Question No 12 Chapter No 5 - T.S. Grewal 11 Class

Question No 12 Chapter No 5

Table of Contents

Solution of Question No 12 Chapter No 5: –

Explanation of All Transactions with images: –

T.S. Grewal’s Double Entry Book Keeping (Class +1) – Solution

12. Prove that the Accounting Equation is satisfied is all the following transactions of Sameer Goel:
(i) Started business with cash Rs. 10,000.
(ii) Paid rent in advance Rs 300
(iii) Purchased goods for cash 5,000 and credit 2,000.
(iv) Sold goods for cash Rs 8,000 costing Rs 4,000.
(v) Paid salary Rs 450 and salary outstanding being Rs 100.
(vi) Bought motorcycle for personal use Rs 3,000.

Solution of Question No 12 Chapter No 5: –

Question No 12 Chapter No 5 – T.S. Grewal 11 Class - Explained with Animated Examples

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S. No.	Particulars	Assets			Liabilities		Capital
S. No.	Particulars	Cash	+Prepaid Rent	+Stock	+Creditors	+O/S Salary	Capital
(i)	Started business with cash Rs. 10,000.	+10,000					+10,000
		10,000	–	–	–	–	+10,000
(ii)	Paid rent in advance Rs 300	-300	+300
		9,700	+300	–	–	–	+10,000
(iii)	Purchased goods for cash 5,000 and credit 2,000.	-5,000	–	+7,000	+2,000		–
		4,700	+300	+7,000	2,000	–	+10,000
(iv)	Sold goods for cash Rs 8,000 costing Rs 4,000.	+8,000	–	4,000	–	–	+4,000
		12,700	+300	+3000	2,000	–	+14,000
(v)	Paid salary Rs 450 and salary outstanding being Rs 100.	-450	–	–	–	+100	-550
		12,250	+300	+3000	2,000	+100	+13,450
(vi)	Bought motorcycle for personal use Rs 3,000.	-3,000	–	–	–	–	-3,000
	Total	9,250	+300	+3000	2,000	+100	10,450

Answer: –

Assets: – Cash 9250+ Prepaid Rent 300 + Stock 3000= 12,550/-
Liabilities: – Creditors 2000 + O/s Salary 100 = 2,100/-
Capital = 10,450/-
Liabilities +Capital
2,100 + 10,450 = 12,550/-

Explanation of All Transactions with images: –

This is not a part of the solution, So you don’t have to write it in the exam. So why we explained if it is not needed. Because This explanation will help you to understand all transactions with logic so don’t need to remember all the transactions but just understand and remember the logic use behind it.

Transaction No. 1

As we discuss in the previous topic, A owner and the business both have a separate identity in the eye of law. So, the business will be treated as an Artificial Person and anything invested by the owner into the business will be treated as capital.
So, In this transaction, as shown in the above image owner investing her cash into the business, this will be treated as capital of the business. The business receiving an asset i.e. cash.

Transaction No. 2

In this transaction, as shown in the above image two accounts are involved Advance Rent and Cash

Advance Rent a/c : – Business paid rent in advance so till date this expense in not due, so till it become due business will treat it as an asset of the business.
Cash a/c:- Business paying cash so it will deducted.

Transaction No. 3

In this transaction, as shown in the above image three accounts are involved Stock(Purchase), Cash and Creditors.

Stock a/c (Purchase):- Because business receiving goods.
Cash a/c : – Because business paying some part of due amount in cash.
Creditor : – Because Business did not pay some part of due amount yet, But it has to pay in future, so that’s why account of creditors is created.

Transaction No. 4

Transaction No. 4 Question No.12 - Chapter No.5- T.S. Grewal +1 Book 2019 — Transaction No. 4 Question No.12 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. Stock(Sale), Cash, and Capital(Profit):

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Stock a/c (Sale):- Because business giving(selling) its goods.
Cash : – Because Business received cash from customer.
Capital(Profit): Because the owner has the right to all profit of the business so the amount of the profit will be added in the capital a/c. (Profit = sale price – cost price) 30,000-20,000 = 10,000(Profit)

Transaction No. 5

In this transaction, as shown in the above image two accounts are involved i.e. O/S wages and capital

Cash a/s: – Part of the payment is made in cash.
O/s Salary A/c: – Business did not pay some amount of salary yet, but has to pay in, So that’s why it becomes a liability for the business.
Capital a/c:- Business get services from its worker. So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital”