From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st March 2024 and the Balance Sheet as on that date, after giving effect to the adjustments given below. | Particulars | Debit (₹) | Credit (₹) | |---|---|---| | Opening Stock | 40,000 | | | Purchases / Sales | 3,00,000 | 5,00,000 | | Wages | 15,000 | | | Salaries | 50,000 | | | Rent | 20,000 | | | Insurance | 6,000 | | | Sundry Debtors / Sundry Creditors | 80,000 | 50,000 | | Furniture | 60,000 | | | Cash at Bank | 39,000 | | | Drawings | 20,000 | | | Capital | | 80,000 | | **Total** | **6,30,000** | **6,30,000** | Adjustments: (1) Closing Stock ₹45,000. (2) Outstanding Salaries ₹5,000. (3) Prepaid Insurance ₹1,000. (4) Depreciate Furniture at 10% p.a.

From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Ac

Numerical Questions · Q8

From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st March 2024 and the Balance Sheet as on that date, after giving effect to the adjustments given below.

Particulars	Debit (₹)	Credit (₹)
Opening Stock	40,000
Purchases / Sales	3,00,000	5,00,000
Wages	15,000
Salaries	50,000
Rent	20,000
Insurance	6,000
Sundry Debtors / Sundry Creditors	80,000	50,000
Furniture	60,000
Cash at Bank	39,000
Drawings	20,000
Capital		80,000
Total	6,30,000	6,30,000

Adjustments: (1) Closing Stock ₹45,000. (2) Outstanding Salaries ₹5,000. (3) Prepaid Insurance ₹1,000. (4) Depreciate Furniture at 10% p.a.

Tamil Nadu DgeTextbookSubjectiveImportance★★★★★

36% · 8/22 Questions

✓ Free question

This is the illustration worked through in full in Section 9 of this chapter. The key steps:

Trading Account: Gross Profit = Sales + Closing Stock − Opening Stock − Purchases − Wages = 5,00,000 + 45,000 − 40,000 − 3,00,000 − 15,000 = ₹1,90,000.

Profit and Loss Account: Salaries (50,000 + 5,000 outstanding = 55,000) + Rent (20,000) + Insurance (6,000 − 1,000 prepaid = 5,000) + Depreciation (10% of 60,000 = 6,000) = ₹86,000 total expenses. Net Profit = 1,90,000 − 86,000 = ₹1,04,000.

Balance Sheet: Liabilities = Capital (80,000) + Net Profit (1,04,000) − Drawings (20,000) + Outstanding Salaries (5,000) + Creditors (50,000) = ₹2,19,000. Assets = Furniture (60,000 − 6,000 = 54,000) + Closing Stock (45,000) + Prepaid Insurance (1,000) + Sundry Debtors (80,000) + Cash at Bank (39,000) = ₹2,19,000.

✓Final answer

Gross Profit = ₹1,90,000. Net Profit = ₹1,04,000. Balance Sheet as on 31.03.2024 totals ₹2,19,000 on both sides (Liabilities: Capital ₹1,64,000 after Net Profit and Drawings + Outstanding Salaries ₹5,000 + Creditors ₹50,000; Assets: Furniture ₹54,000 + Closing Stock ₹45,000 + Prepaid Insurance ₹1,000 + Debtors ₹80,000 + Cash at Bank ₹39,000).

Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2022Set MARCH3 marks

Q. What are adjusting entries ?

›Reveal solution

Adjusting entries are year-end journal entries that record items belonging to the current period but not yet entered in the books, so that the final accounts reflect the true profit and true financial position (accrual/matching basis). Every adjustment has a double effect.

Meaning. At the end of the accounting year some transactions relating to that year are still unrecorded, or some recorded amounts relate partly to the next year. To follow the matching concept (Class-11 Accountancy, Tamil Nadu HSC syllabus), these are corrected through adjusting entries before the Trading, Profit & Loss Account and Balance Sheet are prepared.

Common adjusting entries and their double effect:

Adjustment	Journal entry	Double effect in final accounts
Outstanding expense	Expense A/c Dr / To Outstanding Expense A/c	Add to expense (P&L Dr); show as liability
Prepaid expense	Prepaid Expense A/c Dr / To Expense A/c	Deduct from expense (P&L Dr); show as asset
Accrued income	Accrued Income A/c Dr / To Income A/c	Add to income (P&L Cr); show as asset
Income received in advance	Income A/c Dr / To Income Received in Advance A/c	Deduct from income (P&L Cr); show as liability
Depreciation	Depreciation A/c Dr / To Asset A/c	Show in P&L Dr; deduct from asset
Closing stock	Closing Stock A/c Dr / To Trading A/c	Trading A/c Cr; show as asset

Purpose: they ensure that all expenses and incomes of the period — and only of the period — are taken into account, giving a correct net profit and a correct Balance Sheet.

✓Final answer

Adjusting entries are the journal entries made at the close of the accounting period to record/adjust items such as outstanding and prepaid expenses, accrued income, income received in advance, depreciation, bad debts and closing stock, so that income and expenditure are correctly matched. Each adjustment produces a double effect in the final accounts.

←Previous questionQ7 — Goods costing ₹20,000 were destroyed by fire; the insurance company ad…→Next questionQ9 — From the following Trial Balance of a trader as on 31st March 2024, pr…

🎓Unlock everything free for 14 days

Unlock everything free for 14 days