Exercises · Q4
Q.Mr. Kumar started a business on 1st April 2025 with ₹3,00,000 cash. During the year, following transactions took place:
(i) Purchased furniture for cash ₹40,000
(ii) Purchased goods on credit from Ram ₹60,000
(iii) Introduced additional capital in cash ₹50,000
(iv) Took a loan from the bank ₹1,00,000. Show the effect of each transaction on the Accounting Equation (Assets = Liabilities + Capital), and state the final totals.
Tamil Nadu DgeTextbookSubjectiveImportance★★★★★
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Start your 14-day free trial to unlock the full solution →Starting position: Cash ₹3,00,000 brought in as capital.
Assets = Liabilities + Capital → 3,00,000 = 0 + 3,00,000 ✓
| # | Transaction | Cash | Furniture | Stock | = | Creditors | Bank Loan | + | Capital |
|---|---|---|---|---|---|---|---|---|---|
| Start | Capital introduced | +3,00,000 | = | + | 3,00,000 | ||||
| (i) | Furniture bought for cash | −40,000 | +40,000 | = | + | (no change) | |||
| (ii) | Goods bought on credit from Ram | +60,000 | = | +60,000 | + | (no change) | |||
| (iii) | Additional capital introduced | +50,000 | = | + | +50,000 | ||||
| (iv) | Bank loan taken | +1,00,000 | = | +1,00,000 | + | (no change) |
Final balances:
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Cash = 3,00,000 − 40,000 + 50,000 + 1,00,000 = ₹4,10,000
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Furniture = ₹40,000
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Stock = ₹60,000
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Total Assets = 4,10,000 + 40,000 + 60,000 = ₹5,10,000
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Creditors (Ram) = ₹60,000
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Bank Loan = ₹1,00,000
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Capital = 3,00,000 + 50,000 = ₹3,50,000 …
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