Question

Prepare Accounting Equations, Journal, Ledgers and Trial Balance

1. Murali started business with Cash Rs. 2,00,000 and Bank 5,00,000.

2. Loan taken from HDFC for Rs. 4,50,000.

3. Purchased Stock for Rs. 1,00,000 for cheque.

4. Sold the stock of 50,000 for Rs. 70,000. and as he paid in cash he got a discount Rs. 2,000.

5. Loss of stock due to fire of Rs. 10,000.

6. Insurance recovery of Rs. 8,500 received

7. Paid for charity Rs. 5,000.

8. Paid provident Fund to a retiring employee Rs. 10,000.

9. Salaries due not paid Rs. 20,000.

10. Income tax paid by Murali Rs. 5,050.

Answer 1

Accounting equation is Assets = Liabilities and equity.

Journal entries:

Date	Account titles	Debit ($)	Credit ($)
	Bank	500,000.00
	Cash	200,000.00
	Owner's capital		700,000.00
	(Being capital introduced into the business)
	Bank	450,000.00
	Loan from HFDC		450,000.00
	(Being loan taken from HDFC)
	Inventory (Stock)	100,000.00
	Bank		100,000.00
	(Being stock purchased)
	Cash	68,000.00
	Discount allowed	2,000.00
	Sales		70,000.00
	(Being stock sold)
	Loss of stock	10,000.00
	Inventory		10,000.00
	(Being inventory damaged fue to fire)
	Bank	8,500.00
	Insurance recovery		8,500.00
	(Being insurance recovered)
	Donation	5,000.00
	Bank		5,000.00
	(Being donation given)
	Provident fund	10,000.00
	Bank		10,000.00
	(Being provident fund paid)
	Salaries	20,000.00
	Accrued salaries		20,000.00
	(Being salaries due yet not paid)
	Income tax	5,050.00
	Bank		5,050.00
	(Being income tax paid)

Ledgers:

Dr.	Bank Account		Cr.
Owner’s capital	500000.00	Inventory	100000.00
Loan from HDFC	450000.00	Insurance recovery	8500.00
		Donation	5000.00
		Provident fund	10000.00
		Income tax	5050.00
		Balance c/d	821450.00
	950000.00		950000.00

	Cash Account
Owner’s capital	200000.00
Sales	68000.00
		Balance c/d	268000.00
	268000.00		268000.00

Dr.	Owner’s capital		Cr.
		Bank	500000.00
		Cash	200000.00
Balance c/d	700000.00
	700000.00		700000.00

Dr.	Loan from HDFC		Cr.
		Bank	450000.00
Balance c/d	450000.00
	450000.00		450000.00

Dr.	Inventory		Cr.
Bank	100000.00	Cost of goods sold	50000.00
		Loss of stock	10000.00
		Balance c/d	40000.00
			100000.00

Dr.	Discount allowed		Cr.
Sales	2000.00
		Balance c/d	2000.00
	2000.00		2000.00

Dr.	Sales		Cr.
		Cash	68000.00
		Discount allowed	2000.00
Balance c/d	70000.00
	70000.00		70000.00

Dr.	Loss of stock		Cr.
Inventory	10000.00
		Balance c/d	10000.00
	10000.00		10000.00

Dr.	Insurance recovery		Cr.
		Bank	8500
Balance c/d	8500.00
	8500.00		8500.00

Dr.	Donation		Cr.
Bank	5000.00
		Balance c/d	5000.00
	5000.00		5000.00

Dr.	Provident fund		Cr.
Bank	10000.00
		Balance c/d	10000.00
	10000.00		10000.00

Dr.	Salaries		Cr.
Accrued salaries	20000.00
		Balance c/d	20000.00
	20000.00		20000.00

Dr.	Accrued salaries		Cr.
		Salaries	20000.00
Balance c/d	20000.00
	20000.00		20000.00

Dr.	Income tax		Cr.
Bank	5050.00
		Balance c/d	5050.00
	5050.00		5050.00

Trial Balance:

Accounts	Debit ($)	Credit ($)
Bank	821,450.00
Cash	268,000.00
Owner's capital		700,000.00
Loan from HDFC		450,000.00
Inventory	40,000.00
Discount allowed	2,000.00
Sales		70,000.00
Loss of stock by fire	10,000.00
Insurance recovery		8,500.00
Donation	5,000.00
Provident fund	10,000.00
Salaries	20,000.00
Accrued salaries		20,000.00
Income tax	5,050.00
Difference	67,000.00
	1,248,500.00	1,248,500.00