Q.1 The following is the trial balance of R. Woods as at 30 September 2014

You are required to prepare a trading and profit and loss account for the year ended 30 September 2014 and a balance sheet at that date.

Q.2 On 31 December 2014, the trial balance of Joy toys showed the following accounts and balances.

ParticularsDebit Rs.

Credit Rs.

Capital 39,980Drawings 14,760 Loan—SBI Bank 20,000Leasehold premises 52,500 Motor vehicles 13,650 Investments 4,980 Trade debtors 2,630 Trade creditors 1,910Cash 460 Bank overdraft 3,620Sales 81,640Purchases 49,870 Returns outwards 960Returns inwards 840 Carriage outwards 390 Stock 5,610 Rent and rates 1,420 Light and heat 710 Telephone and postage 540 Printing and stationery 230 Bank interest 140 Interest received 620

148,730 148,730

You are required to prepare a trading and profit and loss account for the year ended 31 December 2014, and a balance sheet at that date

Particulars Amount Particulars AmountBank 500 Capital 75,000Inventory 12,000 Bank loan 22,000Purchases 108,000 Sales 167,000Rent and insurance 15,000 Discount received 3,000Plant and machinery 70,000 Returns outwards 4,000Office furniture and fittings

24,000 Creditors 16,000

Discount allowed 1,600 Bank interest 400Wages and salaries 13,000 Light and heat 9,000 Drawings 10,000Debtors 22,500Returns inwards 1000

2,87,000 2,87,000

The following chart shows the effects of adjustments in final accounts

Name of items Adjustment entry Effect on trading and profit and loss account

Effect on balance sheet

1. Closing stock Closing stock account dr. To trading account

Closing stock will write in the credit side of trading account

It will show as asset in the final account

2. outstanding expenses or expenses payable or expenses due but not paid

Expenses account dr. To outstanding exp.

Outstanding expenses will add in expenses. if it is direct it will go to trading account’s debit side , if it is indirect nature then it will go to the debit side of profit and loss account

It will be the current liability so it will go to the liability side of balance sheet.

3. advance expenses

Advance expenses a/c dr. To expenses account

It will deduct from respective expenses paid.

It will be the current asset so it will go to assets side of balance sheet

4. income receivable

Outstanding income account dr. To income account

It will add in the income and go to credit side of profit and loss account

It will show as asset in the assets side of balance sheet

5. income received in advance

Income account dr. To advance income account

It will deduct from the income received

It will shown as liability in the liabilities side of balance sheet

6 Goods use for personal use

Drawing account dr. To purchase account

It will deduct from purchase in the debit side of trading account

It will deduct from capital in the liabilities side of balance sheet

7. Destroyed of goods

loss by fire or accident account Dr To trading If there is no insurance Profit and loss account dr. To loss by fire / accident

It will shown in credit side of trading account and And also in profit and loss account’s debit side

It will not go to balance sheet

8. Depreciation Depreciation account dr. To respective asset account

It will go to the debit side of profit and loss account

It will deduct from fixed asset . Because it decrease the value of asset

9. Provisional for doubtful debts

If you have make any provision for doubtful debts the its journal entry will passed Provision for doubtful debt account dr. To Bad debts account ( New bad debts which is not shown in trial balance will transfer to provision for doubtful debt account )

Net value of provision for doubtful debt account transfer to profit and loss account’s debit side

Deduct from debtors

10. Commission to manager

Commission account dr. To outstanding commission

It will shown in the debit side of profit and loss account as o/s commission to manager (If it charge on the amount after charging such commission then we will calculate)

It will shown as liability