# Class-11th | Chapter-2 | Accounting Equation | Question No. 6 to 10 | Ts grewal solution | 2020-21

#### Question 6:

Prepare an Accounting Equation and Balance Sheet on the following basis:
(i) Ajeet started business with cash  ` 20,000.
(ii) He purchased furniture for  ` 2,000.
(iii) He paid rent of  ` 200.
(iv) He purchase goods on credit  ` 3,000.
(v) He sold goods (cost price  ` 2,000) for  ` 5,000 on cash.

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Furniture ( `) + Stock ( `) = ( `) (i) Ajit started business  ` 20,000 20,000 = 20,000 20,000 = 20,000 (ii) He purchased furniture for  ` 2,000 – 2,000 + 2,000 = 18,000 + 2,000 = 20,000 (iii) He paid Rent of  ` 200 – 200 = – 200 (expense) 17,800 + 2,000 = 19,800 (iv) He purchased goods on credit  ` 3,000 3,000 = 3,000 17,800 + 2,000 + 3,000 = 3,000 + 19,800 (v) He sold goods (cost price  ` (2,000) for  ` 5,000 on cash 5,000 + + –2,000 = 3,000 (Profit) 22,800 + 2,000 + 1,000 = 3,000 + 22,800

 Assets = 22,800 + 2,000 + 1,000 = ` 25,800 Liabilities = ` 3,000 Capital = ` 22,800 Balance Sheet Liabilities Amount ( `) Assets Amount ( `) Capital 22,800 Cash 22,800 Creditors 3,000 Furniture 2,000 Stock 1,000 25,800 25,800

Page No 5.19:

#### Question 7:

Prepare an Accounting Equation from the following:
(i) Started business with cash  ` 1,00,000.
(ii) Purchased goods for cash  ` 20,000 and on credit  ` 30,000.
(iii) Sold goods for cash costing  ` 10,000 and on credit costing  ` 15,000 both at a profit of 20%.

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Stock ( `) + Debtors ( `) = Creditors ( `) ( `) (i) Started business with cash  ` 1,00,000 1,00,000 = 1,00,000 1,00,000 = 1,00,000 (ii) Purchased goods for cash  ` 20,000 and on credit  ` 30,000 – 20,000 + 20,000 30,000 = 30,000 80,000 + 50,000 = 30,000 + 1,00,000 (iii) Sold goods for cash costing  ` 10,000 and on credit costing 12,000 + – 10,000 = 2,000 ` 15,000 both at a profit of 20% – 15,000 + 18,000 = 3,000 92,000 + 25,000 + 18,000 = 30,000 + 1,05,000

Page No 5.19:

#### Question 8:

Develop an Accounting Equation from the following transactions:

 ` (i) Mohan commenced business with cash 50,000 (ii) Purchased goods for cash 30,000 (iii) Purchased goods on credit 20,000 (iv) Sold goods (costing  ` 10,000) for 12,000 (v) Bought furniture on credit 2,000 (vi) (vii) Paid cash to a creditor  Salary paid 15,000 1,000

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Stock ( `) + Furniture ( `) = Creditors ( `) ( `) (i) Mohan commenced business with cash 50,000 = 50,000 50,000 = 50,000 (ii) Purchased goods for cash – 30,000 + 30,000 = 20,000 + 30,000 = 50,000 (iii) Purchased goods on credit 20,000 = 20,000 20,000 + 50,000 = 20,000 + 50,000 (iv) Sold goods costing  ` 10,000 for  ` 12,000 12,000 + – 10,000 = 2,000 (profit) 32,000 + 40,000 = 20,000 + 52,000 (v) Bought furniture on credit 2,000 = 2,000 32,000 + 40,000 + 2,000 = 22,000 + 52,000 (vi) Paid cash to a creditor – 15,000 = – 15,000 17,000 + 40,000 + 2,000 = 7,000 + 52,000 (vii) Salary Paid – 1,000 = – 1,000 (expenses) 16,000 + 40,000 + 2,000 = 7,000 + 51,000

 Assets = 16,000 + 40,000 + 2,000 = ` 58,000 Liabilities = ` 7,000 Capital = ` 51,000

Page No 5.19:

#### Question 9:

Prepare an Accounting Equation on the basis of the following transactions:
(i) Started business with cash  ` 70,000.
(ii) Credit purchase of goods  ` 18,000.
(iii) Payment made to creditors in full settlement  ` 17,500.
(iv) Purchase of machinery for cash  ` 20,000.
(v) Depreciation on machinery  ` 2,000.

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Stock ( `) + Machinery ( `) ( `) ( `) (i) Started business with Cash  ` 70,000 70,000 70,000 70,000 70,000 (ii) Credit purchase of goods  ` 18,000 18,000 = 18,000 70,000 + 18,000 = 18,000 + 70,000 (iii) Payment made to creditor  ` 17,500 in full settlement – 17,500 = – 18,000 + 500 (Discount Received) 52,500 + 18,000 = 70,500 (iv) Purchase of Machinery for Cash  ` 20,000 – 20,000 20,000 32,500 + 18,000 + 20,000 = 70,500 (v) Depreciation on Machinery  ` 2,000 – 2,000 – 2,000 (Depreciation) 32,500 + 18,000 + 18,000 = 68,500

 Assets = 32,500 + 18,000 + 18,000 = ` 68,500 Liabilities = NIL Capital = ` 68,500

#### Question 10:

Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. Also prepare a Balance Sheet.
(i) Commenced business with cash  ` 60,000.
(ii) Paid rent in advance  ` 500.
(iii) Purchased goods for cash  ` 30,000 and credit  ` 20,000.
(iv) Sold goods for cash  ` 30,000 costing  ` 20,000.
(v) Paid salary  ` 500 and salary outstanding being  ` 100.
(vi) Bought motorcycle for personal use  ` 5,000.

 S. No. Transactions Assets = Liabilities + Capital Cash ( `) + Prepaid Rent ( `) + Stock ( `) Creditors ( `) + Salary outstanding ( `) ( `) (i) Commenced business with cash  ` 60,000 60,000 60,000 60,000 = 60,000 (ii) Paid Rent in Advance  ` 500 – 500 + 500 59,500 + 500 = 60,000 (iii) Purchased goods for Cash  ` 30,000 and Credit  ` 20,000 – 30,000 + 50,000 20,000 29,500 + 500 + 50,000 = 20,000 + 60, 000 (iv) Sold goods for Cash  ` 30,000 Costing  ` 20,000 30,000 + + – 20,000 10,000 (Profit) 59,500 + 500 + 30,000 = 20,000 + 70,000 (v) Paid Salary  ` 500 and Salary Outstanding being  ` 100 – 500 = – 500 100 – 100 59,000 + 500 + 30,000 = 20,000 + 100 + 69,400 (vi) Brought motorcycle for personal use  ` 5,000 – 5000 = – 5000 (Drawings) 54,000 + 500 + 30,000 = 20,000 + 100 + 64,400

 Assets = 54,000 + 500 + 30,000 = ` 84,500 Liabilities = 20,000 + 100 = ` 20,100 Capital = 64,400

 Balance Sheet Liabilities Amount ( `) Assets Amount ( `) Capital 64,400 Cash 54,000 Creditors 20,000 Prepaid Rent 500 Salary Outstanding 100 Stock 30,000 85,500 85,500