The whole of financial accounting is based upon the very simple idea that, resources supply by the owner of the business plus liabilities that must be settled at a future date must be equal to the resources in the business. It follows that the capital plus liabilities of the entity must be equal to assets of the entity expressed as Capital + Liabilities=Assets i.e (C+L=A) .

Demonstrate the efforts of the following transactions on the accounting equation, and prepared the resultant balance sheet as at 31^st July, 2000.

July started business with cash 30,000

Sales on cash 50,000

Stock of materials paid by cash 10,000

Paid cash into bank 20,000

Withdrew cash for office use 10,000

Loan received by cash 20,000

Sales of good received by cheque 30,000

Cash sales 80,000

Debtor paid by cash 50,000

Sales received by cheque 40,000