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