Business Transaction
1. Owner made investment of Rs. 100,000 cash into business.
2. Purchase land for Rs. 20,000 in cash.
3. Purchase building for Rs. 15,000 on credit from Ali.
4. Purchase furniture for Rs. 10000 from Mr. Bilal of which Rs. 3000 paid in cash.
5. Purchase goods for Rs. 25,000 on cash.
6. Sold goods to customers for Rs. 15,000 in cash. Cost of the goods were Rs. 12,000.
7. Sold goods to Mr. Sheikh for Rs. 5,000 on credit. Cost of the goods were Rs. 4,000.
8. Paid office assistant salary Rs. 3,000 in cash.
9. Received Rs. 3,000 cash from Mr. Sheikh to whom sales were made on credit.
10. Payment of Rs. 10,000 made to Mr. Ali from whom building purchased on credit.
11. Owner withdraw Rs. 15,000 cash from business for his/her personal use.
Required: Prepare accounting equation from the above business transactions.
ASSETS = LIABILITIES + CAPITAL
Cash + Land + Building + Furniture+ Goods+ Debtors ALi +Bilal Malik
(sheikh)
1 100,000 = 100,000
2 (20000)+20000
Bal. 80,000+20000 = 100,000
3 +15,000 +15,000
Bal. 80,000 +20,000 +15,000 = 15,000 + 100,000
4 (3000) +10,000 +7000
Bal. 77,000+20,000+ 15,000 + 10,000 + =15,000 +7000 + 100,000
5 (25000) +25,000
Bal. 52,000 +20,000+ 15,000+ 10,000+ 25,000 = 15,000 +7000 + 100,000
6 +15000 (12,000) = +3000
Bal. 67,000+ 20,000+ 15,000 + 10,000 + 13,000 = 15,000 + 7,000 + 10,3000
7 (4,000) + 5,000 1,000
Bal. 67,000+ 20,000 +15,000 +10,000 +9,000 +5000 =15,000 +7000 + 10,4000
8 (3,000) (3,000)
Bal. 64,000 + 20,000 +15,000 + 10,000 + 9,000 + 5,000 = 15,000 + 7,000 + 10,1000
9 + 3,000 (3,000) 0
Bal. 67,000 + 20,000 + 15,000 + 10,000 + 9,000 + 2,000 = 15,000 + 7,000 + 10,1000
10 (10,000) (10,000) 0
Bal. 57,000 + 20,000 + 15,000 + 10,000 + 9,000 + 2,000 = 5,000 + 7,000 + 10,1000
11 (15,000) (15,000)
Bal. 42,000 + 20,000 + 15,000 + 10,000 + 9,000 + 2,000 = 5,000 + 7,000 + 86,000
Rs. 98,000 = Rs. 98,000
Business Transaction
Business Transaction ANALYSIS: ( + -) Assets Liabilities capital
1. Owner Mr. Malik made investment of Rs. 100,000 cash into business.
(Capital + Rs. 100,000 Cash + Rs.100,000 ASSETS)
2. Purchase land for Rs. 20,000 in cash.
( Land + 20,000 Assets Cash -20000 Assets)
3. Purchase building for Rs. 15,000 on credit from Ali.
(Building + 15,000 Assets Liabilities Mr. Ali +15000)
4. Purchase furniture for Rs. 10000 from Mr. Bilal of which Rs. 3000 paid in cash.
(furniture +10,000 assets Cash -3000 Assets Mr.Bilal Liabilities +7000)
5. Purchase goods for Rs. 25,000 on cash.
Goods + 25,000 Assets Cash -25,000 Assets
6. Sold goods to customers for Rs. 15,000 in cash. Cost of the goods were Rs. 12,000.
(Cash +15,000 Assets) Goods – 12,000 Assets Profit + 3000 Capital
7. Sold goods to Mr. Sheikh for Rs. 5,000 on credit. Cost of the goods were Rs. 4,000.
(Debtors(Sheikh) +5,000 Assets Goods -4,000 Assets Profit + 1,000 Capital
8. Paid office assistant salary Rs. 3,000 in cash.
Cash -3,000 Assets Expenses -3,000 Capital
9. Received Rs. 3,000 cash from Mr. Sheikh to whom sales were made on credit.
Cash + 3,000 Assets Debtors (sheikh) -3,000 Assets
10. Payment of Rs. 10,000 made to Mr. Ali from whom purchases were made on credit.
Cash – 10,000 Assets Liabilties Creditors Ali -10,000
11. Owner withdraw Rs. 15,000 cash from business for his/her personal use.
Cash -15,000 Assets Capital – 15,000
Required: Prepare accounting equation from the above business transactions.
