Following transactions are given: Started business with cash Rs.1,00,000 and furniture Rs.50,000. Purchased goods worth of Rs.75,000 on credit. Wages paid: Rs.10,000. Sold goods costing Rs.20,000…

The Accounting Equation is calculated as follows:

1. Initial Investment

   • Cash: Rs. 1,00,000
   • Furniture: Rs. 50,000
   • Total Assets = Rs. 1,50,000
   • Total Liabilities = Rs. 0
   • Capital = Rs. 1,50,000
   • Equation: Assets (1,50,000) = Liabilities (0) + Capital (1,50,000)

2. Purchased goods on credit (Rs. 75,000)

   • Assets (Cash + Stock) = Rs. 1,00,000 + Rs. 75,000 = Rs. 1,75,000
   • Liabilities (Creditors) = Rs. 75,000
   • Capital = Rs. 1,00,000
   • Equation: Assets (1,75,000) = Liabilities (75,000) + Capital (1,00,000)

3. Wages paid (Rs. 10,000)

   • Assets (Cash) = Rs. 90,000
   • Liabilities = Rs. 75,000
   • Capital = Rs. 1,00,000 - Rs. 10,000 = Rs. 90,000
   • Equation: Assets (1,65,000) = Liabilities (75,000) + Capital (90,000)

4. Sold goods (Cost Rs. 20,000, Revenue Rs. 25,000)

   • Assets (Cash + Stock) = Rs. 90,000 + Rs. 25,000 + Rs. 55,000 = Rs. 1,70,000
   • Liabilities = Rs. 75,000
   • Capital = Rs. 90,000 + Rs. 5,000 (Profit) = Rs. 95,000
   • Equation: Assets (1,70,000) = Liabilities (75,000) + Capital (95,000)

Final Accounting Equation: Assets (1,70,000) = Liabilities (75,000) + Capital (95,000)