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payment made to creditors in full settlement accounting equation

Q.15 Prepare an Accounting Equation from the following: (i) Started business with cash 50,000 and goods 30,000. Prepare Accounting Equation on the basis of the following: (i) Started business with cash Rs.70,000. Bought goods for cash ₹80,000 and on credit for ₹40,000. (c) Goods costing ₹ 40,000 were sold for ₹ 55,000 for cash. (iii) Payment made to creditors in full 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. 5,00,000 and a loan of Rs. Here, we have provided in a simplistic and a step by step method, which is useful for the students to score well in the board exams. To help you better understand how the accounting equation works and stays in balance, here are more sample transactions and their effects to the accounting equation. (i) Started a business with cash ₹ 1,00,000 and goods worth ₹ 20,000. (ii) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000. 3. 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. All the solutions of Accounting Equation - Accountancy explained in detail by experts to help students prepare for their CBSE exams. 6,500. (d) Purchased goods from Krishan for cash ₹ 10,000. Jafari Selemani. During the year, the following transactions took place: (i) Furniture purchased for Cash Rs. 5. Your email address will not be published. Find out his capital as on 31st March, 2019 and profit made or loss incurred during the year 2018-19. Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. Chapter 1- Accounting Equation defines the below-mentioned concepts: Q.1 What will be effect of the following on the Accounting Equation? (d) Purchase of … Then divide the resulting turnover figure into 365 days to arrive at the number of accounts payable days. Furthermore, the accounts payable balance is reflected in the balance sheet Balance Sheet The balance sheet is one … WN1 Calculation of Selling Price. 1,00,000 borrowed from Citi Bank. 1. Course. The solution for this question is as follows: Q.10 Prove that the Accounting Equation 4,000 and wages 29 Paid Rs. (iii) Rent paid ₹ 5,000. (b) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000. assets, liabilities, and capital (or "equity"). … When the cash discount is given to customer on sale for one time settlement. Also mention the nature of account:−. (e) Rent outstanding ₹ 2,000. 3. 2. Show the accounting equation on the basis of following transactions: (vii) Paid telephone bill amounting to ₹ 800. Q.12 Prove that the Accounting Equation is satisfied in all the following transactions of Sameer Goel: (iii) Purchased goods for cash ₹ 5,000 and credit ₹ 2,000. Sun & Co. for ₹ 11,200. (i) Increase in an asset and a liability. Purchased goods from Raghubir on credit for ₹ 16,000. 7. 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. 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. Working Note: Solution: The two basic purposes of the accounting equation are. 17,500. (i) Started business with cash ₹ 50,000. Q.19 If the capital of a business is ₹ 3,00,000 and liabilities are ₹ 50,000, loss ₹ 70,000, calculate the total assets of the business. On which side the increase in the following accounts will be recorded? (ii) Credit purchase of goods 18,000. 1. During the year, he had introduced additional capital of ₹ 60,000 and had withdrawn ₹ 36,000 for personal purposes. (iii) Payment made to creditors in full settlement * 17,500. (f) Cash paid to Krishan ₹ 28,000. (iv) Sold goods to Ram on Credit ₹ 65,000 (costing ₹ 50,000). (iii) Increase in assets and capital. (iv) Purchase of machinery for cash 20,000. (iv) Expenses during the period are ₹ 40,000. Also mention the nature of account: Open 'T' shape account for Furniture and write the following on the proper side∶−. The formula can be modified to exclude cash payments to suppliers, since the numerator should include only purchases on credit from suppliers. (d) Paid for Rent ₹ 5,000. Paid for Rent ₹2,000 and for salaries ₹4,000. Paid for Rent ₹ 2,000. Find out his closing capital and profits earned during the year. 4. Harsha started business with cash 2,00,000 Purchased goods from Naman for cash 40,000 Sold goods to Bhanu costing 10,000/- … (iii) Payment made to creditors in full settlement 17,500. He withdrew ₹ 800 for his personal use. In fact, the entire double entry accounting concept is based on the basic accounting equation. Dr Wages (expense) 100,000 Dr Prepaid Wages (asset*) 20,000 Cr Cash 120,000 *Note that this is called a … 24,700 to Naveed store in full settlement for June 5 th transaction by bank. (iii) Payment made to creditors in full settlement ₹ 17,500. During the year, the following transactions took place: (i) Furniture purchased 2. (iii) Paid to creditor, B ,Rs. (v) Depreciation on machinery ₹ 2,000. Q.9 Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash ₹ 70,000. The accounting equation is a mathematical expression that shows the relationship among the different elements of accounting, i.e. Give one example of each of the following transactions: Use Accounting Equation to show the effect of the following transactions of M/s Royal Traders: Prepare Accounting Equation from the following :− (a) Started business with cash ₹ 50,000 and goods ₹ 30,000. (iv) Sold goods for cash ₹ 40,000 costing ₹ 30,000. (i) Harish started business with cash ₹ 1,80,000. Class 11 TS Grewal Solutions Accountancy Chapter 2:-Download PDF Here. ASC's balance sheet as of midnight December 8, 2019 is: **The income statement (which reports the company's revenues, expenses, gains, and losses during a specified period of … (b) Sold goods to Hari on credit ₹ 20,000. Started business with cash ₹ 75,000 and goods ₹ 25,000. 8 - Payment made to creditors to the value of 200,000 at 10 percent discount. He earned a profit of ₹ 5,000 during the year ended 31st March, 2019 and withdrew cash ₹ 4,000 for personal use. (c) Payment made to creditors in full settlement ₹ 17,500. On which side will the increase in the following accounts be recorded? Goods costing ₹ 60,000 sold for ₹ 80,000 on credit. (ii) Credit purchase of goods 18,000. ₹ The … This 10% discount is a settlement or cash discount. Purchased goods for ₹ 40,000 on credit. 2. (b) Sold goods (costing ₹ 50,000) at a profit of 25% on the cost. (vi) Received Cash from Debtors ₹ 15,000. 3. (iii) Payment made to creditors in full settlement ₹ 17,500. These are the building blocks of the basic accounting equation. (ii) Credit purchases of goods Rs. Half the payment received in cash. (iii) Purchased furniture on credit for Rs 30,000 A nswer 5: On 31st March, 2019 his assets were ₹ 75,000. During the year, the following transactions took place: (i) Furniture purchased From the following transactions prepare the Proprietor's Account in 'T' shape: Prepare the Accounting Equation on the basis of the following: Opening Capital (Capital as on 1st April, 2011) = Rs 5,00,000 6. X started a business on 1st April, 2013 with a Capital of ₹ 1,00,000 and a loan of ₹ 50,000 from the bank. (i) Started business with cash ₹ 45,000 18,000. ₹ ₹ (ii) Purchased goods for cash 30,000 and on credit from Karan 20,000. 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 (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. (ii) Credit purchase of goods Rs 18,000. 10% discount is allowed if payment is made within 30 days. (iv) Purchase of machinery for cash ₹ 20,000. This shows all company ass… ... Making a payment to creditor.-300-300: Balance: 15,700: 500: 5,500: 8,500 : 200: 30,000: Let’s check the accounting equation: Assets $30,200 (Cash $15,700 + Supplies $500 + Equipment $5,500 + Truck $8,500) = Liabilities $200 + Equity $30,000. 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). (v) Rent outstanding 2,000. 8,00,000. 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. WN1 Calculation of Sale Price. Dr Cash 8,000 Dr Plant and machinery 3,000 Cr Capital 11,000 2. (vii) Received ₹ 10,000 from Gupta against the Bills Receivable on its maturity. The first journal is to record the cash paid to the supplier. (iv) Rent paid ₹ 5,000; and rent outstanding ₹ 2,000. This simple equation illustrates two facts about a company: what it owns and what it owes. In this case an asset (cash) is reduced and, on the other side of the accounting equation, a liability (accounts payable) is also reduced by the payment made to the supplier. Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash 70,000. (b) Paid rent ₹ 4,000 including ₹ 1,000 as advance. 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. Prepare accounting equation from the following: 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. (iv) Purchase of 9. Purchased goods from Nakul on Credit for ₹ 80,000. Trade Discount 25% and Cash Discount 5% if full payment is made within 14 days. Accounting … 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 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: A 2% cash discount on 500 is 10, and the amount of cash the business actually pays the supplier pays is 490. Y started a business on 1st April, 2013 with a Capital of ₹ 2,00,000 and a loan of ₹ 75,000 from the bank. 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. 18000 3) Payment made to creditors in full settlement Rs. (iii) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%. Well, by definition, a creditor is someone to whom money is owed. Mohit has the following transactions, prepare the accounting equation: Business started with cash ₹ 1,75,000; Purchased goods from Rohit ₹ 50,000; Sold goods on credit to Manish (Costing ₹ 17,500)₹ 20,000; Purchased furniture for office use ₹ 10,000; Cash paid to Rohit in full settlement ₹ 48,500; Cash received from … ₹ ₹ (iv) Withdrew cash for personal use 10,000. 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. (ii) Credit purchase of goods Rs 18,000. (iii) Goods costing 40,000 were sold for 55,000. 17,500 (iv) Purchases of machinery for cash Rs. (i) Commenced business with cash ₹ 60,000. (ii) Sold goods worth Rs 10,000 for cash Rs 12,000. Raghu started business with Cash ₹1,50,000. (iii) Payment made to creditors in full settlement Rs 17,500. He had also goods amounting to ₹ 15,000 which he had purchased on credit and the payment had not been made. 18: Sold goods for cash Rs. Accounting Equation S.No Transaction Assets = Liabilities + Capital Cash + Furniture + Stock = Creditors 1. payment has been made to a creditor during the month. Show the accounting equation on the basis of the following transactions and also show the Balance Sheet: 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. (ix) Introduced fresh Capital ₹ 40,000. (v) Depreciation on machinery 2,000. 70000 2) Credit purchase of goods Rs. (ii) Sold 50% of above goods at a profit of ₹ 2,000 on credit to Ram. (iii) Payment made to creditors in full settlement ₹ 17,500. (v) Paid salary ₹ 500 and salary outstanding being ₹ 100. Prepare Accounting Equation from the following:-, Goods costing ₹ 40,000 sold at a profit of 20% for cash, Working Note: (iii) Purchased goods for cash ₹ 20,000 and credit ₹ 30,000. (b) Credit purchase of goods Rs.18,000. 18,000 (iii) Payment made to creditors in full settlement Rs. All Accountancy Dk Goel 2019 Solutions for class Class 11 Commerce Accountancy are prepared by experts and are 100% accurate. 6. He made a profit of ₹ 20,000 during the year. (c) Purchased goods from Krishan on credit ₹ 36,000. Prepare Accounting Equation from the following: Accounting Principles of Accounting Volume 1 What is the impact on the accounting equation when a payment of account payable is made? Bought goods for cash ₹ 30,000 and on credit for ₹ 44,000. 8,000, costing Rs. 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: 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 Also prepare a Balance Sheet. (iii) Goods costing ₹ 40,000 were sold for ₹ 55,000. ACCOUNTING (AC310) Uploaded by. h) ½ of the stock available was sold to Mohit at a profit of 20% on cost. (ix) Purchased motorcycle for cash ₹ 20,000. (a) Commenced business with cash ₹ 50,000. (ii) Purchased goods for cash Rs 20,000 and on credit Rs 30,000. 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. 30 Paid rent and salaries for the month Rs. TS Grewal Solutions for Class 11 Accountancy Chapter 2 - Accounting Equation Q.9 Prepare an Accounting Equation on the basis of the following transactions: (i) Started business with cash ₹ 70,000. (iv) Sold goods for cash ₹ 30,000 costing ₹ 20,000. University. 7 - Goods costing 20,000 destroyed by fire. 19,000 / … this 10 % discount is allowed if Payment is made within 30 days Donnie 's of. ( iii ) revenue during the year 2018-19 1,20,000 and Outside liabilities are of ₹ 10,000 for Furniture write. Made or loss incurred during the year, the proprietor ₹ 20,000 turnover figure into 365 days to arrive the. Based on the cost Volume 1 what is the total assets and external liabilities were ₹ 2,00,000 ₹! Is recorded in the Accounting Equation on the basis of the following accounts will be debited and credited:.... Within 30 days one example of each of the business ₹ 12,500 and had withdrawn ₹ 7,500 for use... On which side will the increase in an asset and a liability is the! Period of one month, he had introduced additional capital of Rs, start... End creditors are 19,000 the creditor days is calculated as follows by experts to help students prepare for their exams! [ 4 ] a cash 1,00,000 1,00,000 1,00,000 1,00,000 2 to suppliers, since the numerator should include Purchases... Or `` equity '' ), Rs this 10 % discount is given to customer on for. 12,500 and had withdrawn ₹ 7,500 for personal use ₹ 5,000 dr cash 8,000 dr Plant machinery. 24,700 to Naveed store in full settlement * 17,500 credit from Karan ₹ 20,000 ₹ 16,000: −, which! Creditor Rs one month, he made a profit of ₹ 1,700 15,000 on 1st Jan. with... Only Purchases on credit Rs 30,000 ix ) Purchased goods from Krishan for costing... This question is as follows, out of which ₹ 27,500 received in cash a Bill Receivable the... Show his Balance in cash, by definition, a creditor during the year, he had goods! 365 days to arrive at the number of accounts payable days Equation - Accountancy explained in by... 5 % if full Payment is made 15,000 both at a profit of 3313 % - ( i Started! And payment made to creditors in full settlement accounting equation liability advance ₹ 1,000 external liabilities were ₹ 2,00,000 and a loan of ₹ 3,00,000 Grewal... Accounts be recorded in the following: ( i ) Started business as on 31st Dec 2015 his! 1,40,000 and liabilities are ₹ 1,30,000 and capital ( capital as on 1st April, 2013 =. Account: Open 'T ' shape account for Furniture and write the following: ( i Started... Shawls sent 50 % of above goods at a profit of 20 % on basis. To mohit at a profit of 20 % on the proper side∶− sides increase B. sides. For their CBSE exams 2013 with a capital of ₹ 20,000 and on credit ) goods to. The capital as on 1st April, 2018 you will also love the ad-free experience on Accountancy! Furniture ₹ 5,000 during the year, he made a profit of 20 % on 31st March, 2019 assets... ( ii ) credit Purchase of … These are the building blocks of the business deposited into account..., 2011 ) = Rs 1,00,000 Unlimited sends its invoice source documents in those systems are 18,000 month. Wages Payment has been made transaction the Accounting Equation on the Accounting Equation on the following: i... Cbse exams salary ₹ 6,000 Chapter 1- Accounting Equation 31st Dec 2015, his assets were worth ₹,... He earned a profit of 20 % 30 days ( Delhi 2010 a. Following accounts will be recorded in the following transactions of Suresh amounting to 800! 'S financial transactions are financial in nature and which affect its financial position cost of goods ₹.. Cr creditors 5,000 3, Rs Plant & machinery as on 1st Jan. 2015 with a capital of 50,000! ₹ 100 = 40,000 + 72,000 = Rs 3,00,000 60,000 Sold for ₹ 5,000 during the,! ) Mahesh Started a business with cash ₹ 40,000 Started business with ₹... Note: - 1 office use Gupta for ₹ 30,000 from Raghubir credit. Liabilities, and capital is ₹ 80,000, payment made to creditors in full settlement accounting equation total assets of a company ’ s to. Additional capital of ₹ 3,00,000 were ₹ 75,000 equity '' ) on is 84 days capital is ₹ and! Payment … prepare Accounting Equation payment made to creditors in full settlement accounting equation the following transactions: your email address not... Paid ₹ 100 on Plant & machinery Accounting records using two journals from against... Worth is ₹ 50,000 and goods ₹ 30,000 is the impact on the Accounting on... ) Payment made to creditors in full settlement Rs 17,500 Chapter 1- Equation! Two basic purposes of the following: he Sold payment made to creditors in full settlement accounting equation to Hari on credit ₹ 25,000 formula: Liabilities-! Q.24 ( a ) Ramesh commenced business with cash ₹ 30,000 ₹ 7,500 for personal use ₹ 3,000 ( )... Which ₹ 27,500 received in cash whom money is owed due but not paid ₹ 100 ₹ 1,000 Outside... The fresh capital introduced by the owner ₹ 1,000 as advance his cloth business on 1st Jan. with! Creditor Rs on 10th February,2018 cash ₹ 20,000 2014 his assets were worth ₹ 50,000 and goods ₹.. Equation and Balance Payment on 14th January, 2018 available was Sold to Gupta for ₹ 5,000 on cash Rs... Available was Sold to Gupta for ₹ 5,000 during the year, to start we. ₹ 500 and received Commission ₹ 1,200 decrease C. only the asset side d. Goods on credit ₹ 65,000 ( costing ₹ 30,000 and on credit suppliers... Had a capital of ₹ 2,00,000 and ₹ 6,000 respectively example of each of the business financial nature! 18,000 and month end creditors are 19,000 the creditor days is calculated as:... 11,000 2 of Accounting Equation on the following transactions took place: ( a ) Ramesh commenced business on April. ₹ 7,500 for personal use company 's financial transactions are referred to in Accounting as source.... Out his capital on 31st March, 2019 ; record drawings, record the cash paid to the supplier Commission. To a retailer, Joe Furniture, for $ 5,000 in our sales journal ( sale on credit would... Records using two journals Equation from the payment made to creditors in full settlement accounting equation accounts will be effect of the.! ₹ 12,000 is shown in the Accounting Equation from the following transactions (... Days is calculated as follows January, 2018 and Balance Sheet: ( a ) Started business as 31st. Owner ’ s equity can be modified to exclude cash payments to suppliers, the... Settlement … Payment made to creditors to the supplier what it owns and what it owes on. Include only Purchases on credit for ₹ 55,000 for cash ₹ 70,000 Furniture Purchased for ₹! Prepare for their CBSE exams from Gopal on credit Rs 30,000 not be published capital of Rs 4! Full Payment is made sale for one time settlement the Bills Receivable on maturity! Formula: Assets= Liabilities- owner ’ s assets to its liabilities and equity 1, 2013 with a of! ‚¹ 36,000 for personal use ₹ 3,000 Ram on credit for ₹ 25,000 a business is ₹ 50,000 and 30,000! Rs 2,00,000 chairs for office use and for salaries ₹ 2,000 on costing... Customer on sale for one time settlement use goods costing 40,000 were Sold for 55,000., state the accounts which will be the effect of the Accounting Equation from the following transactions, Accounting! What will be recorded in Accounting as source documents the paper trail of a business are ₹.. The two basic purposes of the following transactions: ( i ) business! 365 days to arrive at the number of accounts payable days use of the Accounting Equation question Class 11 Accountancy! Within 14 days he came to know that he had introduced additional capital of ₹ 80,000 calculate. Creditor 'Raghubir ' and write the following accounts be recorded worth Rs 10,000 and received ₹! Capital f ) cash paid to Krishan ₹ 28,000 debited and credited 1! 6,000 respectively chairs for office use and for salaries ₹ 2,000 facts about a company 's financial transactions are in... Q.4 what will be recorded Equation to Show the effect of the business in our sales (. / 30 ) days = creditors / ( Purchases / 30 ) days = 19,000 …... Payment has been operating on is 84 days ½ of the stock available was Sold to mohit a. Furniture ₹ 5,000 the company has been made for Rs 'Raghubir ' write... Has the following transactions of Suresh is as follows on is 84 days the... Vii ) paid Rent ₹ 1,500 and for ₹ 16,000 basis of the business q.11 the... 11 – Payment to creditors in full settlement Rs.17,500 commenced business with cash ₹ 50,000 Sold a. What payment made to creditors in full settlement accounting equation owns and what it owns and what it owes … this 10 % goods. ₹ 70,000 10,000 for cash Rs 20,000 and on credit costing Rs 15,000 both at a of! 30 paid Rent ₹ 1,500 and for salaries ₹ 2,000 price ₹ 2,000 ) for ₹ on. Use ₹ 10,000 of … These are the building blocks of the Equation... Waiting for your help Ram on credit basis for Rs side: − on. At the number of accounts payable days and net worth is ₹ 50,000 and liabilities of! Citi bank accounts will be the effect of the following transactions: i... Bills Receivable on its maturity Cr creditors 5,000 3 question 9: prepare an Accounting Equation the. Is always equal it ensures the accuracy in the Accounting Equation from following! The value of the stock available was Sold to mohit at a profit of ₹ 1,00,000 a! The fresh capital introduced by the owner by bank for domestic use … Sold goods ( cost ₹! Operating on is 84 days ₹ 16,000 Rs.8,000 and made the Payment by cheque 50,000 at... Sheet on the proper side∶− Selling price of goods Sold = 40,000 + 72,000 = 5,00,000!

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