1
9
10
11
12
13
14
15
Exercise - Part 3
In Exercise 1, you identified the two accounts and types of
accounts. In Exercise 2, you recorded the transactions applying
Debit and Credit Rules. Now you try to record the transactions in
the Accounting Equation. The equation can have same sign on
the opposite side of the equation (+ and + or - and -) or opposite
signs (+ and - or - and +) on the one side of the equation. Check
Col K after entering the values whether the value is equal to zero
and this is to ensure your equation holds good. The first one is
example.
Ashok invested Rs. 10 lakhs to start a business venture.
The company borrowed Rs. 50 lakhs from Indian Bank
Purchased Machines for Rs. 15 lakhs by paying cash
Purchased Raw Materials and Component from Reegal & Co. for Rs. 20 lakhs on credit
(See the Notes at the end before entering the transaction)
Paid salary to workers Rs. 3 lakhs
Paid Rs. 2 lakhs for maintenance of machine
Paid Electricity and expenses Rs. 4 lakhs
Sold Goods for Rs. 20 lakhs to Keshav & CO against cash
Sold Goods for Rs. 18 lakhs to Jain & Co on credit
Interest of Rs. 1 lakh paid to bank
Sales commission of Rs. 2 lakhs paid to Meha Agencies
Depreciation for the machine for the period Rs. 1 lakh
Received Rs. 12 lakhs from Jain & Co
Paid Rs. 8 lakhs to Regal & Co from whom Raw material was purchased on credit.
Raw materials and components are consumed in full
Tips: Transfer Raw Material from assets to expenses
Note: In Transaction 4, you are buying Raw Material and it is asset at that point
In transaction 15, you are consuming the Raw Material and here you need to move the asset
To differentiate the two, use "Raw Materials Inventory" for Asset and "Raw Material Consump
Account Name Assets =
Account 1 Asset 10
=
Account 2 Equity
Account 1 Asset 50
Account 2 Liability
Account 1 Asset 15
Account 2 Asset -15
Account 1 Liability
Account 2 Asset 20
Account 1 Asset 3
Account 2 Expenses
Account 1 Asset 2
Account 2 Expenses
Account 1 Asset 4
Account 2 Expenses
Account 1 Revenue
Account 2 Revenue
Account 1 Asset 18
Account 2 Revenue
Account 1 Asset 1
Account 2 Expense
Account 1 Asset 2
Account 2 Expense
Account 1 Expense
Account 2 Liabilty
Account 1 Asset 12
Account 2 Asset -12
Account 1 Liability
Account 2 Asset 8
Account 1 Expense
Account 2 asset
ove the asset to expenses.
rial Consumption" for Expense
Liabilities Equity Revenue
10
50
20
20
-20
18
1
-1
8
Expenses Check
0
3
0
2
0
4
0
0
1
