The following are the extracts from the trial balance of M/s Bhola & Sons as on March 31, 2026
| Account title | Debit ₹ | Credit ₹ |
|---|---|---|
| Opening stock | 2,00,000 | |
| Purchases | 8,10,000 | |
| Sales | 10,10,000 | |
| Total | 10,10,000 | 10,10,000 |
(only relevant items)
Closing Stock as on date was valued at ₹3,00,000.
You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola & Sons.
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Start your 14-day free trial to unlock the full solution →Pass the closing-stock entry (Closing Stock A/c Dr. To Trading A/c ₹3,00,000); it shows on the credit of the Trading Account and as an asset in the Balance Sheet. Gross profit works out to ₹3,00,000.
Concept & treatment. Closing stock is not usually in the trial balance; it is brought into the books by a single entry that debits the Closing Stock A/c (an asset) and credits the Trading A/c. Consequently the same figure appears twice — once on the credit side of the Trading Account (reducing cost of goods sold) and once on the assets side of the Balance Sheet.
Journal entry
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2026 Mar 31 | Closing Stock A/c ...Dr. | 3,00,000 | ||
| To Trading A/c | 3,00,000 | |||
| (Closing stock brought into account) |
Trading and Profit and Loss Account (extract) for the year ended March 31, 2026
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Opening stock | 2,00,000 | By Sales | 10,10,000 |
| To Purchases | 8,10,000 | By Closing stock | 3,00,000 |
| To Gross profit c/d | 3,00,000 | ||
| Total | 13,10,000 | Total | 13,10,000 |
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