Assignment 1

Submitted by : Muzamil Jillani

Reg no. : 229071
 A. Akram Sons
1. Akram starts his business with cash Rs.200000/=.
2. Purchased merchandise on credit Rs. 60000/=.
3. Withdrew cash for private use Rs. 8000/=
4. Merchandise cost Rs. 45000/= sold for RS 75000/=. on account (credit sales)
5. Purchased furniture for Rs. 25000/=

Tno Assets Liability Capital

Cash + Purchases + Drawings + a/c receivable + office eq a/c pay
1 200,000 200,000
2 60,000 60,000
3 (8,000) (8,000)
4 (45,000) 75,000 30,000
5 (25,000) 25,000
Total 282,000 282,000

B. Murad Steels
1. Murad commence his business with cash Rs. 1500000/=
2. Purchased Steel for cash Rs. 800000/=
3. Sold goods cost Rs. 100000/= for Rs. 150000/=
4. Took a loan from bank for Rs. 100000/=
5. Paid salary Rs. 10000 and insurance Rs. 12000/=
6. Received rent from the property Rs. 15000/=
7. Purchase bicycle for his son worth Rs. 10000/=

Tno Assets Liability Capital

Cash + Purchases + Drawings Loan(Bank)
1 1,500,000 1,500,000
2 (800,000) 800,000
3 150,000 (100,000) 50,000
4 100,000 100,000
5 (10,000+12,000) (22,000)
6 15,000 15,000
7 (10,000) (10,000)
Total 1,633,000 1,633,000

C. Bilal Variety Center

1. Bilal starts his business by providing cash Rs 300000/= and a loan from his brother Rs 350000/=
2. Bilal purchased furniture for Rs. 80000/=
3. He purchased goods on credit worth Rs. 28000/=
4. Sold goods on cash and credit worth Rs. 25000/= and 20000/= respectively which cost Rs. 29000/=
5. Paid cash to creditors for the purchase of goods earlier Rs. 5000/=
6. Cash paid for office rent Rs. 30000/=
7. Salary of an employee Rs 5000/= is due but remains outstanding. (salary is not paid yet)
Tno Assets Liability Capital
Cash + Purchases + A/C rec + office eq A/C pay + A/C pay + A/C pay(sal)
1 650,000 650,000
2 (80,000) 80,000
3 38,000 38,000
4 25.000 (29,000) 20,000 16,000
5 (5,000) (5,000)

6 (30,000) (30,000)
7 5,000 (5,000)
Total 669,000 669,000

D. Just mentioned the effect of each business transaction that is what happens to each side of Accounting
Equation.

1) Mr. Aqeel starts his business by the investment of Rs. 500000/= from his own resources and Rs. 500000/= from a
bank loan.
Solution: Transaction 1 increases Assets, Capital and Liabilities
2) Purchase furniture and fixture for Rs. 75000/=
Solution: Transaction 1 increases some assets while decreases other assets, Capital and Liabilities remains
unchanged.
3) Purchased good on credit for Rs. 500000/=
Solution: Transaction 1 increases Assets and Liabilities.
4) Sold goods on cash for Rs. 120000/= which cost Rs 80000/=
Solution: Transaction 1 increases Assets and Capital.
5) Cash paid to creditors for goods purchased earlier Rs. 100000/=
Solution: Transaction 1 decreases Assets and Liabilities
6) Cash paid for shop rent 25000/=
Solution: Transaction 1 increases Assets and Capital.
7) Salaries paid to employees Rs 16000/= out of which Rs 2000/= is outstanding.
Solution: Transaction 1 decreases Assets and Capital while Liabilities increases.
8) Withdrew cash Rs. 5000/= for personal use.
Solution: Transaction 1 decreases Assets and Capital.

E. A number of business transactions carried out by “Smalling Manufacturing Company” are as follows:
1. Borrowed money from a bank.
2. Sold land for cash at a price equal to its cost.
3. Paid a liability.
4. Returned for credit some of the office equipment previously purchased on credit but not yet paid for.
(Treat this the opposite of a transaction in which you purchased office equipment on credit.)
5. Sold land for cash at a price in excess of cost. (Hint: The difference between cost and sales price represents
a gain that will be in the company’s income statement.)
6. Purchased a computer on credit.
7. The owner invested cash in the business.
8. Purchased office equipment for cash.
9. Collected an account receivable.
 Indicate the effects of each of these transactions on the total amounts of the company’s assets, liabilities, and
owners’ equity. Organize your answer in tabular form, using the following column headings and the code
letters, I for increase, D for decrease, and NE for no effect. The answer for transaction 1 is provided as an
example:
Transaction Assets = Liabilities + Owners’ Equity

(a) I I NE

Transaction Assets = Liabilities + Capital

1 I I NE
2 NE NE NE
3 D D NE
4 D D NE
5 I NE I
6 I I NE
7 I NE I
8 NE NE NE
9 NE NE NE