Question 14 Chapter 3 – Unimax Publications of Class 11

Question 14 Chapter 3 – Unimax Publications of Class 11

14. Show the effect of following transactions on Accounting equation.
(a) George started business with cash Rs. 1,00,000 and bank balance Rs. 30,000.
(b) Purchased goods for cash Rs. 30,000 and on credit Rs. 20,000.
(c) Sold half of the total of above goods purchased at a profit of 20% on cost.
(d) Sold remaining goods purchased at a profit of 20% on sale.
(e) Purchased goods for Cash Rs. 45,000.
(f) Advance received from a customer Rs. 10,000 by cheque.
(g) Goods destroyed by fire Rs. 15,000. Insurance company admitted the claim for Rs. 8,000.

The solution of Question 14 Chapter 3 – Unimax Publications of Class 11:

Transactions	Assets				Liabilities		+ Capital
	Cash	+Bank	+Stock	+Claim Admitted	Creditors	+Advance from customers
(a) George started business with cash and bank balance	+1,00,000	+30,000					+1,30,000
(b) Purchased goods for cash and on credit.	-30,000	+0	+50,000		+20,000		+0
(c) Sold half of the total of above goods purchased at a profit of 20% on cost.	+30,000	+0	-25,000		0		+5,000
(d) Sold remaining goods purchased at a profit of 20% on sale.	+31,250	+0	-25,000		0		+6,250
(e) Purchased goods for Cash Rs. 45,000.	-45,000	+0	+45,000		0		0
(f) Advance received from a customer Rs. 10,000 by cheque.	+0	+10,000	+0		0	+10,000	0
(g) Goods destroyed by fire Rs. 15,000.	0	+0	-15,000	+8000	0	+0	-7,000

	86,250	40,000	30,000	8000	20,000	10,000	1,34,250
	1,64,250				1,64,250

BALANCE SHEET

Liabilities	Amount	Assets	Amount
Creditors	20,000	Cash	84,250
Advance from customers	10,000	Bank	40,000
Capital	1,34,250	Stock	30,000
		Claim admitted	8,000

	1,64,250		1,64,250

Working Notes: –

(iii) Half of 50,000 =	50,000 x	1	= 25,000
		2
20% Profit on cost =	25,000 x	20	= 5,000
		100

(iv) Remaing goods =	25,000
20% Profit on cost =	25,000 x	20
		100-20
	25,000 x	20	= 6,250
		80

The solution of Question 14 Chapter 3 – Unimax Publications of Class 11:

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