Question No 28 Chapter No 5 – T.S. Grewal 11 Class

Question No.28 - Chapter No.5- T.S. Grewal +1 Book 2019

Question No 28 Chapter No 5

28. Show an Accounting Equation on the basis of the following transaction: –

(i) Sunil Started business with cash 1,50,000

(ii) Opened a Bank account by depositing Rs 25,000 out of cash

(iii) He sold his personal car for Rs 50,000 and deposited the amount in
the firm’s bank account

(iv) He purchased a building and furniture for 1,00,000

(v) He purchased goods from Ram on Credit 50,000

(vi) He paid cartage 500

(vii) He sold to Shyam on credit goods costing Rs 6,000 for 9,000

(viii) Received rent from tenants 1,000

(ix) Received security deposit from tenants 1,500

(x) Purchased stationery for cash 100

(xi) Invested in shares(personal) 50,000

(xii) Received interest in cash 200

(xiii) Introduced fresh capital 25,000

(xiv) Goods Destroyed by fire 500

Solution of Question No 28 Chapter No 5: –

S. No.  Particulars Assets
Liabilities
Capital
Cash  +Bank +Furn. +Stock

+Debt.

+Crdt. +Sec.
(i) Sunil Started business with cash 1,50,000 +1,50,000             +1,50,000
    1,50,000             +1,50,000
(ii) Opened a Bank account by depositing Rs 25,000 out of cash -25,000 +25,000            
    1,25,000 +25,000           +1,50,000
(iii) He sold his personal car for Rs 50,000 and deposited the amount in
the firm’s bank account
  +50,000           50,000
    1,25,000 +75,000           +2,00,000
(iv) He purchased a building and furniture for 1,00,000 -1,00,000   +1,00,000          
    25,000 +75,000 +1,00,000         +2,00,000
(v) He purchased goods from Ram on Credit 50,000       +50,000   +50,000    
    25,000 +75,000 +1,00,000 +50,000   +50,000   +2,00,000
(vi) He paid cartage 500 -500             -500
    24,500 +75,000 +1,00,000 +50,000   +50,000   +1,99,500
(vii) He sold to Shyam on credit goods costing Rs 6,000 for 9,000       -6,000 +9,000     +3,000
    24,500 +75,000 +1,00,000 +44,000 +9,000 +50,000   +2,02,500
(viii) Received rent from tenants 1,000 +1,000             +1,000
    25,500 +75,000 +1,00,000 +44,000 +9,000 +50,000   +2,03,500
(ix) Received security deposit from tenants 1,500 +1,500           +1,500  
    27,000 +75,000 +1,00,000 +44,000 +9,000 +50,000 +1,500 +2,03,500
(x) Purchased stationery for cash 100 -100              -100 
    26,900 +75,000 +1,00,000 +44,000 +9,000 +50,000 +1,500 +2,03,400
(xi) Invested in shares(personal) 50,000   -50,000           -50,000
    26,900 +25,000 +1,00,000 +44,000 +9,000 +50,000 +1,500 +1,53,400
(xii) Received interest in cash 200 +200             +200
    27,100 +25,000 +1,00,000 +44,000 +9,000 +50,000 +1,500 +1,53,600
(xiii) Introduced fresh capital 25,000 +25,000             +25,000
    52,100 +25,000 +1,00,000 +44,000 +9,000 +50,000 +1,500 +1,78,600
(xiv) Goods Destroyed by fire 500       -500       -500
  Total  52,100 +25,000 +1,00,000 +43,500 +9,000 +50,000 +1,500 +1,78,100

Answer: –

Assets = Cash 52,100 + Bank 25000 + Furniture 100000 + Stock 43500 +  Debtors 9000 = 2,29,600/-

Liabilities: – Creditors 50,000 +  Security 1,500 =  51,500/-

Capital = 1,78,100/-

Liabilities  +Capital

51,500 + 1,78,100= 2,

29,600/-

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.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 1 Question No.28 – 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.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 2 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, one new asset account will be opened named 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.28 Chapter No.5 T.S. Grewal 1 Book 2019 1 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 3 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

With this transaction, two accounts are created i.e. cash and capital

 Transaction No. 4

Transaction No. 4 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 4 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

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

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

Transaction No. 5

Transaction No. 5 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 5 Question No.28 – 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 (Purchase) and Creditor 

  • Stock :- Because business receiving goods.
  • Creditor: – Because Business bought goods on credit, they did not pay anything. But it has to pay in future. so that’s why Seller is become our creditor.

Transaction No. 6

Transaction No. 6 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 6 Question No.28 – 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: – Because business cash goes out from the business.
  • Capital a/c:- because business get services from transporter and paid them for it. 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.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 7 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image three accounts are effected i.e. Stock(Sale), Capital and Debtors:

  • Stock a/c (Sale):- Because business giving(selling) its goods.
  • Debtors (Sohan) : – Because Business sold goods on credit. That’s why he has to pay in future to us, so Shyam is become our Debtors.
  • 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) 9,000-6,000 = 3,000(Profit)

Transaction No. 8

Transaction No. 8 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 8 Question No.28 – 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:- Business paying cash so it will deducted.
  • Capital a/c:- Business received rent from tenant, So this is income of the business. “ All income and gains are added to the capital“.

Transaction No. 9

Transaction No. 9 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 9 Question No.28 – 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:- Business paying cash so it will deducted.
  • Security a/c:- Business received amount of security from tenant which will be refunded in future when tenant leave the building. So that’s why its our liability.

Transaction No. 10

Transaction No. 10 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 10 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image two accounts are involved i.e. Purchase Stationery(Expenses) and Cash

  • Cash a/c : – Because business paying due amount in cash.
  • Capital a/c:- Because business purchase stationery for office use and paid them for it. Stationery items are consumable items, So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital.

Transaction No. 11

Transaction No. 11 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 11 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

With this transaction two accounts are effected one is Bank and another is capital.

Transaction No. 12

Transaction No. 12 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 12 Question No.28 – 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:- Business Receiving cash so it will Added.
  • Capital a/c:- Business earned interest on investment, So this is income of the business. “ All income and gains are added to the capital“.

Transaction No. 13

Transaction No. 13 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 13 Question No.28 – Chapter No.5- T.S. Grewal +1 Book 2019

With this transaction three accounts are created i.e. cash and capital.

Transaction No. 14

Transaction No. 14 Question No.28 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 28 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 14 Question No.28 – 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 (Loss by fire) and Capital(Loss):

  • Stock a/c (Sale):- Because business losing its goods.
  • Capital(Profit): Because owner has right on all profit/loss of the business so the amount of the loss will be deducted from the capital a/c.

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