Prepare accounting equation:
a. Started business with Cash Rs. 250,000.

b. Purchased goods amounting to Rs. 45,000 on credit from Harish .

c. Goods costing to Rs.80,000 was sold for Rs.1,25,000 on credit.

d. Salaries outstanding Rs. 5000

e. Rent paid Rs. 50,000

f. Withdrawn by owner for personal use Rs.25,000.

assets = liabilities + capital

Answers

Answer 1

The accounting equation is:

Assets (Rs. 1,75,000 - Rs. 35,000) = Liabilities (Rs. 45,000 + Rs. 5,000) + Capital (Rs. 20,000)

We have,

Based on the given transactions, we can prepare the accounting equation as follows:

a. Started business with Cash Rs. 250,000.

Assets: Cash = Rs. 250,000

b. Purchased goods amounting to Rs. 45,000 on credit from Harish.

Assets: Cash = Rs. 250,000, Inventory = Rs. 45,000

Liabilities: Accounts Payable = Rs. 45,000

c. Goods costing to Rs. 80,000 was sold for Rs. 1,25,000 on credit.

Assets: Cash = Rs. 250,000, Accounts Receivable = Rs. 1,25,000

Inventory: Rs. 45,000 - Rs. 80,000 = Rs. -35,000 (Assuming no additional purchases or returns)

Liabilities: Accounts Payable = Rs. 45,000

Capital: Retained Earnings = Rs. 1,25,000 - Rs. 80,000 = Rs. 45,000

d. Salaries outstanding Rs. 5,000.

Liabilities: Salaries Payable = Rs. 5,000

e. Rent paid Rs. 50,000.

Assets: Cash = Rs. 250,000 - Rs. 50,000 = Rs. 2,00,000

f. Withdrawn by owner for personal use Rs. 25,000.

Assets: Cash = Rs. 2,00,000 - Rs. 25,000 = Rs. 1,75,000

Capital: Retained Earnings = Rs. 45,000 - Rs. 25,000 = Rs. 20,000

Now, let's summarize the accounting equation:

Assets:

Cash = Rs. 1,75,000

Inventory = Rs. -35,000 (negative value indicates loss or returns)

Liabilities:

Accounts Payable = Rs. 45,000

Salaries Payable = Rs. 5,000

Capital:

Retained Earnings = Rs. 20,000

Therefore,

The accounting equation is:

Assets (Rs. 1,75,000 - Rs. 35,000) = Liabilities (Rs. 45,000 + Rs. 5,000) + Capital (Rs. 20,000)

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