Show the effect of the following transactions on the accounting and prepare the balance sheet at the end: (i) Surveen commenced business with cash ₹ 60,000 and stock ₹ 30,000. (ii) Purchased goods for cash ₹ 3,000 and on credit ₹ 15,000. (iii) Sold goods (costing ₹ 16,000) for ₹ 14,000 in cash. (iv) Sold goods (costing ₹ 12,000) for ₹ 15,000 on credit. (v) Goods donated for Leh Ladakh residents ₹ 7,000. (vi) Goods withdrawn by Surveen for personal use ₹ 9,500.
Answer (1)
To solve the problem, let's analyze each transaction's impact on the balance sheet. We'll adjust Assets, Liabilities, and Owner's Equity accordingly.
(i) Surveen commenced business with cash ₹ 60,000 and stock ₹ 30,000.
Assets: Cash increases by ₹ 60,000 and Stock (Inventory) increases by ₹ 30,000.
Liabilities: No change.
Owner's Equity: Increases by the total investment of ₹ 90,000.
(ii) Purchased goods for cash ₹ 3,000 and on credit ₹ 15,000.
Assets: Stock increases by ₹ 18,000 (₹ 3,000 + ₹ 15,000), Cash decreases by ₹ 3,000.
Liabilities: Increases by ₹ 15,000 due to credit purchase.
Owner's Equity: No change.
(iii) Sold goods (costing ₹ 16,000) for ₹ 14,000 in cash.
Assets: Cash increases by ₹ 14,000, Stock decreases by ₹ 16,000.
Liabilities: No change.
Owner's Equity: Decreases by a loss of ₹ 2,000 (Sales ₹ 14,000 - Cost ₹ 16,000).
(iv) Sold goods (costing ₹ 12,000) for ₹ 15,000 on credit.
Assets: Debtors increase by ₹ 15,000, Stock decreases by ₹ 12,000.
Liabilities: No change.
Owner's Equity: Increases by a profit of ₹ 3,000 (Sales ₹ 15,000 - Cost ₹ 12,000).
(v) Goods donated for Leh Ladakh residents ₹ 7,000.
Assets: Stock decreases by ₹ 7,000.
Liabilities: No change.
Owner's Equity: Decreases by ₹ 7,000 as this is a donation.
(vi) Goods withdrawn by Surveen for personal use ₹ 9,500.
Assets: Stock decreases by ₹ 9,500.
Liabilities: No change.
Owner's Equity: Decreases by ₹ 9,500 as this is a withdrawal for personal use.
Balance Sheet at the End:
Assets :
Cash: ₹ 71,000 (₹ 60,000 - ₹ 3,000 + ₹ 14,000)
Stock: ₹ 3,500 (₹ 30,000 + ₹ 18,000 - ₹ 16,000 - ₹ 12,000 - ₹ 7,000 - ₹ 9,500)
Debtors: ₹ 15,000
Total Assets: ₹ 89,500
Liabilities :
Creditors: ₹ 15,000
Owner's Equity :
Initial Equity: ₹ 90,000
Less Loss on Sale: ₹ 2,000
Add Profit on Sale: ₹ 3,000
Less Donation: ₹ 7,000
Less Personal Withdrawal: ₹ 9,500
Total Owner's Equity: ₹ 74,500
Total Liabilities and Owner's Equity: ₹ 89,500
The balance sheet is balanced with total assets equaling the sum of total liabilities and owner's equity at ₹ 89,500.
