014 and profit earned during the year 2013-14.
Answer:
Opening Capital (Capital as on 1st April, 2013) = Rs 2,00,000
Page No 6.32:
Question 30:
On which side will the increase in the following accounts be recorded? Also mention the nature of account:
| 1. | Furniture | 5. | Proprietor's Account |
| 2. | Wages paid | 6. | Debtor |
| 3. | Rent Received | 7. | Prepaid Insurance |
| 4. | Cash | 8. | Outstanding Salary |
Answer:
| Accounts | Increase Recorded at Side | Nature |
| 1. Furniture | Debit | Asset |
| 2. Wages Paid | Debit | Expense |
| 3. Rent Received | Credit | Income |
| 4. Cash | Debit | Asset |
| 5. Proprietor’s Account | Credit | Capital |
| 6. Debtor | Debit | Asset |
| 7. Prepaid Insurance | Debit | Asset |
| 8. Outstanding Salary | Credit | Liability |
Page No 6.32:
Question 31:
Open 'T' shape account for Furniture and write the following on the proper side∶−
| 1. | Furniture purchased for ₹ 50,000 |
| 2. | Furniture sold costing ₹ 20,000 |
| 3. | Furniture destroyed by fire ₹ 16,000 |
| 4. | Furniture again purchased ₹ 32,000 |
| 5. | Old furniture discarded ₹ 2,000 |
| 6. | Value of furniture was reduced by ₹ 5,000 |
Answer:
As we know, Furniture is an asset, so, increase in furniture will be recorded on the debit side while decrease in furniture will be recorded on the credit side of the Furniture Account.
| Furniture Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record increase in Furniture on this side- | Record decrease in Furniture on this side- | ||||
| 1. Furniture purchased | 50,000 | 2. Furniture sold | 20,000 | ||
| 4. Furniture purchased | 32,000 | 3. Furniture destroyed by fire | 16,000 | ||
| 5. Old furniture discarded | 2,000 | ||||
| 6. Value reduced | 5,000 | ||||
| Total | 82,000 | Total | 43,000 | ||
| Balance | 39,000 | ||||
| 82,000 | 82,000 | ||||
Page No 6.32:
Question 32:
Open 'T' shape account of our Creditor 'X' and write the following transactions on the proper side:
|
|
(₹) |
|
| (i) | Purchased goods from X on Credit | 40,000 |
| (ii) | Paid to X | 30,000 |
| (iii) | Returned goods to X | 6,000 |
| (iv) | Purchased goods from X for Cash | 20,000 |
| (v) | Purchased goods from X on Credit | 50,000 |
| (vi) | Paid to X |
45,000 |
Answer:
Increase in Creditors (being a liability) will be shown on the credit side and decrease in the creditors will be recorded on the debit side of the Creditors Account.
| X’s Account (Creditor) | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record decrease in Creditors on this side- | Record increase in Creditors on this side- | ||||
| 2. Paid to X | 30,000 | 1. Purchased goods from X on credit | 40,000 | ||
| 3. Returned goods to X | 6,000 | 5. Purchased goods from X on credit | 50,000 | ||
| 6. Paid to X | 45,000 | ||||
| Total | 81,000 | Total | 90,000 | ||
| Balance | 9,000 | ||||
| 90,000 | 90,000 | ||||
Note: Transaction Number (iv) will not be recorded in Creditors Account as goods are purchased for cash. Thus, there will be no impact on Creditors Account.
Page No 6.33:
Question 33:
Open 'T' shape account of our Debtor 'Ram' and write the following transactions on proper side:−
|
|
(₹) |
|
| (i) | Sold goods to Ram on Credit | 20,000 |
| (ii) | Received from Ram | 15,000 |
| (iii) | Ram returned goods to us | 3,000 |
| (iv) | Again sold goods to Ram on Credit | 10,000 |
| (v) | Ram returned goods to us | 1,000 |
Answer:
Increase in Debtors (being an asset) will be shown on the debit side and decrease in them will be recorded on the credit side of the Debtors Account.
| Ram’s (Debtor) Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record increase in Debtors on this side- | Record decrease in Debtors on this side- | ||||
| 1. Sold goods to Ram on credit | 20,000 | 2. Received from Ram | 15,000 | ||
| 4. Sold goods to Ram on credit | 10,000 | 3. Ram returned goods | 3,000 | ||
| 5. Ram returned goods | 1,000 | ||||
| Total | 30,000 | Total | 19,000 | ||
| Balance c/d | Balance | 11,000 | |||
| 30,000 | 30,000 | ||||
Page No 6.33:
Question 34:
Put the following on the proper side of Cash Account, Debtors's Account and Creditor's Account:-
|
|
(₹) |
|
| (a) | Sold goods to Shankar on Credit | 50,000 |
| (b) | Sold goods to Ghanshyam for Cash | 30,000 |
| (c) | Purchased goods from Mohan on Credit | 25,000 |
| (d) | Received from Shankar | 29,000 |
| (e) | Shankar returned goods | 1,000 |
| (f) | Sold goods to Shankar for Cash | 5,000 |
| (g) | Returned goods to Mohan | 2,000 |
| (h) | Paid Rent | 4,000 |
Answer:
(I) Increase in Cash (being an asset) will be shown on the debit side and decrease in cash will be recorded on the credit side of the Cash Account.
| Cash Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record increase in Cash on this side- | Record decrease in Cash on this side- | ||||
| (b) Sold goods for cash | 30,000 | (h) Paid rent | 4,000 | ||
| (d) Received from Shankar | 29,000 | ||||
| (f) Sold goods for cash | 5,000 | ||||
| Total | 64,000 | Total | 4,000 | ||
| Balance | 60,000 | ||||
| 64,000 | 64,000 | ||||
(II) Increase in Debtors (being an asset) will be shown on the debit side and decrease in them will be recorded on the credit side of the Debtors Account.
| Shankar’s (Debtor) Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record increase in Debtors on this side- |
Record decrease in Debtors on this side- | ||||
| (a) Sold goods to Shankar on credit | 50,000 | (d) Shankar paid | 29,000 | ||
| (e) Shankar returned goods | 1,000 | ||||
| Total | 50,000 | Total | 30,000 | ||
| Balance | 20,000 | ||||
| 50,000 | 50,000 | ||||
(III) Increase in Creditors (being a liability) will be shown on the credit side and decrease in the creditors will be recorded on the debit side of the Creditors Account.
| Mohan’s (Creditor) Account | |||||
| Dr. | Cr. | ||||
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | ||
| Record decrease in Creditors on this side- | Record increase in Creditors on this side- | ||||
| (g) Returned goods to Mohan | 2,000 | (c) Purchased goods
fromMohan on credit
|
25,000 | ||
| Total | 2,000 | Total | 25,000 | ||
| Balance | 23,000 | ||||
| 25,000 | 25,000 | ||||
Page No 6.33:
Question 35:
Prove that accounting equation is satisfied in all the following cases:
(a) Commenced business with cash ₹ 50,000.
(b) Paid rent ₹ 4,000 including ₹ 1,000 as advance.
(c) Bought goods for cash ₹ 30,000 and on credit ₹ 20,000.
(d) Sold the goods bought on credit for ₹ 25,000.
(e) Purchased furniture worth ₹ 10,000 for office use and for ₹ 5,000 for domestic use.
Answer:
| ACCOUNTING EQUATION | ||||||||||||
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Prepaid Rent |
+ | Stock | Furniture | = | Creditors | |||||
| (i) | Started business with cash | +50,000 | +50,000 | |||||||||
| 50,000 | = | + | 50,000 | |||||||||
| (ii) | Paid rent Rs 4,000 including Rs 1,000 as advance | –4,000 | +1,000 | –3,000 (Expense) | ||||||||
| 46,000 | + | 1,000 | = | + | 47,000 | |||||||
| (iii) | Purchased goods for cash Rs 30,000 and on credit Rs 20,000 | –30,000 | +50,000 | +20,000 | ||||||||
| 16,000 | + | 1,000 | + | 50,000 | = | 20,000 | + | 47,000 | ||||
| (iv) | Sold goods (costing Rs 20,000) for Rs 25,000 | +25,000 | –20,000 | +5,000 (Profit) | ||||||||
| 41,000 | + | 1,000 | + | 30,000 | = | 20,000 | + | 52,000 | ||||
| (v) | Purchased furniture Rs 10,000 for office use and Rs 5,000 for domestic use | –15,000 | +10,000 | –5,000 (Drawings) | ||||||||
| 26,000 | + | 1,000 | + | 30,000 | + | 10,000 | = | 20,000 | + | 47,000 | ||
Page No 6.34:
Question 36:
Prepare accounting equation from the following:
(i) Started a business with cash ₹ 1,00,000 and goods worth ₹ 20,000.
(ii) Sold 50% of above goods at a profit of ₹ 2,000 on credit to Ram.
(iii) Rent paid ₹ 5,000.
(iv) Ram paid 50% of his balance in cash.
Answer:
|
|
|
Cash |
+ |
Stock |
+ |
Debtors |
= |
Liabilities |
+ |
Capital |
|
(i) |
Started business with cash and goods |
+1,00,000 |
+ |
20,000 |
|
|
= |
|
+ |
1,20,000 |
|
(ii) |
Sold goods on credit |
0 |
˗ |
10,000 |
+ |
12,000 |
= |
|
+ |
2,000 |
|
|
New Balance |
1,00,000 |
+ |
10,0000 |
+ |
12,000 |
= |
|
+ |
1,22,000 |
|
(iii) |
Rent paid |
˗ 5,000 |
|
|
|
|
= |
|
˗ |
5,000 |
|
|
New Balance |
95,000 |
+ |
10,000 |
+ |
12,000 |
= |
|
+ |
1,17,000 |
|
(iv) |
Ram paid cash |
+ 6,000 |
|
|
˗ |
6,000 |
= |
|
|
|
|
|
New Balance |
1,01,000 |
+ |
10,000 |
+ |
6,000 |
= |
|
+ |
1,17,000 |
|
|
|
|
|
|
|
|
|
|
|
|
View NCERT Solutions for all chapters of Class 13