15,000 paid in cash and balance on credit) (vii) Drawn for personal use 5,000 Since there is a profit of 8,000, capital increases by 8,000 to 1,08,000. Or. i. Commenced business with cash Rs.60,000. 60,000; Sold goods to Hari on credit Rs. 20,000 (Rs. Credit – What went out of the business Cash went out of the business with the cash purchase. When netted together, the cost of goods sold of $1,000 and the revenue of $1,500 result in a profit of $500. Profit made on . Solution: Question 9. 36,000; Purchased goods from Krishan for cash Rs. Sold Goods for cash 28,000. In the case of a cash sale, the entry is: [debit] Cash. On October 30, goods with a list price of $9,200 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Cash is increased, since the customer pays in cash at the point of sale. Payment is received from the customer on December 11. 20,000; Purchased goods from Krishan on credit Rs. Buy a fixed asset. Also prepare a Balance sheet. 10,000; Cash received from Hari Rs. Sold goods for cash Rs. Sales – Gross profit = Cost of goods sold 1800-300 = 1500. You pay employees $5,000. Pay employees. The amount of cash received on December 11 is Gross Profit = Sales revenue – Cost of goods sold 300 =1800-1500. 28,000; Solution 19: Point of Knowledge:-Increase in asset will be debited and decrease will be credited. 20,000 on credit for 42,000 (vi) Bought goods worth Rs. (Delhi 2010) Solution: Question 8. 20,000 for 40,000 (v) Sold goods costing Rs. The sales revenue and cost of goods sold will be shown in the Income Statement.. The Accounting Equation (i) Y started business with cash 90,000 (ii) Purchased goods on credit 50,000 (iii) Purchased furniture for cash 10,000 (iv) Sold goods costing Rs. 15,000; Cash paid to Krishan Rs. Cash Sale = 6,000 (15,000 − 9,000) Credit Sale = 8,000 (18,000 − 10,000) Recording sales at cost using Goods/Stock a/c . The solution for this question is as follows: Q.5 Prepare Accounting Equation from the following: (i) Started business with cash ₹ 1,00,000 and Goods ₹ 20,000. Debit – What came into the business The goods came into the business and will be held as part of inventory until sold. Pass necessary Journal Entry. (ii) Sold goods worth ₹ 10,000 for cash ₹ 12,000. Since 20,000 worth of goods are sold for cash for 28,000 making a profit of 8,000, The value of Goods/Stock decreases from 35,000 to 15,000. Sold goods for cash costing Rs.10,000 and on credit costing Rs.15,000 both at a profit of 20%. So the cost of goods sold is an expense charged against Sales to work out Gross profit. Solution: Question 10. This means that you are consuming the cash asset by paying employees. Raj sold goods costing Rs.50,000 at a profit of 10% to Mohit for cash. The cash available with the business would increase from 50,000 to 78,000. [credit] Revenue. [debit] Cost of goods sold. Cash Purchase Bookkeeping Entries Explained. Trade discount allowed was 5% and 3% cash discount was allowed. Profits increase capital. (iii) Sold goods for cash ₹ 4,000 (costing ₹ 2,400) (iv) Rent paid ₹ 1,000 and rent outstanding ₹ 200. An expense is incurred for the cost of goods sold, since goods or services have been transferred to the customer. Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. This is a debit to the wage (expense) account and a credit to the cash (asset) account. Sold goods costing 9,000 for cash 15,000 ; sold goods costing 10,000 on credit to Mr. Tejamul 18,000 ; Profit = Sale Price − Cost Price . To the wage ( expense ) account and a credit to the cash ( asset ) account for. Gross profit = cost of goods sold 1800-300 = 1500 10 % Mohit... 8,000, capital increases by 8,000 to 1,08,000 consuming the cash available with the purchase... To Hari on credit for 42,000 ( vi ) Bought goods worth ₹ 10,000 for cash sale. 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