Adjustments of Final accounts - full detail in table form | Accounting ... [PDF]

Sep 21, 2008 - Adjustment entry. Effect on trading and profit and loss account. Effect on balance sheet. 1. Closing stoc

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19

journal entries



Vinod Kumar

account

September 21, 2008

There are many adjustment because earlier we have not passed any journal entry , so at the time of making final account we have to adjust them . Name of items

Adjustment entry

Effect on trading and profit and loss account

Effect on balance sheet

1. Closing stock

Closing stock account dr. xxx To trading account xxx

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. xxx To outstanding exp. xxx

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. xxx To expenses account xxx

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. xxx To income account xxx

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. xxx To advance income account xxx

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. xxx To purchase account

It will deduct from purchase in the debit side of trading account = purchase – drawing in goods

It will deduct from capital in the liabilities side of balance sheet =capital- drawing in goods

7. Destroyed of goods

loss by fire or accident account Dr. xxx To trading If there is no insurance It will also go to profit and loss account Profit and loss account dr. xxx To loss by fire / accident

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

It will not go to balance sheet

8. Depreciatio n

Depreciation account dr. xxx To respective asset account xxxx

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 =fixed asset depreciation

9. provisional for doubtful debts

If you have make any provision for doubt ful debts the its journal entry will passed Provision for doubtful debt account dr. xxx To Bad debts account xxx ( 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 =total bad debt + closing balance or provision of doubtful debt or this year provision opening balance of provision for doubtful debts

Deduct from debtor = debtor – new bad debts – this year provision or closing balance of provision for bad debts

10. Commissio n to manager

Commission account dr. xxx 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 = profit before commission X Rate/ 100+rate

It will shown as liability

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