Question No 14 Chapter No 5 – T.S. Grewal 11 Class

Question No.14 - Chapter No.5- T.S. Grewal +1 Book 2019

Question No 14 Chapter No 5

14 Raghunath had the following transactions in an accounting year:

(i) Commenced business with cash Rs 50,000.

(ii) Paid into Bank Rs 10,000

(iii) Purchased goods for cash Rs 20,000 and credit Rs 30000.

(iv) Sold goods for cash Rs 40,000 costing Rs 30,000

(v) Paid rent Rs 500.

(vi) Rent outstanding Rs 100

(vii) Bought furniture Rs 5,000 on credit.

(viii) Bought refrigerator for personal use Rs 5,000

(ix) Purchased Motorcycle for cash Rs 20,000

Create an Accounting Equation to show the effect of the above transactions on his assets, liabilities and capital and also show his final balance sheet.

Solution of Question No 14 Chapter No 5: –

S. No.  Particulars Assets
Liabilities
Capital
+Cash +Bank +St. +Fur. +Veh.
+Cr. +o/s Rent
(i) Commenced business with cash Rs 50,000. +50,000             +50,000
    50,000 –  –  –  –  +50,000
(ii) Paid into Bank Rs 10,000 -10,000 +10,000            
    40,000 +10,000 –  –  –  +50,000
(iii) Purchased goods for cash Rs 20,000 and credit Rs 30000. -20,000 +50,000     +30,000    
    20,000 +10,000 +50,000 –  30,000 +50,000
(iv) Sold goods for cash Rs 40,000 costing Rs 30,000 +40,000 –  -30,000     –    +10,000
    +60,000 +10,000 +20,000 –  30,000 +60,000
(v) Paid rent Rs 500. -500 –  –      –    -500
    59,500 +10,000 +20,000 –  30,000 +59,500
(vi) Rent outstanding Rs 100 –  –  –        +100 -100
    59,500 +10,000 +20,000 –  30,000 +100 +59,400
(vii) Bought furniture Rs 5,000 on credit. –  –  –  +5,000   +5,000 – 
    59,500 +10,000 +20,000 +5,000 35,000 +100 +59,400
(viii) Bought refrigerator for personal use Rs 5,000 -5000 –  –  –  –  -5000
    54,500 +10,000 +20,000 +5,000 35,000 +100 +54,400
(ix) Purchased Motorcycle for cash Rs 20,000

-20,000

+20,000

  Total  34,500 +10,000 +20,000 +5,000 +20,000 35,000 +100 +54,400

Answer: –

Assets: – Cash 34,500 + bank 10,000 + Stock 2,000 + Furniture 5,000 + Vehicle 20,000 = 89,500/-

Liabilities: – Creditors 35,000  + Outstanding Rent 100 =  35,100/-

Capital = 54,400/-

Liabilities  +Capital

35,100 + 54,400 = 89,500/-

Liabilities Amount Assets Amount
Capital 54,500 Cash 34,500
Creditors 35,000 Bank 10,000
Outstanding Rent 100 Stock 20,000
    Furniture 5,000
    Vehicle 20,000
  89,500   89,500

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 

Transaction No. 1 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 1 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

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

Transaction No. 2 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 2 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. Cash and Bank

  • Cash a/c : Because business paying cash.
  • Bank a/c. Because business deposited the amount of cash in the bank account.

There will no change in capital or liabilities.

Transaction No. 3

Transaction No. 3 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 3 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image three accounts are involved  i.e. 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.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 4 Question No.14 – 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):

  • Stock a/c (Sale):- Because business giving(selling) its goods.
  • Cash : – Because Business received cash from customer.
  • Capital(Profit): Because owner has right on all profit of the business so the amount of the profit will be added in the capital a/c. (Profit = sale price – cost price) 40,000 – 30,000 = 10,000(Profit)
     

Transaction No. 5

Transaction No. 5 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 5 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. rent and capital

  • Cash a/s: – Part of the payment is made in cash.
  • 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”

Transaction No. 6

Transaction No. 6 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 6 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

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

  • O/s Rent A/c: – Business did not paid the amount of rent yet, but has to pay in future, So that’s why it becomes a liability for the business.
  • Capital a/c:- The rent is due but not paid yet. So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital”
     

Transaction No. 7

Transaction No. 7 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 7 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. Furniture a/c (Purchase) and Cash

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

Transaction No. 8

Transaction No. 8 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 8 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. cash and capital:

  • Cash a/c: – payment is made in cash.
  • Capital a/c:-  cash withdrawal by the owner

Transaction No. 9

In this transaction, as shown in the above image two accounts are involved i.e.

Transaction No. 9 Question No.14 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 14 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 9 Question No.14 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. Vehicle and Cash:

  • Vehicle a/c (Purchase):- Because business receiving Motorcycle.
  • Cash a/c : – Because business transaction is not clear about the payment so it assumed that it is paid in cash.

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