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Extractions of the transactions to the accounting equation in the month of January 2019 of Parakumcompany Ltd have been given for you.Following transactions have been occured06. Owner has used a stock Rs. 10,000 and cash Rs. 3000 for his personnel usage.07. Investment income received is Rs. 1200008. PPE should be depreciated 12% per annum09. Paid bank loan installment is Rs. 25000 and included interest for above is Rs. 500010. Received Rs 27000 from debtors under a discount of 10%11. Set off a debtor worth of Rs. 53000 with a creditor of Rs.50,000Required01. Write the transaction could be occurred from the 01-0502. Show the impact of transactions 6 -11 with in the accounting equation and state whether eachvalue increase (+) decrease (-) and in front of the value. (use following format.)TransactionNoncurrentassetsStock Tradereceivables CashEquity TradePayablesOtherPayablesCapital RetainedEarnings1.2.........TransactionNoncurrentassetsStock Tradereceivables CashEquity TradepayablesOtherpayablesCapital Retainedprofit01/01Balance 500 80 60 360 725 - 155 12001 +200 -110 +9002 -36 +4 -4003 -100 +150 +5004 +30 -3005 +20 -30 -10

Question

Extractions of the transactions to the accounting equation in the month of January 2019 of Parakumcompany Ltd have been given for you.Following transactions have been occured06. Owner has used a stock Rs. 10,000 and cash Rs. 3000 for his personnel usage.07. Investment income received is Rs. 1200008. PPE should be depreciated 12% per annum09. Paid bank loan installment is Rs. 25000 and included interest for above is Rs. 500010. Received Rs 27000 from debtors under a discount of 10%11. Set off a debtor worth of Rs. 53000 with a creditor of Rs.50,000Required01. Write the transaction could be occurred from the 01-0502. Show the impact of transactions 6 -11 with in the accounting equation and state whether eachvalue increase (+) decrease (-) and in front of the value. (use following format.)TransactionNoncurrentassetsStock Tradereceivables CashEquity TradePayablesOtherPayablesCapital RetainedEarnings1.2.........TransactionNoncurrentassetsStock Tradereceivables CashEquity TradepayablesOtherpayablesCapital Retainedprofit01/01Balance 500 80 60 360 725 - 155 12001 +200 -110 +9002 -36 +4 -4003 -100 +150 +5004 +30 -3005 +20 -30 -10

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Solution

The question is asking for two things:

  1. To write the transactions that could have occurred from the 01-05. However, these transactions are not provided in the question.

  2. To show the impact of transactions 6 -11 within the accounting equation and state whether each value increases (+) or decreases (-) in front of the value.

The accounting equation is: Assets = Liabilities + Equity

Here's how the transactions from 6-11 would impact the accounting equation:

  1. Owner has used a stock Rs. 10,000 and cash Rs. 3000 for his personal usage. This would decrease the company's assets (stock and cash) and decrease the owner's equity (capital). Transaction: -10,000 (Stock), -3,000 (Cash), -13,000 (Capital)

  2. Investment income received is Rs. 12000 This would increase the company's assets (cash) and increase the owner's equity (retained earnings). Transaction: +12,000 (Cash), +12,000 (Retained Earnings)

  3. PPE should be depreciated 12% per annum This would decrease the company's assets (noncurrent assets) and decrease the owner's equity (retained earnings). Transaction: -12% of PPE value (Noncurrent assets), -12% of PPE value (Retained Earnings)

  4. Paid bank loan installment is Rs. 25000 and included interest for above is Rs. 5000 This would decrease the company's assets (cash) and decrease the company's liabilities (other payables). Transaction: -30,000 (Cash), -25,000 (Other Payables), -5,000 (Retained Earnings)

  5. Received Rs 27000 from debtors under a discount of 10% This would increase the company's assets (cash) and decrease the company's assets (trade receivables). Transaction: +27,000 (Cash), -30,000 (Trade Receivables)

  6. Set off a debtor worth of Rs. 53000 with a creditor of Rs.50,000 This would decrease the company's assets (trade receivables) and decrease the company's liabilities (trade payables). Transaction: -53,000 (Trade Receivables), -50,000 (Trade Payables), -3,000 (Retained Earnings)

Please note that the exact impact on noncurrent assets and retained earnings for transaction 8 would depend on the value of PPE (Property, Plant, and Equipment) which is not provided in the question.

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