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

CCP102.143 1
Objectives
On completion of the period, student would be
able to
 Prepare final accounts with adjustments

CCP102.143 2
Recap:
In the previous classes we have discussed the
following adjustments and their treatment in
the final accounts. They are
 Prepaid insurance. Insurance is included in the
General expenses. From the insurance amount,
we have calculated the prepaid amount and the
same is deducted from the insurance amount in the
Profit and Loss account. The same also shown in
the Balance Sheet under the heading prepaid
expenses (assets side)

CCP102.143 3
 Two home work problems are given in the
previous class. The same is verified in this class
and if any mistakes are there, they are explained
to them individually

CCP102.143 4
Final accounts – solution – 6.
Trading, and profit and loss account for the year ending 31-3-08
Dr C
Particulars amount Particulars Amount
Rs. Ps Rs. Ps
To Opening stock 43,000 By sales 2,14,000
To Purchases 1,45,150 Less: returns 1,200 1,12,800
Less: returns 1,100 1,44,050 By Closing stock 57,000
To Wages 13,500
Add: outstanding 2,500 16,000
1,200
To Carriage inwards 65,550
To Gross profit (transferred -------------- -------------
to P/L account) 2,69,800 2,69,800
To Salaries --------------- --------------
To Carriage inwards 6,800 By Gross profit 65,550
To Insurance 1,500 1,750
Less prepaid 300
1,200
CCP102.143 5
Final accounts – Solution –
6.contd
Trading, and profit and loss account for the year ending 31-3-08
Dr Cr
Particulars amount Amount
Rs. Ps Particulars Rs. Ps
To Bad debts 2,000
To Reserve for doubtful debts 1,100
To Depreciation account
Machinery 5,000
Buildings 6,000 11,000
To Net profit 41,700
------------ -----------
65,550 65,550
------------- ------------

CCP102.143 6
Final Accounts – Solution – 6.Contd
Balance Sheet as on 31-3-08
Liabilities Amount Assets Amount
Rs. Ps Rs. Ps.
Capital 1,40,000 Debtors 24,000
Add: net profit Less: bad debts 2,000
41,700 1,81,700 22,000
14,000 Less: reserve for
------------- 16,000 doubtful debts 1,100 20,900
Creditors Bills receivable 12,000
Bills payable 2,500 Machinery 50,000
Outstanding expenses Less: depreciation 5,000 45,000
Wage Buildings 76,000
Less: depreciation 6,000 70,000
Cash in hand 9,000
Closing stock 57,000
Prepaid expenses - insuranc 300
--------------- -------------
2,14,200 2,14,2000
CCP102.143 7
Final accounts – solution – 7.
Mrs. Shaw brothers, Delhi Trading account for the year ending 31-3-08
Dr Cr
Particulars amount Particulars Amount
Rs. Ps Rs. Ps

To Opening stock 32,500 By Sales 3,70,000

To Purchases 1,96,000 Less: returns 12,000 3,58,000
Less: returns 4,500 1,91,500 30,000
By closing stock
To Wages 43,000 47,500
Add: outstanding 4,500 5,600
To Freight 1,10,900
To Gross profit (transferred ------------- -------------
3,88,000 3,88,000
to profit and loss account) -------------- --------------

CCP102.143 8
Final Accounts – Solution – 7..Contd.
Mrs. Shaw brothers, Delhi Profit and Loss account for the year
ending 31-3-08
Dr Cr
Particulars amount Rs. Particulars Amount
Ps Rs. Ps
To Salaries 25,000 By Gross profit 1,10,900
To General expenses 4,500 By Miscellaneous 2,300
Less: prepaid Insurance 300 4,200 receipts
To rent 7,000
To Postage 1,800
To Stationery 2,500
To Carriage on sales 8,000
To Repairs 9,500
To Bad debts 2,000

CCP102.143 9
Final Accounts – Solution – 7..Contd.
Mrs. Shaw brothers, Delhi Profit and Loss account for the year
ending 31-3-08
Dr Cr
Particulars amount Particulars Amount
Rs. Ps Rs. Ps

To Provision for doubtful debts 3,000

To Depreciation a/c
Land and buildings 3,750
Machinery 12,500
Fixtures 1,400 17,650
To Interest on Mr. Venkken Loan 9,000
To Net Profit (Trans. To Cap. A/c)
23,550
----------- 1,13,200
1,13,200 ------------
------------
CCP102.143 10
 Balance Sheet of Mrs. Shaw Brothers, Delhi as on 31-3-08

Liabilities Amount Assets Amount

Rs. Ps Rs.
Ps.
Capital account 2,00,000 Land and buildings 75,000
Add: net profit 23,550 Less: depreciation 3,750 71,250
----------- 2,23,550 Machinery 1,25,000
Mr. Venkat loan a\c 1,00,000 Less: depreciation 12,500 1,12,500
Add: interest 9,000
-------------- 1,09,000 Furniture & fixtures 14,000 12,600
Sundry creditors 18,500 Less: depreciation 1,400
Outstanding expenses Debtors 60,000
Wage 4,500 Less: Provision for 57,000
doubtful debts 3,000 5,000
Cash in hand 66,900
Cash at bank 30,000
Closing stock 300
--------------- Prepaid expenses- insurance ------------
3,55,550 3,55,550
CCP102.143 11
Final accounts – solution – 7..contd
Note: Interest on Mr. Venkat Loan
Loan Taken from Mr. Venkat Rs. 1,00,000
Rate of interest = 12%
Date of taking the loan 1-7-2007
No of months interest to be paid =
31-3-08 – 1-7-08 = 9 months
Interest to be paid = 1,00,000 x 12/100 x 9/12
= Rs. 9,000.

CCP102.143 12
Assignment - 8
From the following Trail Balance of Mrs. Sita & Co as on 31-3-08,
prepare Trading and Profit and Loss account and Balance Sheet.

Debit Balances Rs. Credit Balance Rs

Purchases 4,60,000 Sales 10,50,000

Return inwards 7,000 Return outwards 6,500
Wages 95,000 Capital 7,00,000
Power 45,000 Creditors 1,15,000
Carriage outwards 35,000
Carriage inwards 23,000
Opening stock 60,000
Land & Premises 4,50,000
Machinery 2,00,000
Patents 50,000
Salaries 1,60,000
Sundry expenses 15,000
Insurance 6,000

CCP102.143 13
Assignment – 8 continued..
From the following Trail Balance of Mrs. Sita & Co as on 31-3-08,
prepare Trading and Profit and Loss account and Balance Sheet.

Debit Balances Rs. Credit Balance Rs

Drawing 60,000
Debtors 1,45,000
Cash in hand 5,500
Cash at Bank 55,000 --------------
18,71,500 18,71,500

CCP102.143 14
Assignment -8 continued..
Adjustments:
2. Depreciate on machinery and patents by 10%
and 30% respectively.
3. Salaries due for the month of March Rs.12,000.
4. The insurance policy expires on 30-6-08.
5. Rs. 25,000 spent on erection of a shed were
included in wages account.
6. Provide reserve for doubtful debts @ 5%.
7. Closing stock as on31-3.08 Rs.75,000.

CCP102.143 15
Note:

All the items of T.B and adjustments have

been dealt with in the earlier problem except
adjustment no:4 which is discussed here

CCP102.143 16
Adjustment :4
Rs:25000 spent on erection of shed was
included in wages A/c
Treatment:
1. Deduct the amount from wages.
2. Add to land and premises.
It is capital expenditure hence the above
treatment is given.

CCP102.143 17
Assignment -9
From the following trial balance of Mr. Lakshman as on 31-3-08, you are
required to prepare Trading account, Profit and Loss account and Balance
Sheet as on date after making the necessary adjustments.
Particulars Debit Credit

Plant and machinery (1-4-2007) 70,000

Plant and machinery (purchased on 1-10-07) 10,000
Opening stock 45,000
Purchases 3,90,000
Return inwards 6,500
Capital account 90,000
Drawing account 16,000
Debtors 11,000
Furniture and fixtures 8,000
Freight and duty 800
Carriage outwards 400
Rent and rates

12,000
CCP102.143 18
Assignment -9 continued…
Printing and stationery 1,800
Trade expenses 2,500
Sundry creditors 2 ,000
Sales 4,95,000
Bad debts 400
Return outwards 1,600
Postage and telegrams 500
Provision for doubtful debts 300
Discounts 1,000
Rent of premises 3,600
Insurance charges 1,200
Salaries and wages 16,000
Cash in hand 3,000
Cash at bank 16,400
------------ -------------
6,11,500 6,11,500
------------- --------------

CCP102.143 19
Assignment -9 continued..
Adjustments:
2. Unexpired insurance Rs. 300
3. Write off bad debts of Rs. 400
4. The provision for doubtful debts is to be maintained at 5% on sundry
debtors.
5. Provide depreciation as follows
a) Furniture and fixtures 5% per annum.
b) Plant and machinery 10% per annum.
8. Half of the rent, received on premises, is received in advance.
9. Stock on 31-3-08 was valued at Rs. 56,000.

CCP102.143 20
Note:
All the items of T.B and adjustments have been
dealt with in earlier problems

CCP102.143 21
Quiz:
1.Income received in advance is___.
a) An asset
b) Liability
c) none

CCP102.143 22