TS Grewal Solutions Class 11 Accountancy Chapter 2

Chapter 2 of the TS Grewal Solutions for Class 11 Accountancy covers the Accounting Equation, which is a key concept for all students to learn. This chapter is important because it forms the basis of all accounting practices. Without a good understanding of the Accounting Equation, moving on to more complex topics can be challenging. To help students succeed, we have created solutions that are clear and easy to follow. These step-by-step explanations make it simpler for students to grasp the concepts and apply them in their exams. By using these solutions, students can build a strong foundation in accounting, which will not only help them score well in their board exams but also prepare them for future studies in accountancy.

Class 11 TS Grewal Solutions Accountancy Chapter 2:

Board	CBSE
Class	Class 11
Subject	Accountancy
Chapter	Chapter 2
Chapter Name	Accounting Equation
Number of questions solved	28
Category	TS Grewal

Chapter 1- Accounting Equation defines the below-mentioned concepts:

• Balance Sheet and Income Statement
• Balance in Accounting:
• Fundamental Accounting Equation
• Accounting equation in an Income Statement
• Double-entry bookkeeping system

Ts Grewal Solutions for Class 11 Accountancy Chapter 2- Accounting Equation

Ts Grewal Solutions for Class 11 Accountancy Chapter 2 Question 1 – 5

Question 1:

Following accounts are being maintained in the books of Shri Ashok. Classify them into Personal, Real, and Nominal Accounts:

1. Land and Building
2. Excise Duty
3. Creditors
4. Capital
5. Motor Vehicles
6. Goodwill
7. Investments
8. Salary
9. Debtors
10. Bad Debts
11. Depreciation
12. Wages
13. Repairs
14. Ramesh, a debtor
15. Interest Received
16. Bank Overdraft
17. Purchase Returns
18. Drawings
19. Freight
20. Return Inwards.

Answer:

Item	Nature of Account
Land & Building	Real A/c
Excise Duty	Nominal A/c
Creditors	Personal A/c
Capital	Personal A/c
Motor Vehicles	Real A/c
Goodwill	Real A/c
Investments	Real A/c
Salary	Nominal A/c
Debtors	Personal A/c
Bad Debts	Nominal A/c
Depreciation	Nominal A/c
Wages	Nominal A/c
Repairs	Nominal A/c
Ramesh, a debtor	Personal A/c
Interest Received	Nominal A/c
Bank Overdraft	Personal A/c
Purchase Returns	Nominal A/c
Drawings	Personal A/c
Freight	Nominal A/c
Return Inwards	Nominal A/c

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Question 2:

Classify the following into Assets, Liabilities, Capital, Expenses, and Revenue:

1. Land
2. Investments
3. Building
4. Interest Received
5. Salary
6. Bank Overdraft
7. Debtors
8. Creditors
9. Bad Debts
10. Capital
11. Depreciation
12. Motor Vehicles
13. Freight
14. Wages
15. Goodwill
16. Repairs

Answer:

Assets	Liabilities	Capital	Expenses	Revenue
Land	Bank Overdraft	Capital	Salary	Interest Received
Investments	Creditors		Bad Debts
Building			Depreciation
Debtors			Freight
Motor Vehicles			Wages
Goodwill			Repairs

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Question 3:

Classify the following into Assets, Liabilities, Capital, Revenue, and Expenses:

1. Plant and Machinery
2. Bank Loan
3. Sales
4. Rent
5. Discount Received
6. Carriage Inwards
7. Carriage Outwards
8. Purchases
9. Bills Payable
10. Wages
11. Advance Income
12. Accrued Income
13. Goodwill
14. Furniture and Fixtures
15. Outstanding Expenses
16. Capital

Answer:

Assets	Liabilities	Capital	Revenue	Expenses
Plant and Machinery	Bank Loan	Capital	Sales	Rent
Goodwill	Bills Payable		Discount Received	Carriage Inwards
Furniture and Fixtures	Advance Income		Accrued Income	Carriage Outwards
	Outstanding Expenses			Purchases
				Wages

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Question 4:

On which side will the increase in the following accounts be recorded? Also, state the nature of the account:

1. Furniture A/c
2. Mohan (Proprietor)
3. Salary A/c
4. Purchases A/c
5. Sales A/c
6. Interest Paid A/c
7. Sohan (Creditor)
8. Ram (Debtor)

Answer:

Name of Accounts	Consequence of Increase	Modern Approach	Traditional Approach
Furniture	Debit	Assets	Real Account
Mohan (Proprietor)	Credit	Capital	Personal Account
Salary	Debit	Expense	Nominal Account
Purchases	Debit	Expense	Nominal Account
Sales	Credit	Revenue	Nominal Account
Interest Paid	Debit	Expense	Nominal Account
Sohan (Creditor)	Credit	Liabilities	Personal Account
Ram (Debtor)	Debit	Assets	Personal Account

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Question 5:

On which side will the decrease in the following accounts be recorded? Also, state the nature of the account:

1. Cash
2. Bank Overdraft
3. Outstanding Salary Paid
4. Outstanding Rent
5. Prepaid Insurance
6. Mohan, Proprietor of the business

Answer:

Name of Accounts	Consequence of Decrease	Modern Approach	Traditional Approach
Cash	Credit	Assets	Real Account
Bank Overdraft	Debit	Liability	Personal Account
Outstanding Salary Paid	Debit	Liability	Personal Account
Outstanding Rent	Debit	Liability	Personal Account
Prepaid Insurance	Credit	Asset	Personal Account
Mohan, Proprietor of the business	Debit	Capital	Real Account

Ts Grewal Solutions for Class 11 Accountancy Chapter 2 Question 6 – 10

Question 6: Prepare an Accounting Equation and Balance Sheet

Given Transactions:

1. Ajeet started the business with cash of ₹20,000.
2. He purchased furniture for ₹2,000.
3. He paid rent of ₹200.
4. He purchased goods on credit worth ₹3,000.
5. He sold goods (cost price ₹2,000) for ₹5,000 in cash.

Accounting Equation and Balance Sheet

S. No.	Transaction	Assets	=	Liabilities	+	Capital
		Cash (₹)	+	Furniture (₹)	+	Stock (₹)
(i)	Ajeet started business with ₹20,000	20,000
(ii)	Purchased furniture for ₹2,000	-2,000	+2,000		=
(iii)	Paid rent of ₹200	-200				=
(iv)	Purchased goods on credit worth ₹3,000			+3,000	=	+3,000
(v)	Sold goods (cost price ₹2,000) for ₹5,000 in cash	+5,000		-2,000	=	+3,000 (Profit)

Balance Sheet:

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	22,800	Cash	22,800
Creditors	3,000	Furniture	2,000
		Stock	1,000
Total	25,800	Total	25,800

Question 7: Prepare an Accounting Equation from the Following

Given Transactions:

1. Started business with cash of ₹1,00,000.
2. Purchased goods for cash of ₹20,000 and on credit worth ₹30,000.
3. Sold goods for cash costing ₹10,000 and on credit costing ₹15,000, both at a profit of 20%.

Accounting Equation:

S. No.	Transaction	Assets	=	Liabilities	+	Capital
		Cash (₹)	+	Stock (₹)	+	Debtors (₹)
(i)	Started business with cash ₹1,00,000	1,00,000			=
(ii)	Purchased goods for cash ₹20,000 and credit ₹30,000	-20,000	+20,000	=	+30,000
(iii)	Sold goods costing ₹10,000 and ₹15,000 at a profit of 20%	+12,000	+18,000	-25,000	=	+6,000 (Profit)

Question 8: Develop an Accounting Equation from the Following

Given Transactions:

1. Mohan commenced business with cash ₹50,000.
2. Purchased goods for cash ₹30,000.
3. Purchased goods on credit ₹20,000.
4. Sold goods (costing ₹10,000) for ₹12,000.
5. Bought furniture on credit ₹2,000.
6. Paid cash to a creditor ₹15,000.
7. Salary paid ₹1,000.

Accounting Equation:

S. No.	Transaction	Assets	=	Liabilities	+	Capital
		Cash (₹)	+	Stock (₹)	+	Furniture (₹)
(i)	Commenced business with cash ₹50,000	50,000			=
(ii)	Purchased goods for cash ₹30,000	-30,000	+30,000	=
(iii)	Purchased goods on credit ₹20,000		+20,000	=	+20,000
(iv)	Sold goods costing ₹10,000 for ₹12,000	+12,000	-10,000	=	+2,000 (Profit)
(v)	Bought furniture on credit ₹2,000			+2,000	=	+2,000
(vi)	Paid cash to a creditor ₹15,000	-15,000		=	-15,000
(vii)	Salary Paid ₹1,000	-1,000		=	-1,000 (Expense)

Question 9: Prepare an Accounting Equation

Given Transactions:

1. Started business with cash ₹70,000.
2. Credit purchase of goods ₹18,000.
3. Payment made to creditors in full settlement ₹17,500.
4. Purchase of machinery for cash ₹20,000.
5. Depreciation on machinery ₹2,000.

Accounting Equation:

S. No.	Transaction	Assets	=	Liabilities	+	Capital
		Cash (₹)	+	Stock (₹)	+	Machinery (₹)
(i)	Started business with cash ₹70,000	70,000			=
(ii)	Credit purchase of goods ₹18,000		+18,000	=	+18,000
(iii)	Payment made to creditors ₹17,500 in full settlement	-17,500		=	-18,000 +500 (Discount Received)
(iv)	Purchase of machinery for cash ₹20,000	-20,000		+20,000	=
(v)	Depreciation on machinery ₹2,000			-2,000	=	-2,000 (Depreciation)

Question 10: Prove the Accounting Equation and Prepare a Balance Sheet

Given Transactions:

1. Commenced business with cash ₹60,000.
2. Paid rent in advance ₹500.
3. Purchased goods for cash ₹30,000 and credit ₹20,000.
4. Sold goods for cash ₹30,000 costing ₹20,000.
5. Paid salary ₹500 and salary outstanding being ₹100.
6. Bought a motorcycle for personal use ₹5,000.

Accounting Equation:

S. No.	Transactions	Assets	=	Liabilities	+	Capital
		Cash (₹)	+	Prepaid Rent (₹)	+	Stock (₹)
(i)	Commenced business with cash ₹60,000	60,000			=
(ii)	Paid Rent in Advance ₹500	-500	+500		=

 

Ts Grewal Solutions for Class 11 Accountancy Chapter 2 Question 11 – 15

Question 11

Transactions:

1. Started business with cash ₹60,000.
2. Rent received ₹2,000.
3. Accrued interest ₹500.
4. Commission received in advance ₹1,000.
5. Amount withdrawn ₹5,000.

Accounting Equation:

S.No.	Transaction	Assets	=	Liabilities	+	Capital
(i)	Started business with cash ₹60,000	Cash ₹60,000	=		+	₹60,000
(ii)	Rent received ₹2,000	Cash ₹62,000	=		+	₹62,000
(iii)	Accrued interest ₹500	Cash ₹62,000 + Accrued Interest ₹500	=		+	₹62,500
(iv)	Commission received in advance ₹1,000	Cash ₹63,000	=	Advance Commission ₹1,000	+	₹62,500
(v)	Amount withdrawn ₹5,000	Cash ₹58,000	=	Advance Commission ₹1,000	+	₹57,500

Balance Sheet:

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	₹57,500	Cash	₹58,000
Advance Commission	₹1,000	Accrued Interest	₹500
Total	₹58,500	Total	₹58,500

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Question 12

Transactions:

1. Started business with cash ₹10,000.
2. Paid rent in advance ₹300.
3. Purchased goods for cash ₹5,000 and on credit ₹2,000.
4. Sold goods for cash ₹8,000, costing ₹4,000.
5. Paid salary ₹450, with ₹100 salary outstanding.
6. Bought motorcycle for personal use ₹3,000.

Accounting Equation:

S.No.	Transaction	Assets	=	Liabilities	+	Capital
(i)	Started business with cash ₹10,000	Cash ₹10,000	=		+	₹10,000
(ii)	Paid rent in advance ₹300	Cash ₹9,700 + Prepaid Rent ₹300	=		+	₹10,000
(iii)	Purchased goods for cash ₹5,000 and credit ₹2,000	Cash ₹4,700 + Stock ₹7,000	=	Creditors ₹2,000	+	₹10,000
(iv)	Sold goods for cash ₹8,000, costing ₹4,000	Cash ₹12,700 + Stock ₹3,000	=	Creditors ₹2,000	+	₹14,000 (Profit ₹4,000)
(v)	Paid salary ₹450, with ₹100 salary outstanding	Cash ₹12,250 + Stock ₹3,000	=	Creditors ₹2,000 + Outstanding Salary ₹100	+	₹13,450 (Expense ₹550)
(vi)	Bought motorcycle for personal use ₹3,000	Cash ₹9,250 + Stock ₹3,000 + Motorcycle ₹3,000	=	Creditors ₹2,000 + Outstanding Salary ₹100	+	₹10,450 (Drawings ₹3,000)

Balance Sheet:

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	₹10,450	Cash	₹9,250
Creditors	₹2,000	Prepaid Rent	₹300
Outstanding Salary	₹100	Stock	₹3,000
		Motorcycle	₹3,000
Total	₹12,550	Total	₹12,550

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Question 13

Transactions:

1. Commenced business with cash ₹50,000.
2. Paid into bank ₹10,000.
3. Purchased goods for cash ₹20,000 and on credit ₹30,000.
4. Sold goods for cash ₹40,000, costing ₹30,000.
5. Rent paid ₹500.
6. Rent outstanding ₹100.
7. Bought furniture ₹5,000 on credit.
8. Bought refrigerator for personal use ₹5,000.
9. Purchased motorcycle for cash ₹20,000.

Accounting Equation:

S.No.	Transaction	Assets	=	Liabilities	+	Capital
(i)	Commenced business with cash ₹50,000	Cash ₹50,000	=		+	₹50,000
(ii)	Paid into bank ₹10,000	Cash ₹40,000 + Bank ₹10,000	=		+	₹50,000
(iii)	Purchased goods for cash ₹20,000 and on credit ₹30,000	Cash ₹20,000 + Bank ₹10,000 + Stock ₹50,000	=	Creditors ₹30,000	+	₹50,000
(iv)	Sold goods for cash ₹40,000, costing ₹30,000	Cash ₹60,000 + Bank ₹10,000 + Stock ₹20,000	=	Creditors ₹30,000	+	₹60,000 (Profit ₹10,000)
(v)	Rent paid ₹500	Cash ₹59,500 + Bank ₹10,000 + Stock ₹20,000	=	Creditors ₹30,000 + Rent Outstanding ₹100	+	₹59,400 (Expense ₹600)
(vi)	Bought furniture ₹5,000 on credit	Cash ₹59,500 + Bank ₹10,000 + Stock ₹20,000 + Furniture ₹5,000	=	Creditors ₹35,000 + Rent Outstanding ₹100	+	₹59,400
(vii)	Bought refrigerator for personal use ₹5,000	Cash ₹54,500 + Bank ₹10,000 + Stock ₹20,000 + Furniture ₹5,000	=	Creditors ₹35,000 + Rent Outstanding ₹100	+	₹54,400 (Drawings ₹5,000)
(viii)	Purchased motorcycle for cash ₹20,000	Cash ₹34,500 + Bank ₹10,000 + Stock ₹20,000 + Furniture ₹5,000 + Motorcycle ₹20,000	=	Creditors ₹35,000 + Rent Outstanding ₹100	+	₹54,400

Balance Sheet:

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	₹54,400	Cash	₹34,500
Creditors	₹35,000	Bank	₹10,000
Rent Outstanding	₹100	Stock	₹20,000
		Furniture	₹5,000
		Motorcycle	₹20,000
Total	₹89,500	Total	₹89,500

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Question 14

Transactions:

1. Started business with cash ₹50,000 and goods ₹30,000.
2. Purchased goods for cash ₹30,000 and on credit ₹20,000.
3. Goods costing ₹40,000 were sold for ₹55,000.
4. Withdrew cash for personal use ₹10,000.
5. Rent outstanding ₹2,000.

Accounting Equation:

S.No.	Transaction	Assets	=	Liabilities	+	Capital
(i)	Started business with cash ₹50,000 and goods ₹30,000	Cash ₹50,000 + Stock ₹30,000	=		+	₹80,000
(ii)	Purchased goods for cash ₹30,000 and on credit ₹20,000	Cash ₹20,000 + Stock ₹60,000	=	Creditors ₹20,000	+	₹80,000
(iii)	Goods costing ₹40,000 were sold for ₹55,000	Cash ₹55,000 + Stock ₹20,000	=	Creditors ₹20,000	+	₹95,000 (Profit ₹15,000)
(iv)	Withdrew cash for personal use ₹10,000	Cash ₹45,000 + Stock ₹20,000	=	Creditors ₹20,000	+	₹85,000 (Drawings ₹10,000)
(v)	Rent outstanding ₹2,000	Cash ₹45,000 + Stock ₹20,000	=	Creditors ₹20,000 + Rent Outstanding ₹2,000	+	₹83,000 (Expense ₹2,000)

Balance Sheet:

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	₹83,000	Cash	₹45,000
Creditors	₹20,000	Stock	₹20,000
Rent Outstanding	₹2,000
Total	₹105,000	Total	₹105,000

Question 15:

Show an Accounting Equation for the following transactions:

1. D. Mahapatra commenced business with cash ₹50,000 and ₹1,00,000 by cheque; goods ₹60,000; machinery ₹1,00,000 and furniture ₹50,000.
2. One-third of the above goods sold at a profit of 10% on cost, and half of the payment is received in cash.
3. Depreciation on machinery provided at 10%.
4. Cash withdrawn for personal use ₹10,000.
5. Interest on drawings charged at 5%.
6. Goods sold to Gupta for ₹10,000 and received a Bill Receivable for the same amount for 3 months.
7. Received ₹10,000 from Gupta against the Bill Receivable on its maturity.

Answer:

Transaction	Assets	=	Liabilities	+	Capital
	Cash (₹)	+	Bank (₹)	+	Stock (₹)
(i) Started Business with Cash ₹50,000 and Bank ₹1,00,000	50,000	+	1,00,000		60,000
(ii) One-third of above goods sold at a profit of 10% on cost, half received in cash (₹60,000 × 1/3 = ₹20,000 × 110% = ₹22,000)	11,000			(20,000)
(iii) Depreciation on Machinery @ 10% (₹1,00,000 × 10%)					(10,000)
(iv) Cash withdrawn for personal use (₹10,000)	(10,000)
(v) Interest on Drawings @ 5% (₹10,000 × 5%)
(vi) Goods Sold to Gupta for ₹10,000, received Bill Receivable			(10,000)
(vii) Received ₹10,000 from Gupta against Bill Receivable	10,000

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Ts Grewal Solutions for Class 11 Accountancy Chapter 2 Question 16 – 20

Question 16:

Prepare Accounting Equation from the following:

1. Started business with cash ₹1,00,000.
2. Purchased goods for cash ₹20,000 and on credit ₹30,000.
3. Sold goods for cash costing ₹10,000 and on credit costing ₹15,000 both at a profit of 20%.
4. Paid salaries ₹8,000.

Answer:

S. No.	Transactions	Assets	=	Liabilities	+	Capital
	Cash (₹)	+	Stock (₹)	+	Debtors (₹)
(i) Started business with cash	1,00,000
(ii) Purchased goods for cash ₹20,000 and on credit ₹30,000	– 20,000	+	50,000		=	30,000
(iii) Sold goods for cash costing ₹10,000 and on credit costing ₹15,000, both at profit of 20%	12,000	+	(25,000)	+	18,000
(iv) Paid Salaries ₹8,000	– 8,000

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Question 17:

Show the accounting equation on the basis of the following transactions:

1. Ram started business with ₹25,000.
2. Purchased goods from Shyam ₹10,000.
3. Sold goods to Sohan costing ₹1,500 for ₹1,800.

Answer:

S. No.	Transaction	Assets	=	Liabilities	+	Capital
	Cash	+	Stock	+	Debtors	=
(i) Ram started business with cash	25,000
(ii) Purchased goods from Shyam		+	10,000		=	10,000
(iii) Sold goods to Sohan costing ₹1,500 for ₹1,800		– 1,500	+	1,800		+

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Question 18:

If the capital of a business is ₹3,00,000 and liabilities are ₹50,000, with a loss of ₹70,000, calculate the total assets of the business.

Answer:

Total Assets = Capital – Loss + Liabilities
= ₹3,00,000 – ₹70,000 + ₹50,000
= ₹2,80,000

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Question 19:

If total assets of a business are ₹1,30,000 and net worth is ₹80,000, calculate the creditors.

Answer:

Creditors = Total Assets – Net Worth
= ₹1,30,000 – ₹80,000
= ₹50,000

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Question 20:

A commenced his cloth business on 1st April, 2018, with a capital of ₹30,000. On 31st March 2019, his assets were worth ₹50,000 and liabilities were ₹10,000. Find out his closing capital and profits earned during the year.

Answer:

Closing Capital = Assets – Liabilities
= ₹50,000 – ₹10,000
= ₹40,000

Profit = Closing Capital – Opening Capital
= ₹40,000 – ₹30,000
= ₹10,000

Ts Grewal Solutions for Class 11 Accountancy Chapter 2 Question 21 – 28

Question 21:

If the capital of a business is ₹1,40,000 and liabilities are ₹80,000, calculate the total assets of the business.

Answer:

Total Assets = Liabilities + Capital
= ₹80,000 + ₹1,40,000
= ₹2,20,000

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Question 22:

Calculate the total assets if:

1. Capital is ₹40,000.
2. Creditors are ₹25,000.
3. Revenue during the period is ₹50,000.
4. Expenses during the period are ₹40,000.

Answer:

Capital after Adjustment of Revenue and Expenses = Capital + Revenue – Expenses
Capital after Adjustment = ₹40,000 + ₹50,000 – ₹40,000 = ₹50,000

Total Assets = Capital after Adjustment + Creditors
= ₹50,000 + ₹25,000
= ₹75,000

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Question 23:

(a) A had a capital of ₹75,000 on 1st April, 2018. He also had goods amounting to ₹15,000 which he had purchased on credit and the payment had not been made. Find out the value of the total assets of the business.

(b) After a period of one month, he realized he had suffered a loss of ₹1,700. He withdrew ₹800 for personal use. Find out his capital and assets of the business.

Answer:

(a) Total Assets = Capital + Creditors for Purchase of Goods
= ₹75,000 + ₹15,000
= ₹90,000

(b) Capital at the End = Capital – Loss – Drawings
= ₹75,000 – ₹1,700 – ₹800
= ₹72,500

Assets = Capital at the End + Creditors for Purchase of Goods
= ₹72,500 + ₹15,000
= ₹87,500

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Question 24:

(a) Mohan started a business on 1st April, 2018, with a capital of ₹10,000 and borrowed ₹3,000 from a friend. He earned a profit of ₹5,000 during the year ended 31st March, 2019, and withdrew cash ₹4,000 for personal use. What is his capital on 31st March, 2019?

(b) Mahesh started a business with a capital of ₹15,000 on 1st April, 2018. During the year, he made a profit of ₹3,000. He owes ₹2,500 to suppliers of goods. What is the total of assets in his business on 31st March, 2019?

Answer:

(a) Capital on 31st March, 2019 = Capital on 1st April, 2018 + Profit − Drawings
= ₹10,000 + ₹5,000 − ₹4,000 = ₹11,000

(b) Total Assets on 31st March, 2019 = Capital on 1st April, 2018 + Profit + Creditors
= ₹15,000 + ₹3,000 + ₹2,500 = ₹20,500

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Question 25:

Mohan started a business on 1st April, 2018, with a capital of ₹25,000 and a loan of ₹12,500 borrowed from Shyam. During 2018-19, he introduced additional capital of ₹12,500 and withdrew ₹7,500 for personal use. On 31st March, 2019, his assets were ₹75,000. Find out his capital on 31st March, 2019, and profit made or loss incurred during the year 2018-19.

Answer:

Capital on 31st March, 2019 = Assets − Loan from Shyam
Capital on 31st March, 2019 = ₹75,000 − ₹12,500 = ₹62,500

Profit (or Loss) during the year 2018-19 = Capital on 31st March, 2019 + Drawings − (Additional Capital + Capital on 1st April, 2018)
= ₹62,500 + ₹7,500 − (₹12,500 + ₹25,000)
= ₹70,000 − ₹37,500 = ₹32,500

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Question 26:

On 31st March, 2019, the total assets and external liabilities were ₹2,00,000 and ₹6,000 respectively. During the year, the proprietor introduced capital of ₹20,000 and withdrew ₹12,000 for personal use. He made a profit of ₹20,000 during the year. Calculate the capital as on 1st April, 2018.

Answer:

Capital on 31st March, 2019 = Total Assets − External Liabilities  = ₹2,00,000 − ₹6,000 = ₹1,94,000

Capital on 1st April, 2018 = Capital on 31st March, 2019 − Additional Capital + Drawings − Profit  = ₹1,94,000 − ₹20,000 + ₹12,000 − ₹20,000 = ₹1,66,000

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Question 27:

Show an Accounting Equation on the basis of the following transactions:

1. Sunil started business with cash ₹1,50,000.
2. Opened a Bank Account by depositing ₹25,000 out of cash.
3. He sold his personal car for ₹50,000 and deposited the amount in the firm’s Bank Account.
4. He purchased a building and furniture for ₹1,00,000.
5. He purchased goods from Ram on credit ₹50,000.
6. He paid cartage ₹500.
7. He sold to Shyam on credit goods costing ₹6,000 for ₹9,000.
8. Received rent from tenants ₹1,000.
9. Received security deposit from tenants ₹1,500.
10. Purchased stationery for cash ₹100.
11. Invested in shares (personal) ₹50,000.
12. Received interest in cash ₹200.
13. Introduced fresh capital ₹25,000.
14. Goods destroyed by fire ₹500.

Answer:

Transaction	Assets		Liabilities	+	Capital
	Cash (₹)	+	Bank (₹)	+	Building and Furniture (₹)
(i) Sunil started business with cash ₹1,50,000	1,50,000
(ii) Opened Bank Account by depositing ₹25,000 from cash	(25,000)	+	25,000
(iii) Sold personal car for ₹50,000 and deposited money in Bank Account		+	50,000
(iv) Building and Furniture purchased for ₹1,00,000	(1,00,000)			+	1,00,000
(v) Purchased goods from Ram on credit ₹50,000
(vi) Paid Cartage ₹500	(500)
(vii) Sold to Shyam on credit goods costing ₹6,000 for ₹9,000				(6,000)	+
(viii) Received rent from tenants ₹1,000	1,000
(ix) Received Security Deposit from tenants ₹1,500
(x) Purchased Stationery for Cash ₹100	(100)
(xi) Invested in Shares (personal) ₹50,000	(50,000)

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