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Financial Accounting
1
Lecture – 14
09 – Paid to Mr. A Rs. 25,000 through cheque
Bank AccountCode 02
Date No Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 130,000 130,000
Feb 02 01 Cash deposited 25,000 155,000
Feb 05 03 Expenses payable paid 15,000 140,000
Feb 15 08 Fixed deposit placed 75,000 65,000
Feb 17 09 Paid to A 25,000 40,000
Mr. ACode 07
Date No Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 15,000 (15,000)
Feb 10 06 Credit purchase from B 60,000 (75,000)
Feb 17 09 Paid to A 25,000 (50,000)
Financial Accounting
2
Lecture – 14
10 – Received cash from Mr. B. Rs. 75,000.
Cash AccountCode 01
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 35,000 35,000
Feb 02 01 Cash deposited 25,000 10,000
Feb 06 04 Cash received from B 14,000 24,000
Feb 20 10 Received from B 75,000 99,000
Mr. BCode 09
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 15,000 15,000
Feb 06 04 Cash received from B 14,000 1,000
Feb 07 05 Discount given to B 1,000 0
Feb 12 07 Credit sale to B 95,000 95,000
Feb 20 10 Received from B 75,000 20,000
Financial Accounting
3
Lecture – 14
11 – Salaries accrued Rs. 5,000.
SalariesCode 10
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 5,000 5,000
Feb 28 11 Salaries Accrued 5,000 10,000
Expenses AccruedCode 12
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 20,000 (20,000)
Feb 03 02 Expenses payable reduced 5,000 (15,000)
Feb 05 03 Expenses payable paid 15,000 0
Feb 28 11 Salaries Accrued 5,000 (5,000)
Financial Accounting
4
Lecture – 14
12 – Expenses accrued Rs. 15,000.
Expenses AccruedCode 12
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 20,000 (20,000)
Feb 03 02 Expenses payable reduced 5,000 (15,000)
Feb 05 03 Expenses payable paid 15,000 0
Feb 28 11 Salaries Accrued 5,000 (5,000)
Feb 28 12 Expenses accrued 15,000 (20,000)
Expense AccountCode 01
Date No. Narration Dr. Rs. Cr. Rs. Bal. Dr/(Cr)
Feb 01 Balance B/F 20,000 20,000
Feb 03 02 Expenses payable reduced 5,000 15,000
Feb 28 12 Expenses accrued 15,000 30,000
Financial Accounting
5
Lecture – 14
Ali Traders
Trial Balance As On February 28, 20--
Title of Account Code Dr. Rs. Cr. Rs.
Cash Account 01 99,000
Bank Account 02 40,000
Capital Account 03 200,000
Furniture Account 04 15,000
Vehicle Account 05 50,000
Purchases Account 06 120,000
Mr. A (Creditor) 07 50,000
Trial Balance
Financial Accounting
6
Lecture – 14
Ali Traders
Trial Balance As On February 28, 20--
Title of Account Code Dr. Rs. Cr. Rs.
Sales 08 190,000
Mr. B (Debtor) 09 20,000
Salaries 10 10,000
Expenses 11 30,000
Expenses Payable 12 20,000
Discount 13 1,000
Fixed deposit 14 75,000
Total 460,000 460,000
Financial Accounting
7
Lecture – 14
• Items purchased for own use of the business are charged as expense, e.g. tube lights, bulbs, stationery etc.
• Items purchased for the purpose of resale are treated as Purchases.
Financial Accounting
8
Lecture – 14
Stock
• Stock is the quantity of unutilized or unsold goods lying with the organization.
Financial Accounting
9
Lecture – 14
Types of Stock
• In case of Trading Concern (an organization that does not manufacture goods and but resells the purchased goods.) Stock in Trade (Finished goods)
• In case of Manufacturing Concern (an organization that purchases material and converts into a finished product by putting it through a process). Raw Material Stock Work in Process Finished Goods Stock
Financial Accounting
10
Lecture – 14
Stock Account
• Stock Account is Debited with the Value of the Goods Purchased.
• Stock account is Credited with the Purchase Price of the Goods Sold / Issued for Production.
• Stock Account shows the cost / purchase value of unsold goods.
Financial Accounting
11
Lecture – 14
Purchase of Stock
• Credit Cash Account OR
Supplier / Creditor Account
• Debit Stock Account
Financial Accounting
12
Lecture – 14
Payment to Creditors
• Debit Supplier / Creditor Account
• Credit Cash Account
Financial Accounting
13
Lecture – 14
Sale of Goods
• Debit Cost of Goods Sold
• Credit Stock Account
Financial Accounting
14
Lecture – 14
+ Opening Stock
+ Purchases
– Value / Cost of Goods Sold
= Closing Stock
Financial Accounting
15
Lecture – 14
Cost of Goods Sold
• Trading Concern
Purchase Price of the Goods Sold
• Manufacturing Concern
+ Cost of Raw Material Consumed
+ Other Manufacturing Costs e.g. salaries of labour, cost
of machinery