Financial Accounting I

Accounting Equation
Problem #1
Show the effects of following transactions on accounting equation:
1) Mr. Ali Started business with cash Rs. 84,000.
2) He purchased goods for cash Rs. 13,000.
3) He purchased furniture costing Rs. 2,000.
4) He sold goods for cash Rs. 3,000 costing Rs. 1,800.
5) He paid salaries Rs. 1,200.
(Rs. 84,000)

Problem #2
Prepare accounting equation on the basis of the following:
(i) Mr. Ali started business with Goods Rs. 20,000 and Cash Rs. 55,000.
(ii) Purchased goods on account for Rs. 15000.
(iii) Cash of Rs. 10,000 deposited into bank.
(iv) Paid cash to supplier of goods Rs. 10,000.
(v) Paid telephone bill Rs. 2,000 by cheque.
(Rs. 78,000)

Problem #3
Show the effect of following transactions on the accounting equation:
(a) Mr. Khan commenced business with cas 200,000.
(b) He purchased building for Rs. 10,000.
(c) He purchased goods worth Rs. 50,000 for cash.
(d) He sold goods to Saleem for Rs. 20,000 costing Rs. 17,000 on credit basis.
(e) He withdrew cash Rs. 3,000 for his personal use.
(Rs. 200,000)

Problem #4
Show the effect of the following transactions upon the accounting equation:
(i) Mr. Babar invested Rs. 1,10,000 in cash.
(ii) He purchased goods for cash Rs. 22,000 and credit Rs. 18,000.
(iii) He made additional investment in cash Rs. 20,000.
(iv) He purchased refrigerator for personal use Rs. 15,000.
(v) He paid rent Rs. 2,000 and rent outstanding Rs. 1,000.
(Rs. 131,000)

Problem #5
Show the effect of the following transactions upon the Accounting equation;
(June,2005)
1.Salman started his business with cash Rs. 1,00,000
5.Purchased furniture for cash Rs. 4,000
6. Purchased goods for cash Rs. 25,000
10. Paid Transportation on goods purchased Rs. 1,000
12. Sold goods for cash Rs. 15,000, costing Rs. 11,000
15. Purchased goods on credit basis for Rs. 15,000
19. Sold goods to Rashid on credit basis for Rs. 8,000, costing Rs. 6,500
25. Received cash from Rashid Rs. 4,000
28. Cash paid to creditor Rs. 9,000
30. Paid rent and salaries for the month Rs. 4,000
(Rs. 106,500)

Problem #6
Show the effects of following transactions on the Accounting Equation;
(a) Mr. Naeem started business with cash Rs. 3,00,000
(b) He purchased furniture for Rs. 15,000
(c) He purchased goods worth Rs. 75,000 for cash
(d) He purchased goods worth Rs. 45,000 on credit
(e) He bought office equipment for Rs. 22,500
(f) He sold goods for Rs. 45,000 costing Rs. 37,500
(g) He sold goods to Saleem for Rs. 30,000 costing Rs. 25,500 on credit basis
(h) He withdrew cash Rs. 4,500 for his personal use
(i) He made additions investment in cash Rs. 22,500
(j) Cash paid to creditors Rs. 37,500
(k) Cash received from Saleem Rs. 22,500
(l) He paid salaries Rs. 4,500
(m) He paid rent of building Rs. 3,000.
(Rs. 330,000)

Problem #7
Assets Rs Liabilities & Owner Equity Rs.
Cash 50000 Creditors 80000
Debtors 34000 Capital 188000
Stock 44000
Building 140000
268000 268000

Transactions during the month of January;

Jan:
1. Purchased goods for cash Rs. 8,000 subject to a trade discount of 10%
5. Sold goods for cash Rs. 24,000 Costing Rs. 21,000
7. Cash paid to creditors Rs. 50,000
9. Sold goods for cash Rs. 10,000 and as credit basis Rs. 6.000 costing Rs. 12,0
11. Goods returned by a customer Rs. 4,000 costing Rs. 3,800
15. Cash received from debtors Rs. 28,000
18. Cash paid for furniture purchased for owner's domestic use Rs. 2,000
22. Depreciation on building Rs. 2,800
29. Paid telephone bill Rs. 1,200
30. Paid salaries Rs. 6,000.
Show the effects of above transactions on the accounting equation.
(Rs. 212,800)