DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : N.Sambaiah
Designation : Head of the section
Branch : DCCP
Institute : Suvr and SR GPW,
Ethamukkala.
Year : I year
Subject : Accountancy-I
Subject Code : CCP102
Topic : Final Accounts
Duration : 50 minutes
Sub Topic :preparation of final accounts
with adjustment.
Teaching Aids : PPT, Animations

CCP102.142 1
Objectives
On completion of the period, student would be
able to

 Prepare final accounts with adjustments

CCP102.142 2
Recap:
In the previous classes we have discussed
the following adjustments and their
Treatment in the final accounts.
They are:
 Treatment of old reserve for doubtful debts
(given in trail balance) and extra new reserve
to be created.
 Treatment of additional bad debts
 Treatment of prepared Expenses

CCP102.142 3
 Final accounts – solution – 4
Sairam, Rajahmundry
Trading account for the period ending 31-3-08
Dr Cr

Particulars amount Rs. Particulars Amount

Ps Rs. Ps

To Opening stock account 14,525 By Sales 71,600

To Purchases a/c. 24,200 Less: returns 1,000 70,600
Less: returns 400 By Closing stock 16,400
---------- 23,800
To Wages 4,500
To Freight on purchases 400
To Gross profit 43,775
(transferred to -------------- ----------
profit and loss account) 87,000 87,000
--------------- -------------

CCP102.142 4
 Final accounts – solution – 4
Sairam, Rajahmundry
P & L account for the period ending 31-3-08
Dr Cr

Particulars amount Particulars Amount

Rs. Ps Rs. Ps

To Salaries 10,500 BY Gross profit 43,775

Add: outstanding 900 11,400
To Freight on sale 600
To Rent & Taxes 1,000
Less: prepaid 450 550
To Reserve for bad debts 530
To Depreciation – Machinery 1,100
To Interest on capital 1,250
To Net Profit (transferred to 28,345
capital account) -------------- ----------
43,775 43,775

CCP102.142 5
 Final accounts – solution – 4.. Contd.
Sairam, Rajahmundry
Balance sheet as on 31-3-08
Liabilities amount Assets Amount
Rs. Ps Rs. Ps
Capital 25,000 Machinery 22,000
Add: interest 1,250 Less: depreciation 1,100 20,900
Add: Net profit 28,345 Furniture 2,600
--------- 54,595 Debtors 10,600
Sundry creditors 13,925 Less: provision 530 10,070
Outstanding expenses: Prepaid expenses:
Salaries Rent and taxes 450
900 Cash at bank 19,000
Closing stock 16,400
------------- ------------
69,420 69,420

CCP102.142 6
 Final accounts – solution – 5
Trading account for the period ending 31-3-08
Dr Cr

Particulars amount Rs. Particulars Amount

Ps Rs. Ps

To Opening stock 24,000 By Sales 3,40,000

To Purchases. 2,40,000 Less: returns 2,000 3,38,000
Less: returns 9,500 By Closing stock 35,000
2,30,500
---------- 16,500
To Wages 2,600
To Carriage 99,400
To Gross profit -------------- -----------
(transferred to profit and
loss account) 3,73,000 3,73,000
-------------- ------------

CCP102.142 7
 Final accounts – solution – 5.. contd
Profit and Loss account for the preiod ending 31-3-08
Dr Cr
Particulars amount Particulars Amount
Rs. Ps Rs. Ps
To Salaries 32,000 BY Gross profit 99,400
To Rent & Taxes 4,500 By Interest 1,600
Add: outstanding 800 5,300 By Interest earned 1,000
To Bad debts 2,000 but not received ------- 2,600
To Provision for doubtful debts
(3700 – 3000) 700
To Depreciation account;
Plant &Machinery 7600
Furniture 3600 11,200
To Net Profit (transferred to 50,800
capital account) ----------- -----------
1,02,000 1,02,000

CCP102.142 8
Final accounts – solution – 5.. contd
Balance sheet as on 31-3-08

Liabilities amount Rs. Assets Amount

Ps Rs. Ps
Capital 1,25,000 Plant &Machinery 76000
Add: Net profit 50,800 Less: depreciation 7600 68,400
---------- 1,75,800 Furniture 18,000
creditors 60,000 Less: depreciation 3,600 14,400
Outstanding expenses: Debtors 76,000
Rent 800 Less: bad debts 2,000
74,000
Less: Provision
for bad debts 3,700 70,300
Cash at bank 47,500
Closing stock 35,000
Income earned, not received
Interest 1,000
--------------- ------------
2,36,600 2,36,600
--------------- ------------

CCP102.142 9
Final accounts – solution – 5.. contd
Note: Provision for doubtful debts:
Debtors 76,000
Less: bad debts (given in adjustments) 2,000
---------
74,000
----------
Reserve required on 74,000 x 5/100 = 3700
Reserve available in trail balance = 3000
Additional reserve created in this year = 700
Note: Total reserve (3000 + 700 = 3700) is to be deducted from the
debtors in the Balance Sheet.

CCP102.142 10
Assignment - 6
Prepare Trading account, Profit and Loss account and
Balance Sheet from the following trial balance as on 31-3-08.

Debit Rs credit Rs

Wages 1 3,500 Capital 1 ,40,000

Salaries 6 ,800 Sales 2 ,14,000
Cash in hand 9,000 Returns 1 ,100
Purchases 1,45,150 Creditors 1 4,000
Returns 1 ,200 Bills payable 16,000
Stock 0n 1-4.07 43,000
Carriage inwards 1,200
Carriage outwards 1,750
Buildings 7 6,000
Machinery 50,000
Insurance 1 ,500
Debtors 2 4,000
Bills Receivables 12,000 -----------
3,85,100
3,85,100
CCP102.142 11
Assignment - 6 continued

Adjustments:
2. Closing stock on 31-3-08 Rs.57,000
3. Outstanding wages Rs.2,500
4. Write off bad debts Rs.2000 and make a
provision for doubtful debts @ 5% on Debtors.
5. Prepaid insurance Rs.300
6. Machinery and Buildings are to be depreciated by
Rs.5000 and Rs.6000 respectively.

CCP102.142 12
Assignment - 7
From the following information prepare Trading, profit and loss
Account and Balance Sheet of Mrs. Shaw Brothers, Delhi. The
balances of accounts are as follows for the year ending 31-3-08.

5. Machinery 1,25,000
6. Furniture and fixtures 14,000
7. Opening stock 32,500
8. Land and buildings 75,000
9. Purchases 1,96,000
10. Salaries 25,000
11. General expenses 4,500
12. Rent paid 7,000
13. Postage 1,800
14. Stationery 2,500

CCP102.142 13
Assignment - 7 continued
1. Wages 43,000
2. Freight 5,600
3. Carriage on sales 8,000
4. Repairs 9,500
5. Capital 2,00,000
6. Loan from Mr.Venkat 1,00,000
7. @ 12% interest
8. Creditors 18,500
9. Purchase returns 4,500
10. Miscellaneous receipts 2,300
11. Sales 3,70,000
contd….

CCP102.142 14
Assignment – 7 continued
1. Debtors 60,000
2. Bad debts 2,000
3. Cash in hand 5,000
4. Cash at bank 66,900
5. Sales returns 12,000

Adjustments:
8. Wages Rs.4500 are outstanding.
9. General expenses include the insurance
Rs.1200,paid for the period ending 30-6-08.

CCP102.142 15
Assignment – 7 continued
1. A provision of 5% on Debtors is to be created for
doubtful debts.
2. Depreciation is to be charges as follows:
Land and buildings … 5%
Machinery 10%
Furniture and fixtures 10%

7. The loan of Mr. Venkat was taken on 1-10-07,

interest on it has not been paid yet.
8. The value of the stock as on 31-3-08 Rs. 30,000.
CCP102.142 16
Assignment – 7 continued
Note: In the above problem- General expenses are
Rs.4,500. Insurance paid is also included in this amount.
Insurance paid is Rs.1200.
Insurance is generally paid for one year in a single
payment.
In this problem, insurance is paid up to 30-6-08. Hence
the above amount is applicable for the period of 1-7-07
to 30-6-08. Hence one quarter i.e. 1-4-08 to 30-6-08 is
not pertaining to this accounting year. Hence one quarter
amount is not pertaining to this year. The amount is
prepaid expenses, as follows.
The amount of one-quarter = 1200 x ¼ = 300

CCP102.142 17
Quiz:
1.Outstanding incomes appear:
a) In profit and loss and balance sheet
b) In trading A/c and profit and loss A/c
c) None of the above

CCP102.142 18