Prove that the accounting equation satisfied …

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