Final Accounts Formats Adjustments Table

Mukesh Agarwal Research Group FINAL ACCOUNTS OF TRADING CONCERN (CPT Notes 2008)

AECIndia.Commerce, G M Ext. Place, Shinde Ki Chhawani, Gwalior-474001 +91-751-2424240, 98930-16415

CS/CA Guidance ClassesE-mail: [email protected], [email protected] Page 1 of 11

FINAL ACCOUNTS OF TRADING CONCERN

1. Gross Profit =Net Sales – Cost of goods sold

Net sales =

Total Sales – Sales Returns or Returns inward

Cost of Goods sold =

Opening Stock + Net Purchases + Direct expenses - Closing Stock

Net Purchases =

Total purchases – Purchases returns or returns outward

Direct Expenses =

Purchasing expenses for goods + Manufacturing Expenses

D i r e c t E x p e n s e s Purchasing expenses for goods Manufacturing Expenses

1. Carriage OR Carriage Inward OR Carriage on purchases OR Carriage & Cartages.

1. Coal, Gas, Steam, Water, Fuel, Power

2. Freight OR Railway Freight 2. Excise duty

3. Octroi 3. Productive Expenses

4. Royalty 4. Wages OR Wages & salary

5. Import duty 5. Factory lighting

6. Custom duty 6. Factory Heating

7. Dock charges 7. Factory Rent, Rates, Taxes and Insurance

8. Clearing charges 8. Other Factory Expenses

9. Unloading Charges 9. Haulage

10. Order placement expenses 10. Factory manager or Works Manager salary

11. Factory worker’s / staff’s salary

12. Stores Overheads

13. Oiling and Cleaning of Machines

14. Technical Directors Fees




2. Net Profit =

Gross profit + All Incomes + All Gains OR Profits - Indirect expenses – All Losses

Incomes Gains Indirect expenses Losses

Operating Expenses Non

Operating Expenses

Office and Administrative

Expenses

Selling and Distribution Expenses

Commission Received A/c

Profit on sale of Assets

Salaries & Wages

Carriage outward

Interest on loan Loss on sales of

fixed Assets

Discount Received A/c

Profit on sale of investments

Rent, rates & Taxes

Carriage on sales

Interest on capital

Loss on Sales of Investments

Interest Received A/c

Bad debts recovered

Printing & Stationery

Loading Charges

Donations Bad Debts

Rent Received Grant received Lighting Advertisement Charity Loss by fire

Interest on Investments

Insurance premium

Commission Finance Charges

Loss by theft

Dividends on Shares

Telephone Charges

Brokerage Loss by

accidents

Tax refund Legal charges Export duty

Interest on drawings

Audit fees packing charges

Establishment

exp. Delivery van

exp.

Trade exp. Stable exp.

General Charges Discount allowed

Bank Charges Agent’s Salary

Postage & Telegrams

Sales tax

Depreciation on office’s Fixed

Assets

Depreciation on Sales

Department’s Fixed Assets

Repairs &

Maintenance Entertainment

Expenses

Director fees Sales Promotion

Expenses




Trading and Profit & Loss Accounts (For the year ended …..)

Dr. Cr. Particulars Amounts Particulars Amounts

To Opening Stock XXX By Sales XXX To Purchases XXX (-) Sales Returns (XXX) XXX (-) Purchases Returns

(XXX) By Goods sent on consignments XXX

(-) Dis. on purchases (XXX) XXX By Goods supplied to branch XXX To Direct Expenses XXX By Goods withdrawn by Owner* XXX To Gross profit c/d (B/F) By Goods distributed as sample* XXX By Goods gave as charity* XXX By Goods lost* XXX By Closing Stock XXX By Gross loss c/d (B/F)

Total XXX Total XXX To Gross loss b/d

XXX

By Gross profit b/d

XXX

To Indirect Expenses XXX By All Incomes XXX To All Losses XXX By All Gains & profits XXX To Net Profit (B/F) By Net Loss (B/F) (Transferred to Capital A/c) (Transferred to Capital A/c)

Total XXX Total XXX

Balance Sheet (As on ……………………)

Liabilities Amounts Assets Amounts Bank overdraft XXX Cash in Hand XXX B/P XXX Cash at bank XXX Creditors XXX Debtors XXX Outstanding Expenses XXX B/R XXX Advance Income XXX Closing Stock: XXX Loans XXX Prepaid Expenses XXX Bank Loans XXX Accrued Incomes XXX Capital XXX Investments XXX (+) Additional Capital XXX Loan and Advances XXX (+) Interest on Capital XXX Goodwill XXX (+) Net Profit XXX Land and Building XXX XXX Plant & Machinery XXX (-) Drawings (XXX) Furniture, Fixtures & Fittings XXX (-) Interest on Drawings (XXX) Car XXX (-) Net Loss (XXX) XXX Loose Tools XXX Patents right XXX Copy right XXX Trade Mark XXX

Total XXX Total XXX

*These items, alternatively

deducted from purchases.




FINAL ACCOUNTS OF MANUFACTURING CONCERN

Manufacturing, Trading and Profit & Loss Account Dr. (For the year ended …………..) Cr.

Particulars Amounts Particulars Amounts To Opening Stock of WIP By Sales of Scrap XXX To Raw Material Consumed: By Cost of Joint Product XXX Opening Stock XXX By Cost of by Product XXX (+) Purchases of R/M XXX By Closing Stock of WIP XXX (+) Carriage Inward XXX By Trading Account c/d (B/F) (+) Freight inward XXX (Cost of goods production transferred) (-) Return Outward of R/M (XXX) (-) Closing Stock (XXX) XXX To Wages XXX To Salary of Works Manager XXX To Power, Electricity & Water XXX To Fuel XXX To Factory Postage & Telephone XXX To Depreciation on: Plant & Machinery XXX Factory land & Building XXX To Repairs to: Plant & Machinery XXX Factory Land & Building XXX To Insurance: Plant & Machinery XXX Factory Land & Building XXX To Factory Rent & Taxes XXX To Factory General Expenses XXX To Royalty based on Production XXX

Total XXX Total XXX To Opening Stock of finished goods XXX By Sales XXX To Purchases of F/G XXX (-) Sales Returns (XXX) XXX (-) Purchases Returns of F/G (XXX) By Goods sent on consignments XXX (-) Discount on purchases (XXX) XXX By Goods supplied to branch XXX To Manufacturing Account b/d XXX By Goods withdrawn by Owner* XXX (Cost of goods production transferred) By Goods distributed as sample* XXX To Purchasing Exp. of F/G XXX By Goods gave as charity* XXX To Gross profit c/d (B/F) By Goods lost* XXX By Closing Stock of finished goods XXX By Gross loss c/d (B/F)

Total XXX Total XXX To Gross loss b/d XXX By Gross profit b/d XXX To Indirect Expenses XXX By All Incomes XXX To All Losses XXX By All Gains & profits XXX To Net Profit (B/F) By Net Loss (B/F) (Transferred to Capital A/c) (Transferred to Capital A/c)

Total XXX Total XXX *These items, alternatively deducted from purchases.




Balance Sheet (As on ……………………)

Liabilities Amounts Assets Amounts

Bank overdraft XXX Cash in Hand XXX

B/P XXX Cash at bank XXX

Creditors XXX Debtors XXX

Outstanding Expenses XXX B/R XXX

Advance Income XXX Closing Stock: XXX

Loans XXX Raw Material XXX

Bank Loans XXX Work-in-progress XXX

Capital XXX Finished Goods XXX XXX

(+) Additional Capital XXX Prepaid Expenses XXX

(+) Interest on Capital XXX Accrued Incomes XXX

(+) Net Profit XXX Investments XXX

XXX Loan and Advances XXX

(-) Drawings (XXX) Goodwill XXX

(-) Interest on Drawings (XXX) Land and Building XXX

(-) Net Loss (XXX) XXX Plant & Machinery XXX

Furniture, Fixtures & Fittings XXX

Car XXX

Loose Tools XXX

Patents right XXX

Copy right XXX

Trade Mark XXX

Total XXX Total XXX

Class Notes / Working Notes




A D J U S T M E N T S T A B L E

ADJUSTMENTS JOURNAL ENTRY EFFECT IN TRADING A/C PROFIT & LOSS

A/C BALANCE SHEET

Dr. Cr. Dr. Cr. Liabilities Assets

1. Closing Stock. Closing Stock A/c Dr. To Trading A/c

Adjusted Purchases and Closing Stock: - If the amount of closing Stock is appearing in the trial balance, it means that opening and closing stock both have been adjusted in the purchase (Adjusted Purchase = Opening Stock + Total Purchases – Purchase return – Closing Stock). Only closing stock will be given in the trial balance and it will be shown on the Assets side of the Balance Sheet. It will not be shown in the trading Account as it has already adjusted in the purchases.

2. Outstanding direct Expenses [due but not paid]

Direct Expenses A/c Dr. To out/s Direct Exp. A/c

(+)In Direct Exp.

3. Outstanding indirect Exp. [Due but not paid]

Indirect Exp. A/c Dr. To out/s Indirect Exp. A/c

(+) in Indirect

Exp.

Outstanding expenses appearing in trial balance: - If outstanding expenses are given on the credit side of the trial balance, it means that outstanding expenses are already adjusted in the relevant expenses account. In this case outstanding expenses will be shown only on the liabilities side of Balance Sheet.

4. Prepaid / Unexpired Direct Exp. [Exp. Paid in Advance]

Prepaid Direct Exp A/c Dr. To Direct Exp. A/c

(-) from Direct Exp.

5. Prepaid /

Unexpired Indirect Exp. [Exp. Paid in Advance]

Prepaid Indirect Exp A/c Dr. To Indirect Exp.

(-)from Indirect

Exp.

Prepaid / Unexpired expenses appearing in trial balance: - If Prepaid / Unexpired expenses are given on the Debit side of the trial balance, it means that Prepaid / Unexpired expenses are already adjusted in the relevant expenses account. In this case Prepaid / Unexpired expenses will be shown only on the Assets side of Balance Sheet.

6. Accrued Income or outstanding income [ Due but not received]

Accrued Income A/c Dr. To Income A/c

(+) in Income

* If accrued income is already appearing on the debit side of the trial balance, than it will be shown on the assets side of the balance sheet only.

7. Advance Income or unexpired Income [Received in Advance]

Income A/c Dr. To Advance Income A/c

(-) from Income

* If income received in advance is already appearing on the credit side of trial balance, it will be shown only in the liabilities side of balance sheet.

8. Interest on loan [ Due but not paid]

Interest on loan A/c Dr. To loan A/c

(+) in loan

Implied adjustments: - If a loan account carrying certain rate of interest is given on the credit side of the trial balance, than it is

essential to calculate interest at the rate mentioned should be made for outstanding interest on loan, as mentioned above. 9. Interest on capital

[charged by owner]

Interest on capital A/c Dr. To capital A/c

(+) in capital

10. Interest on Drawings [Int. due on drawing

Drawing A/c Dr. To int. on Drawing A/c

(+) in drawing or

(-) from capital

11. Interest on Investment [Int. due but not received]

Accrued Intt. A/c Dr. To Intt. On Investment A/c




12. Advance received from costumer / debtors, but includes in creditors.

Creditors A/c Dr. To Adv, from Debtors A/c

(-) from Creditors & separately

disclosed as Adv. From debtors.

13. Advance paid to supplier / creditors, but includes in debtors.

Adv. to Suppliers A/c Dr. To Debtors A/c

(-) from Debtors& separately disclosed as Adv. to creditors.

14. Bill receivable Dishonored.

Debtors A/c Dr. To B/R A/c

(+) in Debtors & (-) from

B/R

15. Bill discounted Dishonored.

Debtors A/c Dr. To Bank A/c

(+) in Debtors & (-) from Bank A/c

16. Bill Discounted but not matured.

No any journal entry passed, show in liabilities side as FOOT NOTE.

Show as FOOT NOTE

17. Bad debts OR bad debts written off

a) at the time of bad debts: Bad debts A/c Dr. To Debtor A/c b) Bad debts written off, If Provision for bad debts are not maintained: P. & L. A/c Dr. To Bad debts A/c c) Bad debts written off, If Provision for bad debts are maintained: Prov. For B/D A/c Dr. To Bad Debts A/c

(-) from debtors

* If bad debts are already appearing in the trial balance, then these should be shown only on the debit side of profit and Loss Account.

18. Provision for Bad Debts [maintained the provision]

P. & L. A/c Dr. To Prov. For B/D A/c

(-) from debtors

Provision for bad debts already appearing in the trial balance: - When Provision for bad and doubtful debts is already appearing on the credit side of trial balance, it is called old provision. In this case bad debts, new provision for bad debts and old provision will appear in final accounts as follows:

P r o f i t a n d l o s s A / c Particulars Rs. Particulars Rs.

To Bad debts (given in trial balance) XXX (+) Further bad debts (given in adjustments) XXX (+) New Provision (given in adjustments) XXX XXX (-) Old Provision (given in trial balance) (XXX)

XXX

NOTE: i. If old provision for bad debts is more than the sum of bad debts and new provision, then these items will be shown on

the credit side of profit and Loss Account. ii. It is to be noted that calculation of New provision for bad debts should be the amount of debtors left after adjusting

all other adjustments (Excluding Next Adjustment) related to debtors and after deducting further bad debts. iii. There is no need to make a provision for bad debts on GOOD DEBTS.

B a l a n c e S h e e t Liabilities Rs. Assets Rs.

Debtors XX (-) Further bad debts (given in adjustments)XX XX (-) New provision (given in adjustments) XX

XXX




19. Provision for Discount on Debtors { prov. maintained]

P. & L. A/c Dr. To Prov. For Dis. A/c

(-) from debtors

* It is to be noted that calculation of provision for Discount on debtors should be the amount of debtors left after deducting further bad debts and New provision for bad & doubtful debts.

20. Provision for Discount on Creditors { prov. maintained]

provision for discount Dr. To P. & L. A/c

(-) from creditors

21. Goods withdrawn by owner. [not entered]

Drawing A/c Dr. To purchase A/c (-) from

purchase

(+) in Drawing or (-)in capital

22. Private Purchases recorded as Business Purchases.

Drawing A/c Dr. To purchase A/c (-) from

purchase

(+) in Drawing or (-)in capital

23. Goods given as Charity. [not entered]

Charity A/c Dr. To Purchases A/c

(-) from purchase

24. Goods distributed as free samples. [not entered]

Advertisement A/c Dr. To Purchases A/c

(-) from purchase

25. Use of goods in Business as Assets.

Respective Assets A/c Dr. To Purchases A/c

(-) from purchase

26. Goods gave to customer on approval (Return) Basis but entered in the Books as a actual sales

Sales A/c Dr. To Debtor A/C

(-) from sales at

SP (+) in closing stock at

CP

(-)from Debtors at

SP (+) in closing stock at

CP

27. Goods returned by customer taken in to stock but not entered in the Books.

Sales Return A/c Dr. To Debtors A/c

(-) from Sales

(-)from debtors

28. Goods in transit but not Entered in the books.

Goods in transit A/c Dr. To Creditors A/c

(+) in purchases

(+) in closing stock

(+) in

creditor

(+) in closing stock

29. Loss of Goods.

Loss by ___ A/c Dr. To purchase A/c

(-)from purchases

30. Insured goods lost worth Rs.5000 but Insurance Co. accepted the claim for Rs. 3000.

Loss by ___ A/c Dr. 2,000 [actual loss] Ins. Claim A/c Dr. 3000 [claim ] To purchase A./c 5000 [total loss]

(-) from purchase total loss Rs.5000

At actual

loss Rs.2000

At claim Rs. 3000

31. Purchased any fixed Assets, but recorded in Purchases book or Purchases A/c

Respective Assets A/c Dr. To Purchases A/c

(-)from purchases

32. Exp. Related to fixed assets purchased or installed recorded as Direct exp.

Fixed Assets A/c Dr. To Direct Exp. A/c

(-) from Expenses

(+) in Fixed Assets




33. Depreciation Charged on Fixed Assets

Depreciation A/c Dr. To Fixed Assets A/c

(-) From Fixed Assets

*If depreciation is already appearing on the debit side of trial balance it will be shown only in the Dr. side of Profit and Loss Account.

34. Loss of Fixed Assets.

Loss by ___ A/c Dr. To Fixed Assets A/c

(-) From Fixed Assets

35. Loss of insured fixed assets.

Loss by ___ A/c Dr. [actual loss] Ins. Claim A/c Dr. [claim ] To Fixed Assets A./c [total loss]

At

actual loss

(-) From Fixed

Assets At total loss

& Show of

ins. Claim

36. Invoice not received for goods purchased.

Purchases A/c Dr. To Creditors A/c

(+) in Purchase

(+) in

Creditors

37. Salaries / Rent / Interest less tax.

Salaries/ Rent / Intt. A/c Dr. To Income tax A/c

(+) in Exp.

38. Employer’s Contribution in provident fund [not shown in trial Balance ]

Salary A/c Dr. To provident fund A/c

(+) in salary

39. Profit on Joint Ventures / Consignment.

Joint Ventures A/c Dr. To Profit & Loss A/c

40. Manager’s Commission Payable on profit.

Commission A/c Dr. To Comm. payable A/c

Commission payable calculated as follows: -

i. When commission is payable on net profit before charging such commission =

Net profit before commission Rate of Commission / 100

ii. When commission is payable on net profit after charging such commission =

Net profit before commission Rate of Commission / (100 + Rate)

Class Notes / Working Notes

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Final Accounts Formats Adjustments Table