Tutorial 05

Expanded Accounting Equation

Activity 01

Record following transactions in the expanded accounting equation.

1. Started the business with the owner investing 100,000 cash, 150,000 worth land and 50,000

worth computers.

2. Purchased office furniture for 15,000 from Arpico Ltd by paying 10,000 cash and putting the

remaining balance on credit.

3. Purchased office furniture by paying 18,000 worth cheques.

4. Purchase on credit basis Rs. 20,000.

5. Sales on credit basis Rs. 25,000.

6. Provide services for Rs. 7,000.

7. Electricity bill payment Rs. 5,000.

8. Accrued water bill payment Rs. 2,000.

9. Salary for staff Rs. 25,000.

10. Additional other income earned Rs. 30,000.

Activity 02

Record following transactions in the expanded accounting equation and show the totals of each
component of the equation.

1. Amal invested Rs. 500,00 and start up a company.

2. He obtained a loan Rs. 250,000 from a bank

3. Amal purchased furniture for Rs. 50,000 and a Motor vehicle for 75,000
4. Purchase goods on credit basis Rs. 25,000 from Narmada

5. Goods worth Rs. 10,000 has returned to Narmada due to damage.

6. Sales on credit basis Rs. 30,000 to Gishan

8. Cash drawings Rs. 5,000

9. Paid salary Rs. 30,000

10. Earned additional income of Rs. 10,000

11. Receivable interest income Rs. 20,000

12. Paid interest for bank loan obtained Rs. 12,500

Activity 03

ABC company was a small-scale enterprise which had 6 employees. They were into

manufacturing shoes. Following transactions took place in the month of May 2020.

1. Owner invested Rs. 500,000 to the business

2. Purchased goods worth Rs. 10,000 on credit.

3. Sold goods for Rs. 20,000 on cash

4. Rs. 2000 cash received from debtors was deposited in the bank

5. The company transfer money from bank to employees as monthly salary payment Rs.

1000 each

6. Depreciation on machine amounting to Rs. 10,000 at 10 % p.a

7. Revaluation of building from Rs. 152,000 to Rs. 154,000.

8. A debtor gave an equipment to settle his account worth Rs. 1000

9. Brought good on credit basis Rs. 20,000.

10. Company received a cash discount of 10% for early settlement of above 20,000.
 11. Purchased a machine for Rs. 200,000. ¾ of the machine was paid at the moment of

purchase and the rest is not yet paid.

You are requiring to,

Record these transactions in the expanded accounting equation using the following format.

Activity 04

Following transactions took place during the first month of April 2021 in Amalya (Pvt) Ltd.
Record these transaction using the expanded accounting equation.

1. Owner invested Rs. 700,000 to the business.

2. Purchased goods on cash worth Rs. 16,000 for resale.

3. The business paid Rs.20,000 as insurance premium during the first month. The

monthly insurance premium is Rs.10,000.

4. Madura has taken Rs. 6,000 worth of goods out the goods purchased for sale, for his

personal use.

5. Purchased goods worth Rs. 50,000 for resale on credit

6. Paid monthly electricity bill Rs.5,000

7. Received rent income of Rs. 16,000

8. Bad debts Rs. 3000

9. Debtors paid cash Rs. 10,000

10. Company settled its creditors Rs. 15,000