TS Grewal Accountancy Class 11 Solutions Chapter 2

Accounting Equation
Question 1.
What will be effect of the following on the Accounting Equation?
(i) Started business with cash ₹ 45,000
(ii) Opened a Bank Account with a deposit of ₹ 4,500
(iii) Bought goods from M/s. Sun & Co. for ₹ 11,200
Solution:

Question 2.
Show the Accounting Equation for the following transactions:
Solution:

Question 3.
Show the effect of the following transactions on the Accounting Equation:
(i) Started business with cash ₹ 50,000.
(ii) Salaries paid ₹ 2,000.
(iii) Wages Outstanding ₹ 200.
(iv) Interest due but not paid ₹ 100.
(v) Rent paid in advance ₹ 150.
Solution:

Question 4.
What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash ₹ 18,000
(ii) Purchased goods for Cash ₹ 5,000 and on credit ₹ 2,000
(iii) Sold goods for cash ₹ 4,000 (costing ₹ 2,400)
(iv) Rent paid ₹ 1,000 and Rent Outstanding ₹ 200
Solution:

Question 5.
Prepare Accounting Equation from the following:
(i) Started business with cash ₹ 1,00,000 and Goods ₹ 20,000.
(ii) Sold goods worth ₹ 10,000 for cash ₹ 12,000.
(iii) Purchased furniture on credit for ₹ 30,000
Solution:

Question 6.
Prepare an Accounting Equation and Balance Sheet on the following basis:
(i) Ajeet started business ₹ 20,000.
(ii) He purchased furniture for ₹ 2,000.
(iii) He paid rent of ₹ 200.
(iv) He purchase goods on credit ₹ 3,000.
(v) He sold goods (cost price ₹ 2,000) for ₹ 5,000 on cash.
Solution:

Question 7.
Prepare an Accounting Equation from the following:
(i) Started business with cash ₹ 1,00,000.
(ii) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000.
(iii) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000
both at a profit of 20%.
Solution:

Question 8.
Develop an Accounting Equation from the following transactions:
Solution:

Question 9.
Prepare an Accounting Equation on the basis of the following transactions:
(i) Started business with Cash ₹ 70,000
(ii) Credit purchase of goods ₹ 18,000
(iii) Payment made to creditor ₹ 17,500 in full settlement
(iv) Purchase of Machinery for Cash ₹ 20,000
(v) Depreciation on Machinery ₹ 2,000
Solution:

Question 10.
Prove that the Accounting Equation is satisfied in all the following
transactions of Suresh. Also prepare a Balance Sheet.
(i) Commenced business with cash ₹ 60,000.
(ii) Paid Rent in Advance ₹ 500.
(iii) Purchased goods for Cash ₹ 30,000 and Credit ₹ 20,000.
(iv) Sold goods for Cash ₹ 30,000 Costing ₹ 20,000.
(v) Paid Salary ₹ 500 and Salary Outstanding being ₹ 100.
(vi) Bought motorcycle for personal use ₹ 5,000.
Solution:

Question 11.
Show the effect of the following transactions on assets, liabilities and capital
using the Accounting Equation. Also prepare a Balance Sheet:
(i) Started business with Cash ₹ 60,000
(ii) Rent Received ₹ 2,000
(iii) Accrued Interest ₹ 500
(iv) Commission received in advance ₹ 1,000
(v) Amount withdrawn ₹ 5,000
Solution:

Question 12.
Prove that the Accounting Equation is satisfied in all the following
transactions of Sameer Goel:
(i) Started business with cash ₹ 10,000.
(ii) Paid rent in Advance ₹ 300.
(iii) Purchased goods for cash ₹ 5,000 and credit ₹ 2,000.
(iv) Sold goods for cash ₹ 8,000 costing ₹ 4,000.
(v) Paid salary ₹ 450 and salary outstanding being ₹100.
(vi) Bought motorcycle for personal use ₹ 3,000.
Solution:

Question 13.
Show the Accounting Equation on the basis of the following transactions and
present a Balance Sheet on the last new equation balance:

Solution:
 

Question 14.
Raghunath had the following transactions in an accounting year:
(i) Commenced business with cash ₹ 50,000.
(ii) Paid in to bank ₹ 10,000.
(iii) Purchased goods for Cash ₹ 20,000 and Credit ₹30,000.
(iv) Sold goods for Cash ₹ 40,000 Costing ₹ 30,000.
(v) Rent paid ₹ 500.
(vi) Rent Outstanding ₹ 100.
(vii) Bought furniture ₹5,000 on credit.
(viii) Bought refrigerator for personal use ₹ 5,000.
(ix) Purchased motorcycle for cash ₹ 20,000.
Create an Accounting Equations to show the effect of the above transaction
on his assets, liabilities and capital and also show his final Balance Sheet.
Solution:

Question 15.
Prepare an Accounting Equation from the following :
(i) Started business with cash ₹ 50,000 and goods ₹ 30,000.
(ii) Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000.
(iii) Goods costing ₹ 40,000 were Sold for ₹ 55,000.
(iv) Withdrew cash for personal use ₹ 10,000.
(v) Rent outstanding ₹ 2,000.
Solution:

Question 16.
Show an Accounting Equation for the following transactions:
(i) D. Mahapatra commenced business with cash of ₹ 50,000 and ₹ 1,00,000
by cheque; goods ₹ 60,000; machinery ₹ 1,00,000 and furniture ₹ 50,000.
(ii) 1/3 rd of above goods sold at a profit of 10% on cost, and half of the
payment is received in cash.
(iii) Depreciation on machinery provided @ 10%.
(iv) Cash withdrawn for personal use ₹ 10,000.
(v) Interest on drawings charged @ 5%.
(vi) Goods Sold to Gupta for ₹ 10,000 and received a Bill Receivable for the
same amount for 3 months.
(vii) Received ₹ 10,000 from Gupta against the Bill Receivable on its
maturity.
Solution:
Working Note:
Rs.60,000 × 1/3 = Rs.20,000 × 110% = Rs.22,000
Half received in Cash = Rs.11,000

Question 17.
Prepare Accounting Equation from the following:
(a) Started business with cash ₹ 1,00,000.
(b) Purchase goods for cash ₹ 20,000 and on credit ₹ 30,000.
(c) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both
at a profit of 20%.
(d) Paid salaries ₹ 8,000.
Solution:

Question 18.
Show the accounting equation on the basis of following transactions:
(a) Ram started business with ₹ 25,000.
(b) Purchased goods from Shyam ₹ 10,000.
(c) Sold goods to Sohan costing ₹ 1,500 for ₹ 1,800.
Solution:

Question 19.
If the capital of a business is ₹ 3,00,000 and liabilities are ₹ 50,000, loss ₹
70,000, calculate the total assets of the business.
Solution:
Total Assets = Capital – Loss + Liabilities = Rs.3,00,000 – Rs.70,000 +
Rs.50,000 = Rs.2,80,000
Total Assets of the business is Rs.2,80,000
Question 20.
If total assets of a business are ₹ 1,30,000 and net worth is ₹ 80,000,
calculate the creditors.
Solution:
Creditors = Total Assets – Net worth = Rs.1,30,000 – Rs.80,000 = Rs.50,000
Creditors is Rs.50,000.

Question 21.
A commenced his cloth business on 1st April, 2017 with a capital of ₹
30,000. On 31st March 2018, his assets were worth ₹ 50,000 and liabilities
of ₹ 10,000. Find out his closing capital and profits earned during the year.
Solution:
Closing Capital = Assets – Liabilities = Rs.50,000 – Rs.10,000 = Rs.40,000
Profit = Closing Capital – Opening Capital = Rs.40,000 – Rs.30,000 =
Rs.10,000

Question 22.
If capital of a business is ₹ 1,40,000 and liabilities are of ₹ 80,000, calculate
the total assets of the business.
Solution:
Total Assets = Liabilities + Capital = Rs.80,000 + Rs.1,40,000 = Rs.2,20,000
Total Assets of the business is Rs.2,20,000

Question 23.
Calculate the total assets if:
(i) Capital is ₹ 40,000.
(ii) Creditors are ₹ 25,000.
(iii) Revenue during the period is ₹ 50,000.
(iv) Expenses during the period are ₹ 40,000.
Solution:
Capital after Adjustments = Capital + Revenue – Expenses = Rs.40,000 +
Rs.50,000 – Rs.40,000 = Rs.50,000
Total Assets = Capital after adjustment + Creditors = Rs.50,000 + Rs.25,000
= Rs.75,000

Question 24.
(a) A had a capital of ₹ 75,000 on 1st April, 2017. He had also goods
amounting to ₹ 15,000 which he had purchased on credit and the payment
had not been made. Find out the value of the total assets of the business.
(b) After a period of one month, he came to know that he had suffered a loss
of ₹ 1,700. He withdrew ₹ 800 for his personal use. Find out his capital and
assets of the business.
Solution:
a. Total Assets = Capital + Creditors = Rs. 75,000 + Rs. 15,000 = Rs. 90,000
b. Revised Capital = Capital – Loss – Drawings = Rs. 75,000 – Rs. 1,700 –
Rs. 800
i. Revised Capital = Rs. 72,500
Assets = Revised Capital + Creditors = Rs. 72,500 + Rs. 15,000
ii. Assets = Rs. 87, 500

Question 25.
(a) Mohan started a business on 1st April, 2017 with a capital of ₹ 10,000
and borrowed ₹ 3,000 form a friend. He earned a profit of ₹ 5,000 during the
year ended 31st March, 2018 and withdrew cash ₹ 4,000 for private use.
What is his capital on 31st March, 2018 ?
(b) Mahesh started a business with a capital of ₹ 15,000 on 1st April, 2017.
During the year, he made a profit of ₹ 3,000. He owes ₹ 2,500 to suppliers of
goods. What is the total of assets in his business on 31st March, 2018 ?
Solution:
Mohan Started the Business
a. Capital on 31st March 2018 = Capital on April 01,2017 + Profit –
Drawings
= Rs.10,000 + Rs.5,000 – Rs.4,000 = Rs.11,000
Mahesh Started the Business
b. Total Assets on 31st March 2018 = Capital on April 01, 2017 + Profit +
Creditors
= Rs.15,000 + Rs.3,000 + Rs.2,500 = Rs.20,500

Question 26.
Mohan started a business on 1st April, 2017 with a capital of ₹ 25,000 and a
loan of ₹ 12,500 borrowed from Shyam. During 2017-18 he had introduced
additional capital of ₹ 12,500 and had withdrawn ₹ 7,500 for personal use.
On 31st March, 2018 his assets were ₹ 75,000. Find out his capital as on 31st
March, 2018 and profit made or loss incurred during the year 2017-18.
Solution:
Mohan Started the Business
Capital on 31st March 2018 = Assets – Loan from Shyam = Rs.75,000 –
Rs.12,500 = Rs.62,500
Profit (or Loss) during the year 2017 – 18 = Capital on March 31, 2018 +
Drawings – (Capital on April 01,2017 + Additional Capital)
= Rs. 62,500 + Rs. 7,500 – (Rs. 25,000 + Rs. 12,500) = Rs.70,000 –
Rs.37,500 = Rs.32,500

Question 27.
On 31st March, 2018, the total assets and external liabilities were ₹ 2,00,000
and ₹ 6,000 respectively. During the year, the proprietor had introduced
capital of ₹ 20,000 and withdrawn ₹ 12,000 for personal use. He made a
profit of ₹ 20,000 during the year. Calculate the capital as on 1st April, 2017.
Solution:
Capital on 31st March 2018 = Total Assets – External Liabilities = Rs.
2,00,000 – Rs. 6,000 = Rs. 1,94,000
Capital on 01st April 2017 = Capital on March 31, 2018 – Additional Capital
+ Drawings – Profit
= Rs. 1,94,000 – Rs. 20,000 + Rs. 12,000 – Rs. 20,000 = Rs. 1,66,000

Question 28.
Show an Accounting Equation on the basis of the following transactions:

Solution:
 

Question 29.
Draw an Accounting Equation on the basis of the following transactions:
(i) Commenced business with cash ₹ 50,000, cheque ₹ 1,00,000, goods ₹
30,000 and furniture ₹ 20,000.
(ii) Car, personal asset of the proprietor, was sold for ₹ 1,00,000 against
cheque which he deposited in his Savings Account.
(iii) An amount of ₹ 50,000 was transferred from his Savings Account to the
firm’s Bank Account.
(iv) A new car was purchased for ₹ 6,00,000 for office use. It was paid by
taking loan from Bank of ₹ 5,00,000 and balance by issue of cheque from
firm’s Bank Account.
(v) Sold goods to Ajay on credit costing ₹ 4,000 for ₹ 5,000.
(vi) Sold goods for cash costing ₹ 12,000 for ₹ 16,000.
(vii) Purchased good for cash ₹ 40,000.
(viii) Purchased goods on credit for ₹ 20,000.
(ix) Paid rent ₹ 3,000 including ₹ 2,000 in advance.
(x) Paid salaries ₹ 2,000.
(xi) Sold goods costing ₹ 8,000 for ₹ 10,000.
(xii) Salaries outstanding ₹ 1,000.
(xiii) Charge depreciation on furniture ₹ 500.
Solution:
Note: In transaction (ii), there is not impact on the Accounting Equation,
therefore it is not shown in the above statement.