# Recording Of Transactions – I – Accounting Equation Solutions

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Analysis of Transactions – Accounting Equation – Numerical Questions
1. Prepare the accounting equation on the basis of the following data.
(a)
₹ 2,00,000
(b)
Purchased goods from Naman for cash
₹ 40,000
(c)
Sold goods to Bhanu costing ₹ 10,000/- for
₹ 12,000
(d)
Bought furniture on credit
₹ 7,000

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(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Debtors
Furniture
Total
1. Harsha started business with cash ₹ 2,00,000
2,00,000
2,00,000
2,00,000
2,00,000
=
2,00,000
2,00,000
2. Purchased goods from Naman for cash ₹ 40,000
(40,000)
40,000
1,60,000
40,000
2,00,000
=
2,00,000
2,00,000
3. Sold goods to Bhanu costing ₹ 10,000/- for ₹ 12,000
(10,000)
12,000
2,000
1,60,000
30,000
12,000
2,02,000
=
2,02,000
2,02,000
4. Bought furniture on credit ₹ 7,000
7,000
7,000
1,60,000
30,000
12,000
7,000
2,09,000
=
7,000
2,02,000
2,09,000
Total
2,09,000
=
2,09,000
Thus we’ve
Assets
=
Cash ₹ 1,60,000 + Goods ₹ 30,000 + Debtors ₹ 12,000 + Furniture ₹ 7,000
=
₹ 2,09,000
Liabilities
=
Creditors ₹ 7,000
Capital
=
₹ 2,02,000
Assets ₹ 2,09,000 = Liabilities ₹ 7,000 + Capital ₹ 2,02,000

2. Prepare accounting equation from the following:
(a)
₹ 2,50,000
(b)
He purchased furniture for cash
₹ 35,000
(c)
He paid commission
₹ 2,000
(d)
He purchased goods on credit
₹ 40,000
(e)
He sold goods (Costing ₹ 20,000) for cash
₹ 26,000

Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Furniture
Total
a. Kunal started business with cash ₹ 2,50,000
2,50,000
2,50,000
=

2,50,000
2,50,000
2,50,000
2,50,000
=
2,50,000
2,50,000
b. He purchased furniture for cash ₹ 35,000
(35,000)
35,000
2,15,000
35,000
2,50,000
=
2,50,000
2,50,000
c. He paid commission ₹ 2,000/-
(2,000)
(2,000)
2,13,000
35,000
2,48,000
=
2,48,000
2,48,000
d. He purchases goods on credit ₹ 40,000
40,000
40,000
2,13,000
40,000
35,000
2,88,000
=
40,000
2,48,000
2,88,000
e. He sold goods (Costing ₹ 20,000) for cash ₹ 26,000
26,000
(20,000)
6,000

2,39,000
20,000
35,000
2,94,000
=
40,000
2,54,000
2,94,000
Total
2,94,000
=
2,94,000
Thus we’ve
Assets
=
Cash ₹ 2,39,000 + Goods ₹ 20,000 + Furniture ₹ 35,000
=
₹ 2,94,000
Liabilities
=
Creditors ₹ 40,000
Capital
=
₹ 2,54,000
Assets ₹ 2,94,000 = Liabilities ₹ 40,000 + Capital ₹ 2,54,000
3. Mohit has the following transactions, prepare the accounting equation:
(a)
₹ 1,75,000
(b)
Purchased goods from Rohit
₹ 50,000
(c)
Sold goods on credit to Manish (Costing ₹ 17,500)
₹ 20,000
(d)
Purchased furniture for office use
₹ 10,000
(e)
Cash paid to Rohit in full settlement
₹ 48,500
(f)
₹ 20,000
(g)
Rent Paid
₹ 1,000
(h)
Cash withdrew for personal use
₹ 3,000

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Debtors
Furniture
Total
1. Mohit started business with cash ₹ 1,75,000
1,75,000
1,75,000
1,75,000
1,75,000
=
1,75,000
1,75,000
2. Purchased goods from Rohit for ₹ 50,000
50,000
50,000
1,75,000
50,000
2,25,000
=
50,000
1,75,000
2,25,000
3. Sold goods on credit to Manish (Costing ₹ 17,500) for ₹ 20,000
(17,500)
20,000
2,500
1,75,000
32,500
20,000
2,27,500
50,000
1,77,500
2,27,500
4. Purchased furniture for office use ₹ 10,000
(10,000)
10,000
1,65,000
32,500
20,000
10,000
2,27,500
=
50,000
1,77,500
2,27,500
5. Cash paid to Rohit in Full settlement ₹ 48,500
(48,500)
(50,000)
1500
1,16,500
32,500
20,000
10,000
1,79,000
=
1,79,000
1,79,000
6. Cash received from Manish ₹ 20,000
20,000
(20,000)
1,36,500
32,500
10,000
1,79,000
=
1,79,000
1,79,000
7. Rent Paid ₹ 1,000
(1,000)
(1,000)
1,35,500
32,500
10,000
1,78,000
=
1,78,000
1,78,000
8. Cash withdrawn for personal use ₹ 3,000
(3,000)
(3,000)
1,32,500
32,500
10,000
1,75,000
=
1,75,000
1,75,000
Total
1,75,000
=
1,75,000
Thus we’ve
Assets
=
Cash ₹ 1,32,500 + Goods ₹ 32,500 + Furniture ₹ 10,000
=
₹ 1,75,000
Liabilities
=
0
Capital
=
₹ 1,75,000
Assets ₹ 1,75,000 = Liabilities ₹ 0 + Capital ₹ 1,75,000

4. Rohit has the following transactions:
(a)
₹ 1,50,000
(b)
Purchased machinery on credit
₹ 40,000
(c)
Purchased goods for cash
₹ 20,000
(d)
Purchased car for personal use
₹ 80,000
(e)
Paid to creditors in full settlement
₹ 38,000
(f)
Sold goods for cash costing ₹ 5,000
₹ 4,500
(g)
Paid Rent
₹ 1,000
(h)
₹ 2,000

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Machinery
Total
a. Rohit commenced business with cash ₹ 1,50,000
1,50,000
1,50,000
1,50,000
1,50,000
=
1,50,000
1,50,000
b. Purchased machinery on credit ₹ 40,000
40,000
40,000
1,50,000
40,000
1,90,000
=
40,000
1,50,000
1,90,000
c. Purchsaed goods for cash ₹ 20,000
(20,000)
20,000
1,30,000
20,000
40,000
1,90,000
=
40,000
1,50,000
1,90,000
d. Purchased car for personal use ₹ 80,000
(80,000)
(80,000)
50,000
20,000
40,000
1,10,000
=
40,000
70,000
1,10,000
e. Paid to creditors in full settlement ₹ 38,000
(38,000)
(40,000)
2000
12,000
20,000
40,000
72,000
=
72,000
72,000
f. Sold goods costing ₹ 5,000 for ₹ 4,500
4,500
(5,000)
(500)
16,500
15,000
40,000
71,500
=
71,500
71,500
g. Paid Rent ₹ 1,000
(1,000)
(1,000)
15,500
15,000
40,000
70,500
=
70,500
70,500
2,000
2,000
17,500
15,000
40,000
72,500
=
2,000
70,500
72,500
Total
72,500
=
72,500
Thus we’ve
Assets
= Cash ₹ 17,500 + Goods ₹ 15,000 + Machinery ₹ 40,000
= ₹ 72,500
Liabilities
= ₹ 2,000
Capital
= ₹ 70,500
Assets ₹ 72,500 = Liabilities ₹ 2000 + Capital ₹ 70,500

5. Use accounting equation to show the effect of the following transactions of M/s Royal Traders:
(a)
₹ 1,20,000
(b)
Purchased goods for cash
₹ 10,000
(c)
₹ 5,000
(d)
Salary outstanding
₹ 2,000
(e)
Prepaid insurance
₹ 1,000
(f)
₹ 700
(g)
Sold goods for cash (Costing ₹ 5,000) for
₹ 7,000
(h)
Goods destroyed by fire
₹ 500

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Insurance
Total
a. Started business with cash ₹ 1,20,000
1,20,000
1,20,000
1,20,000
1,20,000
=
1,20,000
1,20,000
b. Purchased goods for cash ₹ 10,000
(10,000)
10,000
1,10,000
10,000
1,20,000
=
1,20,000
1,20,000
5,000
5,000
1,15,000
10,000
1,25,000
=
1,25,000
1,25,000
d. Salary outstanding ₹ 2,000
2,000
(2,000)
1,15,000
10,000
1,25,000
=
2,000
1,23,000
1,25,000
e. Prepaid Insurance ₹ 1,000
(1,000)
1,000
1,14,000
10,000
1,000
1,25,000
=
2,000
1,23,000
1,25,000
700
700
1,14,700
10,000
1,000
1,25,700
=
2,000
1,23,700
1,25,700
g. Sold goods for cash (Costing ₹ 5,000) ₹ 7,000
7,000
(5,000)
2,000
1,21,700
5,000
1,000
1,27,700
=
2,000
1,25,700
1,27,700
h. Goods destroyed by fire ₹ 500
(500)
(500)
1,21,700
4,500
1,000
1,27,200
=
2,000
1,25,200
1,27,200
Total
1,27,200
=
1,27,200
Thus we’ve
Assets
=
Cash ₹ 1,21,700 + Goods ₹ 4,500 + Insurance ₹ 1,000
=
₹ 1,27,200
Liabilities
=
₹ 2,000
Capital
=
₹ 1,25,200
Assets ₹ 1,27,200 = Liabilities ₹ 2000 + Capital ₹ 1,25,200
6. Show the accounting equation on the basis of the following transaction:
(a)
(i) Cash
₹ 5,00,000
(ii) Goods
₹ 1,00,000
(b)
Purchased building for cash
₹ 2,00,000
(c)
Purchased goods from Himani
₹ 50,000
(d)
Sold goods to Ashu (Cost ₹ 25,000)
₹ 36,000
(e)
₹ 3,000
(f)
Rent outstanding
₹ 5,000
(g)
Depreciation on building
₹ 8,000
(h)
Cash withdrawn for personal use
₹ 20,000
(i)
₹ 5000
(j)
Cash paid to Himani on account
₹ 20,000
(k)
₹ 30,000

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Building
Debtors
Total
Creditors
Outstanding Rent
i.
Cash ₹ 5,00,000
ii.
Goods ₹ 1,00,000
5,00,000
1,00,000
5,00,000
1,00,000
6,00,000
=
6,00,000
6,00,000
b. Purchased building for cash ₹ 2,00,000
(2,00,000)
2,00,000
3,00,000
1,00,000
2,00,000
6,00,000
=
6,00,000
6,00,000
c. Purchased goods from Himani ₹ 50,000
50,000
50,000
3,00,000
1,50,000
2,00,000
6,50,000
=
50,000
6,00,000
6,50,000
d. Sold goods to Ashu (Cost ₹ 25,000) for ₹ 36,000
(25,000)
36,000
11,000
3,00,000
1,25,000
2,00,000
36,000
6,61,000
=
50,000
6,11,000
6,61,000
e. Paid Insurance premium ₹ 3,000
(3,000)
(3,000)
2,97,000
1,25,000
2,00,000
36,000
6,58,000
=
50,000
6,08,000
6,58,000
f. Rent outstanding ₹ 5000
5000
(5000)
2,97,000
1,25,000
2,00,000
36,000
6,58,000
=
50,000
5,000
6,03,000
6,58,000
g. Depreciation on building ₹ 8,000
(8,000)
(8,000)
2,97,000
1,25,000
1,92,000
36,000
6,50,000
=
50,000
5,000
5,95,000
6,50,000
h. Cash withdrawn for personal use ₹ 20,000
(20,000)
(20,000)
2,77,000
1,25,000
1,92,000
36,000
6,30,000
=
50,000
5,000
5,75,000
6,30,000
5,000
5,000
2,82,000
1,25,000
1,92,000
36,000
6,35,000
=
50,000
5,000
5,000
5,75,000
6,35,000
j. Cash paid to Himani on account ₹ 20,000
(20,000)
(20,000)
2,62,000
1,25,000
1,92,000
36,000
6,15,000
=
30,000
5,000
5,000
5,75,000
6,15,000
j. Cash received from Ashu ₹ 30,000
30,000
(30,000)
2,92,000
1,25,000
1,92,000
6,000
6,15,000
=
30,000
5,000
5,000
5,75,000
6,15,000
Total
6,15,000
=
6,15,000
Thus we’ve
Assets
=
Cash ₹ 2,92,000 + Goods ₹ 1,25,000 + Building ₹ 1,92,000 + Debtors ₹ 6,000
=
₹ 6,15,000
Liabilities
=
Creditors ₹ 30,000 + Outstanding Rent ₹ 5,000 + Advance Rent Received ₹ 5,000
=
₹ 40,000
Capital
=
₹ 5,75,000
Assets ₹ 6,15,000 = Liabilities ₹ 40,000 + Capital ₹ 5,75,000

7. Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation
(a)
₹ 1,20,000
(b)
₹ 10,000
(c)
Invested in shares
₹ 50,000
(d)
₹ 5,000
(e)
Purchased goods on credit from Ragani
₹ 35,000
(f)
Paid cash for house hold Expenses
₹ 7,000
(g)
Sold goods for cash (costing ₹ 10,000)
₹ 14,000
(h)
Cash paid to Ragani
₹ 35,000
(i)
Deposited into bank
₹ 20,000

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Shares
Bank
Total
a. Started business with cash ₹ 1,20,000
1,20,000
1,20,000
1,20,000
1,20,000
=
1,20,000
1,20,000
10,000
10,000
1,30,000
1,30,000
=
1,30,000
1,30,000
c. Invested in shares ₹ 50,000
(50,000)
50,000
80,000
50,000
1,30,000
=
1,30,000
1,30,000
5,000
5,000
85,000
50,000
1,35,000
=
1,35,000
1,35,000
e. Purchased goods on credit from Ragani ₹ 35,000
35,000
35,000
85,000
35,000
50,000
1,70,000
=
35,000
1,35,000
1,70,000
f. Paid cash for household expenses ₹ 7,000
(7,000)
(7,000)
78,000
35,000
50,000
1,63,000
=
35,000
1,28,000
1,63,000
g. Sold goods for cash (Costing ₹ 10,000) for ₹ 14,000
14,000
(10,000)
4,000
92,000
25,000
50,000
1,67,000
=
35,000
1,32,000
1,67,000
h. Cash paid to Ragani ₹ 35,000
(35,000)
(35,000)
57,000
25,000
50,000
1,32,000
=
1,32,000
1,32,000
i. Deposited into bank ₹ 20,000
(20,000)
20,000
37,000
25,000
50,000
20,000
1,32,000
=
1,32,000
1,32,000
Total
1,32,000
=
1,32,200
Thus we’ve
Assets
=
Cash ₹ 37,000 + Goods ₹ 25,000 + Shares ₹ 50,000 + Bank ₹ 20,000
=
₹ 1,32,000
Liabilities
=
₹ 0
Capital
=
₹ 1,32,000
Assets ₹ 1,32,000 = Liabilities ₹ 0 + Capital ₹ 1,32,000

8. Show the effect of the following transactions on the accounting equation:
(a)
(i) Cash
₹ 2,30,000
(ii) Goods
₹ 1,00,000
(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)
₹ 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

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Building
Debtors
Prepaid Insurance
Total
Creditors
Outstanding Rent
(i)
Cash ₹ 2,30,000
(ii)
Goods ₹ 1,00,000
(iii)
Building ₹ 2,00,000
2,30,000
1,00,000
2,00,000
5,30,000
2,30,000
1,00,000
2,00,000
5,30,000
=
5,30,000
5,30,000
b. Purchased goods for cash ₹ 50,000
(50,000)
50,000
1,80,000
1,50,000
2,00,000
5,30,000
=
5,30,000
5,30,000
c. Sold goods (Costing ₹ 20,000) for ₹ 35,000
35,000
(20,000)
15,000
2,15,000
1,30,000
2,00,000
5,45,000
=
5,45,000
5,45,000
d. Purchased goods from Rahul ₹ 55,000
55,000
55,000
2,15,000
1,85,000
200,000
6,00,000
=
55,000
5,45,000
6,00,000
e. Sold goods to Varun (Costing ₹ 52,000) ₹ 60,000
(52,000)
60,000
8,000
2,15,000
1,33,000
2,00,000
60,000
6,08,000
=
55,000
5,53,000
6,08,000
f. Paid cash to Rahul in full settlement ₹ 53,000
(53000)
(55,000)
2,000
1,62,000
1,33,000
2,00,000
60,000
5,55,000
=
5,55,000
5,55,000
g. Salary paid by him ₹ 20,000
(20,000)
(20,000)
1,42,000
1,33,000
2,00,000
60,000
5,35,000
=
5,35,000
5,35,000
h. Received cash from Varun in full settlement ₹ 59,000
59,000
(60,000)
(1,000)
2,01,000
1,33,000
2,00,000
5,34,000
=
5,34,000
5,34,000
i. Rent outstanding ₹ 3,000
3,000
(3,000)
2,01,000
1,33,000
2,00,000
5,34,000
=
3,000
5,31,000
5,34,000
j. Prepaid Insurance ₹ 2,000
(2000)
2,000
1,99,000
1,33,000
2,00,000
2,000
5,34,000
=
3,000
5,31,000
5,34,000
k. Commission received by him ₹ 13,000
13,000
13,000
2,12,000
1,33,000
2,00,000
2,000
5,47,000
=
3,000
5,44,000
5,47,000
l. Amount withdrawn by him for personal use ₹ 20,000
(20,000)
(20,000)
1,92,000
1,33,000
2,00,000
2,000
5,27,000
=
3,000
5,24,000
5,27,000
m. Depreciation charge on building ₹ 10,000
(10,000)
(10,000)
1,92,000
1,33,000
1,90,000
2,000
5,17,000
=
3,000
5,14,000
5,17,000
n. Fresh capital invested ₹ 50,000
50,000
50,000
2,42,000
1,33,000
1,90,000
2,000
5,67,000
=
3,000
5,64,000
5,67,000
o. Purchased goods from Rakhi ₹ 10,000
10,000
10,000
2,42,000
1,43,000
1,90,000
2,000
5,77,000
=
10,000
3,000
5,64,000
5,77,000
Total
5,77,000
=
5,77,000
Thus we’ve
Assets
=
Cash ₹ 2,07,000 + Goods ₹ 1,43,000 + Building ₹ 1,90,000 + Debtors ₹ 35,000 + Prepaid Insurance ₹ 2,000
=
₹ 5,77,000
Liabilities
=
Creditors ₹ 10,000 + Outstanding Rent ₹ 3,000
=
₹ 13,000
Capital
=
₹ 5,64,000
Assets ₹ 5,77,000 = Liabilities ₹ 13,000 + Capital ₹ 5,64,000

9. Transactions of M/s Vipin Traders are given below.
Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.
(a)
₹ 1,25,000
(b)
Purchased goods for cash
₹ 50,000
(c)
Purchase furniture from R.K. Furniture
₹ 10,000
(d)
Sold goods to Parul Traders (Costing ₹ 7,000 vide bill no.5674)
₹ 9,000
(e)
Paid cartage
₹ 100
(f)
Cash Paid to R.K. furniture in full settlement
₹ 9,700
(g)
Cash sales (costing ₹ 10,000)
₹ 12,000
(h)
₹ 4,000
(i)
Cash withdrew for personal use
₹ 3,000

(Figures in rupees)
Transaction
No.
Assets
=
Liabilities
Capital
Total
Cash
Stock of Goods
Debtors
Furniture
Total
a. Business started with cash ₹ 1,25,000
1,25,000
1,25,000
1,25,000
1,25,000
=
1,25,000
1,25,000
b. Purchased goods for cash ₹ 50,000
(50,000)
50,000
75,000
50,000
1,25,000
=
1,25,000
1,25,000
c. Purchased furniture from R.K. furniture for ₹ 10,000
10,000
10,000
75,000
50,000
10,000
1,35,000
=
10,000
1,25,000
1,35,000
d. Sold goods to Parul Traders (Costing ₹ 7,000 vide bill no.5674) ₹ 9,000
(7,000)
9,000
2,000
75,000
43,000
9,000
10,000
1,37,000
=
10,000
1,27,000
1,37,000
e. Paid cartage ₹ 100
(100)
(100)
74,900
43,000
9,000
10,000
1,36,900
=
10,000
1,26,900
1,36,900
f. Cash Paid to R.K. furniture in full settlement ₹ 9,700
(9,700)
(10,000)
300
65,200
43,000
9,000
10,000
1,27,200
=
1,27,200
1,27,200
g. Cash sales (costing ₹ 10,000) ₹ 12,000
12,000
(10,000)
2,000

77,200
33,000
9,000
10,000
1,29,200
=
1,29,200
1,29,200
4,000
4,000
81,200
33,000
9,000
10,000
1,33,200
=
1,33,200
1,33,200
i. Cash withdrew for personal use ₹ 3,000
(3,000)
(3,000)
78,200
33,000
9,000
10,000
1,30,200
=
1,30,200
1,30,200
Total
1,30,200
=
1,30,200
Thus we’ve
Assets
=
Cash ₹ 78,200 + Goods ₹ 33,000 + Debtors ₹ 9,000 + Furniture ₹ 10,000
=
₹ 1,30,200
Liabilities
=
₹ 0
Capital
=
₹ 1,30,200
Assets ₹ 1,30,200 = Liabilities ₹ 0 + Capital ₹ 1,30,200
10. Bobby opened a consulting firm and completed these transactions during November, 2017
(a)
Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a business called Bobbie Consulting.
(b)
Purchased land and a small office building. The land was worth ₹ 1,50,000 and the building worth ₹ 3,50,000. The purchase price was paid with ₹ 2,00,000 cash and a long term note payable for ₹ 8,00,000
(c)
Purchased office supplies on credit for ₹ 12,000
(d)
Bobbie transferred title of motor car to the business. The motor car was worth ₹ 90,000.
(e)
Purchased for ₹ 30,000 additional office equipment on credit.
(f)
Paid ₹ 7,500 salary to the office manager.
(g)
Provided services to a client and collected ₹ 30,000
(h)
Paid ₹ 4,000 for the month’s utilities.
(i)
Paid supplier created in transaction c.
(j)
Purchase new office equipment by paying ₹ 93,000 cash and trading in old equipment with a recorded cost of ₹ 7,000
(k)
Completed services of a client for ₹ 26,000. This amount is to be paid within 30 days.
(l)
Received ₹ 19,000 payment from the client created in transaction k.
(m)
Bobby withdrew ₹ 20,000 from the business.
Analyse the above stated transactions and open the following T-accounts:
Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.

a.
Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a business called Bobbie Consulting.
Analysis of this transaction: In this transaction there is cash inflow increasing the cash at hand and also there is addition of office equipment. This transaction increases the capital. As the increase in the assets is debited and the increase in the capital is credited, these transactions will be recorded with a debit to the cash and office equipment and a credit to the capital.
b.
Purchased land and a small office building. The land was worth ₹ 1,50,000 and the building worth ₹ 3,50,000. The purchase price was paid with ₹ 2,00,000 cash and a long term note payable for ₹ 8,00,000
Analysis of Transaction: The land purchased is an asset. An increase in the asset has to be debited.
Similarly the purchase of building incresases the asset and hence should be debited.
For purchasing the above two assets, another asset i.e. cash is spent and hence decreased. And a decrease in the asset should be credited.
At the same time there is a long term note payable for ₹ 8,00,000. This is a liability. An increase in the liability should be credited.
c.
Purchased office supplies on credit for ₹ 12,000
Analysis of transaction: Purchase of office supplies is an expense and hence an increasse in the expenses should be debited.
For purchasing the office supplies, a liability is created and hence the accounts payable will be increased and an increased liability should be credited.
d.
Bobbie transferred title of motor car to the business. The motor car was worth ₹ 90,000.
Analysis of the transaction: Motor car will be an asset and hence an increase in the asset should be debited.
Transferring the title of the motor car will increase the capital. An increase in the capital should be credited.
e.
Purchased for ₹ 30,000 additional office equipment on credit.
Analysis of the transaction: Office equipment is an asset and hence an increase in the asset will be debited.
This office equipment is purchased on credit and hence the liability of the accounts payable account will be increased. An increase in the liability should be credited.
(f)
Paid ₹ 7,500 salary to the office manager.
Analysis of the transaction: Salary is an expense and hence an increase in the expense should be debited.
Payment of salary will reduce the cash. A decrease in the cash asset should be credited.
(g)
Provided services to a client and collected ₹ 30,000
Analysis of the transaction: Providing services for cash should be debited to the cash account.
This should be credited to the capital account.
h.
Paid ₹ 4,000 for the month’s utilities.
Analysis of the transaction: Monthly utilities is an expense and hence an increase in the expense should be debited.
On the otherhand the payment of the expenses will reduce the cash. And hence a decrease in the cash asset should be credited.
i.
Paid supplier created in transaction c.
Analysis of the transaction: There is a decrease in the liability and hence it should be debited.
As this liability is paid out through cash, it’ll reduce the cash asset. A decrease in the cash asset shoud be credited.
j.
Purchase new office equipment by paying ₹ 93,000 cash and trading in old equipment with a recorded cost of ₹ 7,000
Analysis of the transaction: Buying the new office equipment will increase the assets and hence should be debited.
However, for buying this office equipment, the old equipment of ₹ 7,000 is traded out. Thus there is a decrease in the asset and hence it should be credited.
Also, the rest of the amount is i.e 93,000 – 7,000 = 86,000 is paid out in case. Thus there is a decrease in the cash asset and hence it should be credited.
k.
Completed services of a client for ₹ 26,000. This amount is to be paid within 30 days.
Analysis of the transaction: Completion of services has created revenue.
As this is a sale, the sales account should be credited.
l.
Received ₹ 19,000 payment from the client created in transaction k.
Analysis of the transaction: There is revenue and hence should be credited.
This is bringing in cash and hence the cash acccount should be debited.
m.
Bobby withdrew ₹ 20,000 from the business.

Analysis of the transaction: There is withdrawal and hence the drawings account i.e.expenses should be debited.

The drawings will reduce the cash and hence the cash asset should be credited.