Page 2 - LN

B. Bought goods from Ram Rs. 30,000

Effect

Assets = Capital + Liabilities

Cash Goods Capital Creditors

Old Equation 3,00,000 + – = 3,00,000 + –

Transactions 0 + 30,000 = 0 + 30,000

N.E. 3,00,000 + 30,000 = 3,00,000 + 30,000

Explanation:- As goods is purchased on credit, one effect is that it should be
shown in the assets side as Goods & other effect is that goods are purchased on
credit so it is to be shown in Liabilities as Creditors..

C. Sold goods (costing Rs. 10000) for cash at Rs. 13000 Effect

Assets = Capital + Liabilities

Cash Goods Capital Creditors

Old Equation 3,00,000 + 30,000 = 3,00,000 + 30,000

Transactions +13000 + 10,000 = + 3000 + 30,000

N.E. 3,13,000 + 20,000 = 3,03,000 + 30,000

Explanation:- The transaction will affect both sides as cash has been received so it

is to be added back in cash (Rs 13,000) & Goods are to be reduced by 10,000 as
goods has been sold also profit of Rs. 3,000 Is to be added back in Capital. Net
effect will remain same for both sides

D. Paid to creditors Rs. 20,000

Assets = Capital + Liabilities

Cash Goods Capital Creditors

Old Equation 3,13,000 + 20,000 = 3,03,000 + 30,000