Download - 7 Sesson Adjusting Entires
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Adjustment entries
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Outstanding Expenses Incurred within the year but payment has not been made.Profit and Loss Account
Expenses Employee BenefitSalaries XXAdd Outstanding SalariesXXXX
Balance SheetCapital and Liabilities Current Liabilities Outstanding SalariesXX
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Prepaid Expenses Expenses which have been paid, but some amount is to be recorded next year Profit and Loss Account
Expenses Other ExpensesInsurance PremiumXXLess Prepaid ExpensesXXXX
Balance SheetCapital and Liabilities Current AssetsPrepaid ExpenseXX
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Prepaid Expenses Expenses which have been paid, but some amount is to be recorded next year Profit and Loss Account
Expenses Other ExpensesInsurance PremiumXXLess Prepaid ExpensesXXXX
Balance SheetAssetsCurrent AssetsPrepaid ExpenseXX
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Depreciation of Assets Depreciation means diminution or fall in value of assets due to its constant use.
Profit and Loss Account
Expenses Depreciation Depreciation of assets XX
Balance SheetAssetsNon Current AssetsFixed Assets Less DepreciationXXX XXXXX
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Bad Debts Bad debts represent money due from Drs. which is irrecoverable
Profit and Loss Account
Expenses Other expensesBad DebtsXXProvision for Bad and doubtful debtsXX
Balance SheetAssetsCurrent AssetsSu.Debtors Less Bad debts XXX XX Less Provision for bad debtsXXX
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Closing Stock
Profit and Loss Account
Expenses Change in inventoryOpening closing XXLess Closing stockXX
Balance SheetAssetsCurrent AssetsClosing StockXXX
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Outstanding Income and Accrued IncomeIncome earned but money has not been received
Other Income Interest on Loan Add Outstanding interest XXInterest on Investment XXAdd Accrued Interest
Balance SheetAssetsOutstanding InterestAccrued InterestXXX
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Income received in Advance Incomes received during the current year but part of the amt relates to next year.
ExpensesFinance CostInterest XXLess Received in Advance XX
Balance SheetLiabilities Received in Advance XXXXX
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Interest on Capital & Drawings
ExpensesFinance CostInterest on CapitalXXXX
Balance SheetEquity and Liabilities Share CapitalXXAdd Interest on CapitalXXX
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Interest on Capital & Drawings
Other Income Interest on Drawings XX
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Balance SheetEquity and Liabilities Share CapitalLess Drawings XXLess Interest on DrawingsXXX
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Q5. From the following balance extracted from the books of M/s Rajendra Kumar Gupta & Co., prepare a Trading and Profit and Loss Account and a Balance Sheet.
Particulars RsParticulars RsOpening Stock 1,250Plant and Machinery 6,230Sales 11,800Return Outwards1,380Depreciation 667 Cash in hand 895Commission (Cr.) 211Salaries 750Insurance 380Debtors1,905Carriage Inwards 300Discount (Dr.) 328Furniture 670Bills Receivable2,730Printing Charges 481Wages1,589Carriage Outwards 200Return Inwards1,659Capital 9,228Bank Overdraft4,000Creditors 1,780Purchases8,679Bills Payable 541 Cash in hand 47Bad Debts 180 Closing Stock3,700
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1. From the following trial balance of ABC Co., prepare trading and profit and loss account and balance sheetAdjustments Closing stock Rs 80000Interest on Capital @6%Prepaid advertisement Rs 2000Drawings Rs 1800Outstanding salaries Rs 3000Depreciation on building @ 5 %, furniture @ 5 % and motor car @ 10 %
Capital 500000Commission 7500Purchase returns 1800Creditors 56000Sales 350000915300915300
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Particulars Dr Cr Cash in hand 3500Cash in bank 6000Purchases 225000Stock (Opening)72000Debtors 50000Motor Car 30000Furniture 15000Building 425800Advertisement 22000Repairs and maintenance 13000General Expenses 16000Insurance 7000Salaries 30000
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Differentiate the following : Accounting Income vs. Economic Income Revenues vs. Gains; Expenses vs. Losses Fiscal Year vs. Calendar Year Revenue Recognition vs. Expense Recognition Accruals vs. Prepaids Balance Sheet Approach vs. Income Statement Approach Cash Basis vs. Accrual Basis
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