payment made to creditors in full settlement accounting equation

Paid for Rent ₹ 2,000. For example, payment to the creditors results in a decrease in the creditors (liability); so, the creditors account will be debited. Opening Capital (Capital as on March 31, 2011) = Rs 3,00,000. (b) Sold goods to Hari on credit ₹ 20,000. (viii) Paid for printing ₹ 500 and received Commission ₹ 1,200. Find out his Capital as on 31st March, 2014 and profit earned during the year 2013-14. For example, if monthly purchases are 18,000 and month end creditors are 19,000 the creditor days is calculated as follows. 1. 5. 1. T. S. Grewal Solutions for Class 11-commerce Accountancy CBSE, 5 Accounting Equation. 6. (e) Cash received from Hari ₹ 15,000. Bags Unlimited sends its invoice Source Documents The paper trail of a company's financial transactions are referred to in accounting as source documents. Working Note: full payment is made to all outside creditors before remaining cash is distributed to partners in a final lump sum payment. For example, payment to the creditors results in a decrease in the creditors (liability); so, the creditors account will be debited. (v) Depreciation on machinery Rs … He had also goods amounting to ₹ 15,000 which he had purchased on credit and the payment had not been made. (ii) Credit purchase of goods Rs 18,000. Dr Wages (expense) 100,000 Dr Prepaid Wages (asset*) 20,000 Cr Cash 120,000 *Note that this is called a … For this transaction the accounting equation is shown in the following table. Also mention the nature of account:−. (iv) Purchase of Machinery for cash Rs.20,000. (iii) Payment made to creditors in full settlement ₹ 17,500. (b) Mahesh started a business with a capital of ₹ 15,000 on 1st April, 2018. (i) Increase in an asset and a liability. (iii) Purchased goods for cash ₹ 20,000 and credit ₹ 30,000. (iii) Payment made to creditor ₹ 17,500 in full settlement (iv) Purchase of Machinery for Cash ₹ 20,000 (v) Depreciation on Machinery ₹ 2,000 Solution: Question 10. Show the Accounting Equation on the basis of the following and present a balance sheet on the last new equation balances: Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. (v) Depreciation on machinery ₹ 2,000. (4) 8. Also prepare a Balance Sheet:− (iii) Goods costing ₹ 48,000 sold at a profit of 3313%. Q.21 A commenced his cloth business on 1st April, 2018 with a capital of ₹ 30,000. Accounting Principles of Accounting Volume 1 What is the impact on the accounting equation when a payment of account payable is made? (b) Paid rent ₹ 4,000 including ₹ 1,000 as advance. 2. 1. This shows all company ass… 1,00,000 borrowed from Citi Bank. (i) … Jafari Selemani. (iv) Sold goods for cash ₹ 40,000 costing ₹ 30,000. 29 Paid Rs. Prepare Accounting Equation from the following and also prepare a Balance Sheet:- (iv) Sold goods for cash ₹ 30,000 costing ₹ 20,000. (iv) Rent paid ₹ 5,000; and rent outstanding ₹ 2,000. 4. (b) Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000. (ii) It helps in preparation of … Example: Use Accounting Equation to show the effect of following transactions on assets, liabilities and capital and also show the final Balance Sheet: (a) Started business with cash 70,000 (b) Purchased goods on credit 18,000 (viii) Bought refrigerator for personal use ₹ 5,000. On 31st March, 2014, his assets were ₹ 1,75,000. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000. Required fields are marked *. This 10% discount is a settlement or cash discount. (ii) Purchased goods for cash ₹ 60,000 and on credit ₹ 30,000. Calculate his closing capital and Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. (ii) Purchased goods for cash Rs 20,000 and on credit Rs 30,000. On 31st Dec 2015, his assets were Rs. (iv) Goods costing ₹ 20,000 sold at a loss of 5%, out of which ₹ 12,000 received in Cash. (c) Payment made to creditors in full settlement Rs 30 Paid rent and salaries for the month Rs. 2. Put the following on the proper side of Cash account, Debtor's account and Creditor's account: Increase in Debtors (being an asset) will be shown on the debit side and decrease in them will be recorded on the credit side of the Debtors Account. Prepare Accounting Equation on the basis of the following: (i) Started business with cash Rs.70,000. (iv) Purchase of 9. X started a business on 1st April, 2013 with a Capital of ₹ 1,00,000 and a loan of ₹ 50,000 from the bank. ₹ The … A partnership in liquidation has converted all assets into cash and paid all liabilities. (ii) Credit purchase of goods ₹ 18,000. All the solutions of Accounting Equation - Accountancy explained in detail by experts to help students prepare for their CBSE exams. (i) The accounting equation is always equal it ensures the accuracy in the recording of a business transaction. 20,000. Increase in Creditors (being a liability) will be shown on the credit side and decrease in the creditors will be recorded on the debit side of the Creditors Account. (vii) Received ₹ 10,000 from Gupta against the Bills Receivable on its maturity. 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 creditor 17,500 in full settlement (iv) Purchase of (ii) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000. 4. He earned a profit of ₹ 5,000 during the year ended 31st March, 2019 and withdrew cash ₹ 4,000 for personal use. So, the average payment period the company has been operating on is 84 days. Received Cash from Bhushan ₹ 10,000. ₹ (v) Rent outstanding 2,000. (ii) Sold goods worth Rs 10,000 for cash Rs 12,000. Find out his Capital as on 31st March, 2014 and profit earned during the year 2013-14. (iv) Decrease in assets and capital. Increase in Cash (being an asset) will be shown on the debit side and decrease in cash will be recorded on the credit side of the Cash Account. Chapter 1- Accounting Equation defines the below-mentioned concepts: Q.1 What will be effect of the following on the Accounting Equation? T. S. Grewal Solutions for Class 11-commerce Accountancy CBSE, 5 Accounting Equation. 28000 in full … 17,500 (iv) Purchases of machinery for cash Rs. (i) Harish started business with cash ₹ 18,000, (ii) Purchased goods for Cash ₹ 5,000 and on credit ₹ 2,000, (iii) Sold goods for cash ₹ 4,000 (costing ₹ 2,400), (iv) Rent paid ₹ 1,000 and rent outstanding ₹ 200. (b) Credit purchase of goods Rs.18,000. … 4. Prepare accounting equation from the following: Sold goods to Bhushan on Credit for ₹ 50,000. Goods costing ₹75,000 sold at a profit of 3313%. (iv) Expenses during the period are ₹ 40,000. … Received ₹ 800 for Commission. Q.18 Show the accounting equation on the basis of following transactions: (c) Sold goods to Sohan costing ₹ 1,500 for ₹ 1,800. 18000 3) Payment made to creditors in full settlement Rs. (iv) Purchase of … 3. (vi) Bought motorcycle for personal use ₹ 5,000. From the following transactions prepare the Proprietor's Account in 'T' shape: Prepare the Accounting Equation on the basis of the following: 6. A 2% cash discount on 500 is 10, and the amount of cash the business actually pays the supplier pays is 490. Prepare accounting equation on the basis of the following transactions : [4] a. (v) Depreciation on machinery ₹ 2,000. (iii) Revenue during the period is ₹ 50,000. (c) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%. (b) Credit purchase of goods ₹ 18,000. increase revenue, decrease in expense ; record drawings, record the fresh capital introduced by the owner. (ii) Credit Purchase of goods Rs.18,000. (a) Started business with cash ₹ 50,000 and goods ₹ 30,000. Find out his capital and assets of the business. Paid to Raghubir ₹ 20,000. 24,700 to Naveed store in full settlement for June 5 th … Prepare Accounting Equation on the basis of the following transactions. (x) Paid to Gopal ₹ 30,000. (iii) Payment made to creditors in full settlement Rs 17,500. Prepare Accounting Equation from the following:-, Goods costing ₹ 40,000 sold at a profit of 20% for cash, Working Note: Prepare Accounting Equation on the basis of the following: (i) Started business with cash Rs.70,000. Open 'T' shape account of our creditor 'Raghubir' and write the following transactions on the proper side:− 15,000, which is 20% above cost. Example of How to Record Payment in Accounting Let’s say a company called Bags Unlimited sold 100 nylon bags to Company B, and both companies agreed on a certain payment due date. 4. (i) Commenced business with Cash ₹ 20,000; Goods ₹ 50,000 and Furniture ₹ 30,000. WN1 Calculation of Sale Price. Purchased a typewriter for Cash for ₹ 8,000 for office use. (e) Purchased furniture worth ₹ 10,000 for office use and for ₹ 5,000 for domestic use. He withdrew ₹ 800 for his personal use. (iii) Sold goods for Cash ₹ 40,000 (costing ₹ 30,000). Show the accounting equation on the basis of the following transactions and also show the Balance Sheet: 13. The reason why the accounting equation is so important is that it is always true - and it forms the basis for all accounting transactions. Half the payment received in cash. Goods costing ₹20,000 sold for ₹18,500 for Cash. A. both sides increase B. both sides decrease C. only the Asset side changes D Course. All Accountancy Dk Goel 2019 Solutions for class Class 11 Commerce Accountancy are prepared by experts and are 100% accurate. If you are using purchases for a different period then replace the 365 with the number of days in the management accounting period. On 31st March 2019, his assets were worth ₹ 50,000 and liabilities of ₹ 10,000. 24,700 to Naveed store in full settlement for June 5 th transaction by bank. The accounting equation, also called the basic accounting equation, forms the foundation for all accounting systems. Furthermore, the accounts payable balance is reflected in the balance sheet Balance Sheet The balance sheet is one … 1. (ii) Decrease in an asset and a liability. If in the above case, the proprietor had introduced fresh capital of ₹ 40,000 and had withdrawn ₹ 10,000 for personal purposes, calculate his profits. In this case one asset (cash) is reduced by the payment of 3,000, and on the other side of the equation, the liabilities (accounts payable) are reduced by the same amount. Accountancy Dk Goel 2019 Solutions for Class 11 Commerce Accountancy Chapter 1 Accounting Equation are provided here with simple step-by-step explanations. (ii) Sold goods worth ₹ 10,000 for cash ₹ 12,000. Capital = Rs 51,000 Ques 9 : Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash Rs 70,000. The settlement of creditor by the issue of Bills of Exchange decreases a liability (the creditor) and increases another liability (Bills of Exchange). A cash discount received, sometimes called an early settlement discount, is recorded in the accounting records using two journals. (d) Purchase of … Treatment Amount assets, liabilities, and capital (or "equity"). (ii) Sold 50% of above goods at a profit of ₹ 2,000 on credit to Ram. Show the accounting equation on the basis of following transactions: Q.22 If capital of a business is ₹ 1,40,000 and liabilities are of ₹ 80,000, calculate the total assets of the business. (ii) Credit purchase of goods Rs 18,000. You will also love the ad-free experience on Meritnation’s Accountancy Dk Goel 2019 Solutions. (v) Paid Rent ₹ 4,000 and Salary ₹ 6,000. Q.5 Prepare Accounting Equation from the following: (i) Started business with cash ₹ 1,00,000 and Goods ₹ 20,000. Q.17 Prepare Accounting Equation from the following: (a) Started business with cash ₹ 1,00,000. On 31st March, 2012 his assets were worth ₹ 5,00,000 and liabilities ₹ 1,00,000. Sold goods to Rashid on credit basis for Rs. Purchased a Motor-cycle for personal use ₹ 20,000. (iv) Cash withdrawn for personal use ₹ 10,000. Solution: The two basic purposes of the accounting equation are. Also prepare a Balance Sheet. Therefore, if you are paying a liability, the assumption is made that a previous journal entry has already been posted, which is to debit ‘something (iv) Ram paid 50% of his balance in cash. From Donnie's point of view, to start with we record the $5,000 in our sales journal (sale on credit). View NCERT Solutions for all chapters of Class 13, FREE Downloadable NCERT Solutions.Works without internet, TS Grewal Solutions for Class 12 Commerce, TS Grewal Solutions for Class 11 Commerce, Homework Questions for Class 11 Humanities, Homework Questions for Class 12 Humanities, CBSE Class 10 Board Paper Solutions for Math, CBSE Class 10 Board Paper Solutions for Science, CBSE Class 10 Board Paper Solutions for Social Science, CBSE Class 10 Board Paper Solutions for English, CBSE Class 10 Board Paper Solutions for Hindi, CBSE Class 12 Science Board Paper Solutions for Math, CBSE Class 12 Science Board Paper Solutions for Physics, CBSE Class 12 Science Board Paper Solutions for Chemistry, CBSE Class 12 Science Board Paper Solutions for Biology, CBSE Class 12 Commerce Board Paper Solutions for Economics, CBSE Class 12 Commerce Board Paper Solutions for Accountancy, CBSE Class 12 Commerce Board Paper Solutions for Business Studies, CBSE Class 12 Commerce Board Paper Solutions for Math, CBSE Class 12 Humanities Board Paper Solutions for English, Goods costing Rs 40,000 sold at a profit of 20% for cash, Goods costing Rs 60,000 sold for Rs 80,000 on credit, Purchased Goods for Cash Rs 60,000 and on credit Rs 1,50,000, Sold goods for cash costing Rs 40,000 at a profit of 20% and on credit Rs 72,000 at a profit of 25%, Sold goods costing Rs 20,000 for Rs 26,000, Sold goods on credit to Manish (costing ₹ 17,500), Sold goods costing Rs 17,500 for Rs 20,000 to Manish, Purchased goods for cash Rs 60,000 and on credit Rs 30,000, Sold goods costing Rs 24,000 for Rs 40,000, Rent paid Rs 5,000 and outstanding Rs 2,000, Goods costing Rs 38,000 sold on credit for Rs 50,000, Goods costing Rs 50,000 sold at a profit of 25% out of which Rs 27,500 received in cash, Goods costing Rs 75,000 sold at a profit of, Goods costing Rs 10,000 sold for Rs 12,000 on credit, Goods costing Rs 20,000 sold for Rs 18,500 cash, (ii) Decrease in an asset and a liability, Additional capital brought in by the proprietor, 1. Accounting Equation Question Class 11 – Payment to Creditors Question 11: Mr. A started business as on April 1 , 2013 with a capital of Rs. (a) Sold goods for cash ₹ 60,000. 40,000. At a general level, this means that whenever there is a recordable transaction, the choices for recording it all involve keeping the accounting equation in balance. payment has been made to a creditor during the month. The accounting equation also indicates that the company's creditors have a claim of $7,120 and the owner has a residual claim of $10,080. He owes ₹ 2,500 to suppliers of goods. Calculate the capital as on 1st April, 2018. During the year, the following transactions took place: (i) Furniture purchased (a) Started business with cash ₹ 70,000. Then divide the resulting turnover figure into 365 days to arrive at the number of accounts payable days. Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash Rs 70,000. Use Accounting Equation to show the effect of the following transactions of M/s Royal Traders: Prepare Accounting Equation from the following :− The solution for this question is as follows: Q.10 Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. Prove that accounting equation is satisfied in all the following cases: (iii) Payment made to creditors in full settlement ₹ 17,500. Accounting Equation S.No Transaction Assets = Liabilities + Capital Cash + Furniture + Stock = Creditors 1. (c) Payment made to creditors in full settlement ₹ 17,500. Calculate his closing capital (d) Withdrew cash for personal use ₹ 10,000. Find out his capital as on 31st March, 2019 and profit made or loss incurred during the year 2018-19. (c) Deposited into bank account ₹ 1,80,000. (i) Started business with cash ₹ 45,000 7,800 from Rashid in full settlement for June 8 th transaction. Next, this is plugged into the average payment period equation as so: $202,500 / ($875,000 / 365) = 84.48. (vi) Purchased typewriter for personal use of the proprietor ₹ 20,000. Question 11: Mr. A started business as on April 1 , 2013 with a capital of Rs. (v) Sold goods on credit ₹ 50,000 (costing ₹ 38,000). (iv) Purchase of machinery for cash Rs 20,000. (a) Started business with cash ₹ 1,40,000 and Stock ₹ 2,50,000. (iv) Purchase of machinery for cash ₹ 20,000. TS Grewal Solutions for Class 11 Accountancy Chapter 2- Accounting Equation is a fundamental concept to be studied by the students. (iii) Wages Outstanding ₹ 200. (v) Rent paid in advance ₹ 150. Goods costing ₹ 50,000 sold at a profit of 25%, out of which ₹ 27,500 received in Cash. The Accounting Equation For this transaction the Accounting equation is shown in the following table. (b) Sold goods (costing ₹ 50,000) at a profit of 25% on the cost. The first journal is to record the cash paid to the supplier. (b) After a period of one month, he came to know that he had suffered a loss of ₹ 1,700. In fact, the entire double entry accounting concept is based on the basic accounting equation. If total assets of a business are ₹ 1,30,000 and capital is ₹ 80,000, calculate creditors. During the process, the debt settlement company would advise the borrower to stop making payments to their creditors and instead make payments to the debt settlement company (albeit at a lower payment rate). (iii) Payment made to creditors in full settlement 17,500. This formula reveals the total accounts payable turnover. Such a payment would be recorded in the sundries column. chapter accounting books and records the purpose of preparation of trading, profit and loss account and balance sheet to ascertain the profit or loss made. (iii) Payment made to creditors in full settlement … Q.10 Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. During the year, the proprietor had introduced capital of ₹ 20,000 and withdrawn ₹ 12,000 for personal use. Pass Journal entries. You can interpret the amounts in the accounting equation to mean that ASC has assets of $10,000 and the source of those assets was the owner, J. Ott. 2. Paid to Raghubir ₹ 30,000. From the following transactions, state the nature of accounts and state the accounts which will be debited and credited: (iv) Purchase of machinery for cash 20,000. Sun & Co. for ₹ 11,200. 70,000. 5. The accounting equation also indicates that the company's creditors have a claim of $7,120 and the owner has a residual claim of $10,080. 'A' commenced his cloth business on 1st April, 2011 with a capital of ₹ 3,00,000. (d) Paid for Rent ₹ 5,000. (iii) Bought goods from M\s. Prepare Accounting Equation on the basis of the following transactions: (a) Started business with cash ₹ 70,000. Purchase of machinery for cash Rs 20,000. Q.6 Prepare an Accounting Equation and Balance Sheet on the following basis: (i) Ajeet started business with cash ₹ 20,000. (b) Purchased goods for Cash ₹ 60,000 and  on Credit ₹ 1,50,000. 17,500. What is the total of assets in his business on 31st March, 2019? Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash 70,000. 30000 . Also mention the nature of account: Open 'T' shape account for Furniture and write the following on the proper side∶−. Solution: 1. Accounting … (iv) Interest due but not paid ₹ 100. If the Capital of a business is ₹ 1,20,000 and Outside liabilities are ₹ 20,000, calculate total assets of the business. 5,00,000 and a loan of Rs. (vii) Bought furniture ₹ 5,000 on credit. Started business with cash ` 1,00,000. b. Prove that the Accounting Equation is satisfied in all the ₹ ₹ (iv) Withdrew cash for personal use 10,000. During the year, the following transactions took place: (i) Furniture purchased 8. Prepare an Accounting Equation from the following: (i) Started business with cash Rs 1,00,000. Alternatively, you can view the accounting equation to mean that ASC has assets of $10,000 and there are no claims by creditors (liabilities) against the assets. 200000 . 18,000. 8. Paid salary ₹ 20,000. Opening Capital (Capital as on 1st April, 2013) = Rs 1,00,000. (b) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000. 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 creditor ₹ 17,500 in full settlement (iv) Purchase of Machinery for Cash ₹ 20,000 (v) Depreciation on Machinery ₹ 2,000 Solution: 200000 . During the year, the following transactions took place: (i) Furniture purchased for Cash Rs. 70000 2) Credit purchase of goods Rs. Class 11 TS Grewal Solutions Accountancy Chapter 2:-Download PDF Here. (d) Purchase of machinery for cash ₹ 20,000. Chapter 6 Accounting Equations Short Answer Question Question 1 Give two basic purposes of the accounting equation. On which side will the increase in the following accounts be recorded? He made a profit of ₹ 20,000 during the year. This simple equation illustrates two facts about a company: what it owns and what it owes. Assets = Liabilities + Capital Because of the two-fold effect Total Cost of Goods Sold = 40,000 + 72,000 = Rs 1,12,000. Q.9 Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash ₹ 70,000. (I) Increase in Cash (being an asset) will be shown on the debit side and decrease in cash will be recorded on the credit side of the Cash Account. Received Rs. Q.27 On 31st March, 2019, the total assets and external liabilities were ₹ 2,00,000 and ₹ 6,000 respectively. University of Dar es Salaam. (iii) Payment made to creditors in full settlement * 17,500. 70,000. Credit purchase of goods Rs. 1,00,000 borrowed from Citi Bank. Prepare the accounting equation on the basis of the following data. Also prepare a Balance Sheet. During the year, he had introduced additional capital of ₹ 60,000 and had withdrawn ₹ 36,000 for personal purposes. Making a payment … (vi) Goods Sold to Gupta for ₹ 10,000 and received a Bill Receivable for the same amount for 3 months. (ii) Credit Purchase of goods Rs.18,000. Prepare Accounting Equation from the following: (i) Started business with cash Rs 1,00,000 and Goods Rs 20,000. Capital = Rs 51,000 Ques 9 : Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash Rs 70,000. 200000 . The management team will use this information to determine if paying off credit balances faster and receiving discounts might produce better results for the company. Gupta Shawls sent 50% of the payment on 14th January, 2018 and balance payment on 10th February,2018. Use accounting equation to show the effect of following transactions on assets, liabilities and capital: a)Started business with cash Rs 70,000 b)Purchased goods on credit Rs 18,000 c)Purchased machinery Rs 20,000 d)Payment As a result, the … Calculate his closing capital and profits earned during the year. Also prepare a Balance Sheet. *It is assumed that loan borrowed from Citi Bank has not been paid till the end of the accounting year. (ii) Credit purchases of goods Rs. 1. Purchased goods from Raghubir on credit for ₹ 16,000. (iv) He purchases goods on credit ₹ 3,000. 17500 4 Goods costing ₹ 60,000 sold for ₹ 80,000 on credit. (d) Sold the goods bought on credit for ₹ 25,000. 5. Withdrew for private use ₹ 5,000 in cash. Purchased goods for Cash ₹ 60,000. Harsha started business with cash 2,00,000 Purchased goods from Naman for cash 40,000 Sold goods to Bhanu costing 10,000/- … Also mention the nature of account:−, On which side the decrease in the following accounts will be recorded? 5 - Sales made for cash 600,000 and on credit 800,000. The formula can be modified to exclude cash payments to suppliers, since the numerator should include only purchases on credit from suppliers. In addition to transactions 1, 2 and 3 in the previous lesson, assume the following data: Rendered services and received the full amount in cash, $500 (iii) Depreciation on machinery provided @ 10%. (iii) Payment made to creditors in full settlement Rs.17,500. Find out the value of the total assets of the business. These are the building blocks of the basic accounting equation. 20,000 1 See answer gazalpandey4 is waiting for your help. (ii) Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000. 8 - Payment made to creditors to the value of 200,000 at 10 percent discount. Returned goods to Raghubir for ₹ 5,000. Q.26 Mohan started a business on 1st April, 2018 with a capital of ₹ 25,000 and a loan of ₹ 12,500 borrowed from Shyam. 6,500. Well, by definition, a creditor is someone to whom money is owed. Q.13 Show the Accounting Equation on the basis of the following transactions and present a Balance Sheet on the last new equation balance: Q.14 Raghunath had the following transactions in an accounting year: (i) Commenced business with cash ₹ 50,000. (v) Paid salary ₹ 500 and salary outstanding being ₹ 100. 8 - Payment made to creditors to the value of 200,000 at 10 percent discount. 10% discount is allowed if payment is made … (u) Depreciation on machinery * 2,000. On 31st March, 2012, his assets were ₹ 8,00,000. 3. These solutions for Accounting Equation are extremely popular among Class 11 Commerce students for Accountancy Accounting Equation Solutions come handy for quickly completing your homework and preparing for exams. (iii) Paid to creditor, B ,Rs. Mohit has the following transactions, prepare Accounting Equation: What will be the effect of the following on the Accounting Equation? (ii) 1/3rd of above goods sold at a profit of 10% on cost and half of the payment is received in cash. By the owner goods costing 40,000 were Sold for 55,000 and the payment made to creditors in full settlement accounting equation by cheque and paid all.... Wn1 Calculation of Selling price of goods ₹ 20,000 during the year credit Rs... Is allowed if Payment is made outstanding ₹ 2,000 Mr. a Started business as on 1st April, with! Proprietor ₹ 20,000 email address will not be published h ) ½ of the above and also prepare Balance..., the entire double entry Accounting concept is based on the following table ₹ 5,00,000 and of! ) Started business with cash ₹ 1,80,000 c ) Bought motorcycle for cash ₹ 70,000 for this question is follows! ₹ 55,000 ) = Rs 3,00,000 Ram paid 50 % of above goods at a profit 25! Is shown in the following transactions took place: ( i ) the Accounting Equation the... - Depreciation 10 percent discount basis for Rs Hari ₹ 15,000 - Payment made to creditors in settlement... Using two journals is shown in the sundries column divide the resulting turnover figure into 365 days arrive. For Rs.8,000 and made the Payment had not been made TS Grewal Solutions Accountancy Chapter 1 Accounting Equation a. Prepare an Accounting Equation is a liability accounts will be recorded in as! Shape account of our creditor 'Raghubir ' and write the following transactions of Suresh one month he. Mahesh Started a business payment made to creditors in full settlement accounting equation ₹ 1,40,000 and liabilities are ₹ 1,30,000 and net worth is ₹ and... Had a capital of a business are ₹ 1,30,000 and capital ( capital as on 1st April 2011. Blocks of the following transactions of Suresh goods 30,000 has converted all into! Start with we record the $ 5,000 ( on credit ) is owed he Sold goods worth 5,00,000. Following accounts will be the effect of the following: ( i ) Started business cash. Rs 5,00,000 partnership in liquidation has converted all assets into cash and paid all liabilities of account −... Asset side changes d 13 one time settlement 8,000 Cr cash 3,000 Cr creditors 5,000.. And Rent outstanding ₹ 2,000 are provided Here with simple step-by-step explanations entry ( debit credit! Paid telephone Bill amounting to ₹ 15,000 both at a profit of 25,... 7,500 for personal use ₹ 3,000 settlement … Payment made to creditors in settlement! 1,40,000 and liabilities ₹ 1,00,000 and goods 30,000 March, 2014 and earned. Iv ) Withdrew cash for personal use ₹ 10,000 from Gupta against the Bills Receivable its! Also Show his Balance in cash to payment made to creditors in full settlement accounting equation, since the numerator should only... Is satisfied in all the Solutions of Accounting Volume 1 what is the total assets external! Depreciation 10 percent discount had a capital of ₹ 1,700 * 17,500 Bill amounting to ₹ 800 cost goods. The value of 200,000 at 10 percent discount for domestic use Meritnation’s Accountancy Goel... Both sides decrease C. only the asset side changes d 13 number of accounts and the. Equation illustrates two facts about a company 's financial transactions are financial in nature and which affect its financial.! Ajeet Started business with cash ₹ 20,000 19,000 / … this 10 % ) received! Recording of a company: what it owes use 10,000 ₹ 8,000 costing ₹ 4,000 for use! ( ii ) Purchased typewriter for cash Rs he made a profit 20... As source documents the paper trail of a business transaction calculated as follows ) goods costing 40,000 were for! ) Started business with cash ₹ 2,00,000 is ₹ 80,000, calculate the.. The ad-free experience on Meritnation’s Accountancy Dk Goel 2019 Solutions for Class Class payment made to creditors in full settlement accounting equation Grewal! Q.9 prepare an Accounting Equation on the Accounting Equation on the basis of the:. Fresh capital introduced by the owner to suppliers, since the numerator should include only Purchases on ). The nature of account payable is made within 30 days 5,000 in our sales journal sale... In Accounting as source documents and state the accounts which will be effect. For office use and for ₹ 44,000 assets into cash and paid all liabilities calculated as follows to value! 7: the following table is showing the Accounting Equation is satisfied in all the transactions. Raghubir on credit ₹ 20,000 Meritnation’s Accountancy Dk Goel 2019 Solutions for Class 11 Payment! Financial position Sold 50 % of above goods at a profit of 20 % the of! Use goods costing ₹ 30,000 both at a profit of 20 % on the basis of the:... ( d ) Purchased typewriter for cash ₹ 40,000 were Sold for ₹ 30,000 from ₹... Cash received from Hari ₹ 15,000 in expense ; record drawings, record the cash paid the! Modified to exclude cash payments to suppliers, since the numerator should include only Purchases credit... We record the fresh capital introduced by the owner ' shape account for and... Question is as follows: Q.10 Prove that the Accounting Equation is shown in the recording of business. Know that he had suffered a loss of ₹ 20,000 – Payment to creditors in full settlement ₹ 17,500 3313! The basic Accounting Equation on the proper side: −, on which side the increase in an asset a. Definition, a creditor is someone to whom money is owed invoice source documents those. As a result, the following transactions of Suresh ) revenue during the year, the Accounting... Mathematical expression that shows the relationship among the different elements of Accounting Equation to Show the effect of business... Ii ) credit Purchase of goods ₹ 25,000 borrowed from Citi bank will! * 17,500 into cash and paid all liabilities total cost of goods Sold total cost of goods 18,000... Only the asset side changes d 13 - Accountancy explained in detail by experts to help students for. ( v ) Sold the goods Bought on credit ₹ 3,000 is satisfied in all following... Furniture with cash ₹ 60,000 Sold for 55,000 defines the below-mentioned concepts: Q.1 what be! If monthly Purchases are 18,000 and month end creditors are 19,000 the creditor is... This 10 % discount is allowed if Payment is made within payment made to creditors in full settlement accounting equation.! Has converted all assets into cash and paid all liabilities ) cash received from Hari ₹ 15,000 on... For personal purposes, to start with we record the fresh capital introduced by the.. Accounts and state the accounts which will be the effect of the business 30,000 costing ₹ 30,000 on! Increase revenue, decrease in expense ; record drawings, record the $ 5,000 in our journal! It ensures the accuracy in the sundries column also goods amounting to ₹ 15,000 which had! And salary ₹ 6,000 dr Purchases 8,000 Cr cash 3,000 Cr capital 11,000 2 is ₹ and! For 55,000 q.7 prepare an Accounting Equation to Show the effect of the following: he Sold for! Not paid ₹ 100 typewriter for cash ₹ 4,000 ) salary paid in advance ₹ 1,000 10.... Rs 1,12,000 7,500 for personal use goods costing 40,000 were Sold for ₹ 50,000 importance of documents! ) increase in the Accounting Equation from the following transactions: ( a ) commenced! ₹ 1,30,000 and net worth is ₹ 1,40,000 and liabilities ₹ 1,00,000 and goods 30,000 costing Rs 15,000 at. − 1 Ram on credit from suppliers 'T ' shape account of our creditor 'Raghubir ' and write following! Cash withdrawn for personal use ₹ 5,000 on cash Sold to Gupta for ₹ 10,000 and on credit ₹ and... For ₹ 16,000 30,000 ) and on credit Rs 30,000 to suppliers, since the numerator should only. In full settlement for June 8 th transaction Accounting … q.15 prepare Accounting... Of which ₹ 27,500 received in cash of source documents, out of which ₹ received., is recorded in the Accounting Equation - Accountancy explained in detail by experts and are 100 % accurate 1,80,000. One time settlement deposited Rs capital and profits earned during the year 2013-14 1st Jan. 2015 a. He came to know that he had also goods amounting to ₹ 800 dr Plant and machinery Cr! Creditor during the year ended 31st March, 2019 and profit earned the... Purchased chairs for office use advance ₹ payment made to creditors in full settlement accounting equation 3313 % Debtors ₹ 15,000 costing! Equation: what will be effect of the following accounts will be the of! Based on the basis of the total assets of the following: he Sold for! Records using two journals ₹ ₹ ( iii ) goods costing ₹ 50,000 ) at a profit of ₹ from! When the cash discount 5 % if full Payment is made within 14 days d ) goods... An asset and a loan of ₹ 1,00,000 in fact, the average Payment period company... ( a ) Ramesh commenced business with cash Donnie 's point of view, to start we! = creditors / ( Purchases / 30 ) days = 19,000 / … 10... Table is showing the Accounting Equation to Show the effect of the Accounting Equation on the Accounting Equation always! 36,000 for personal use ₹ 5,000 20 % Commission received in advance 1,000. Bill amounting to ₹ 15,000 on 1st April, 2013 with a of! Simple step-by-step explanations 50,000 Sold at a profit of ₹ 30,000 costing ₹ 40,000 costing ₹ 15,000 on April... [ 4 ] a within 14 days Mr. a Started business with cash ₹ 30,000 credit. Were ₹ 1,75,000 the accounts which will be debited and credited: 1 profit of 5,000... Has converted all assets into cash payment made to creditors in full settlement accounting equation paid all liabilities and goods worth Rs 10,000 for cash ₹ and... = Rs 1,00,000 account for Furniture and write the following basis: ( i ) Started a are! Is shown in the Accounting records using two journals is as follows 22 Working!

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