Analysis of Transactions
Show the effect of following transaction on the accounting equation:
| Transaction | ₹ | |
|---|---|---|
| (a) (i) | Manoj started business with: Cash | 2,30,000 |
| (a) (ii) | Goods | 1,00,000 |
| (a) (iii) | Building | 2,00,000 |
| (b) | He purchased goods for cash | 50,000 |
| (c) | He sold goods (costing ₹20,000) | 35,000 |
| (d) | He purchased goods from Rahul | 55,000 |
| (e) | He sold goods to Varun (Costing ₹52,000) | 60,000 |
| (f) | He paid cash to Rahul in full settlement | 53,000 |
| (g) | Salary paid by him | 20,000 |
| (h) | Received cash from Varun in full settlement | 59,000 |
| (i) | Rent outstanding | 3,000 |
| (j) | Prepaid Insurance | 2,000 |
| (k) | Commission received by him | 13,000 |
| (l) | Amount withdrawn by him for personal use | 20,000 |
| (m) | Depreciation charge on building | 10,000 |
| (n) | Fresh capital invested | 50,000 |
| (o) | Purchased goods from Rakhi | 10,000 |
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Manoj's fifteen transactions leave Assets ₹5,77,000 = Liabilities ₹13,000 (Creditors 10,000 + Outstanding rent 3,000) + Capital ₹5,64,000.
Treatment. Cash sales above cost give profit (c, and gains/losses on settlements affect Capital). Credit sale to Varun raises Debtors and profit; settling Rahul at ₹53,000 vs ₹55,000 gives discount received ₹2,000 (gain); receiving ₹59,000 from Varun against ₹60,000 gives discount allowed ₹1,000 (loss). Salary and drawings reduce Capital; rent outstanding is a liability; prepaid insurance is an asset; depreciation reduces Building; fresh capital and commission received raise Capital; goods from Rakhi raise Goods and Creditors.
Accounting Equation (columns: Cash, Goods, Building, Debtors, Prepaid Ins. = Creditors + O/s Rent + Capital)
| # | Transaction | Cash (₹) | Goods (₹) | Building (₹) | Debtors (₹) | Prepaid (₹) | Total Assets (₹) | = | Creditors (₹) | + | O/s Rent (₹) | + | Capital (₹) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (a) | Cash + Goods + Building | 2,30,000 | 1,00,000 | 2,00,000 | — | — | 5,30,000 | = | — | + | — | + | 5,30,000 |
| (b) | Goods for cash ₹50,000 | 1,80,000 | 1,50,000 | 2,00,000 | — | — | 5,30,000 | = | — | + | — | + | 5,30,000 |
| (c) | Sold (cost 20,000) ₹35,000 | 2,15,000 | 1,30,000 | 2,00,000 | — | — | 5,45,000 | = | — | + | — | + | 5,45,000 |
| (d) | Goods from Rahul (credit) | 2,15,000 | 1,85,000 | 2,00,000 | — | — | 6,00,000 | = | 55,000 | + | — | + | 5,45,000 |
| (e) | Sold to Varun (cost 52,000) ₹60,000 | 2,15,000 | 1,33,000 | 2,00,000 | 60,000 | — | 6,08,000 | = | 55,000 | + | — | + | 5,53,000 |
| (f) | Paid Rahul in full ₹53,000 | 1,62,000 | 1,33,000 | 2,00,000 | 60,000 | — | 5,55,000 | = | — | + | — | + | 5,55,000 |
| (g) | Salary paid ₹20,000 | 1,42,000 | 1,33,000 | 2,00,000 | 60,000 | — | 5,35,000 | = | — | + | — | + | 5,35,000 |
| (h) | From Varun in full ₹59,000 | 2,01,000 | 1,33,000 | 2,00,000 | — | — | 5,34,000 | = | — | + | — | + | 5,34,000 |
| (i) | Rent outstanding ₹3,000 | 2,01,000 | 1,33,000 | 2,00,000 | — | — | 5,34,000 | = | — | + | 3,000 | + | 5,31,000 |
| (j) | Prepaid insurance ₹2,000 | 1,99,000 | 1,33,000 | 2,00,000 | — | 2,000 | 5,34,000 | = | — | + | 3,000 | + | 5,31,000 |
| (k) | Commission received ₹13,000 | 2,12,000 | 1,33,000 | 2,00,000 | — | 2,000 | 5,47,000 | = | — | + | 3,000 | + | 5,44,000 |
| (l) | Drawings ₹20,000 | 1,92,000 | 1,33,000 | 2,00,000 | — | 2,000 | 5,27,000 | = | — | + | 3,000 | + | 5,24,000 |
| (m) | Depreciation building ₹10,000 | 1,92,000 | 1,33,000 | 1,90,000 | — | 2,000 | 5,17,000 | = | — | + | 3,000 | + | 5,14,000 |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.