finalaccounts-01

8/8/2019 finalaccounts-01

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FINAL ACCOUNTS

Preparation of Final Accounts involve:

Trading Account ( The objective is to ascertain the

gross profit and gross loss of an organization during an

accounting period.)

Profit and Loss account ( To ascertain net profit or

net loss during an accounting period)

Balance Sheet ( It shows the financial position of

the of a business by detailing the sources of funds and

utilization of funds.)


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Trading Account( Old System)

Particulars Amount Particulars Amount

To Opening Stock By sales

To Purchases

Less Purchase Return

By

Closing

StockTo Carriage Inwards

To wages

Gas, water and Fuel

Lighting and Heating

Factory Expenses

To Gross profit c/d


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Trading Account( New SystemParticulars Rs. Rs. Rs.

Sales Less Sales return --Opening stock

Purchases Less purchase return

Carriage

Gas Water and Fuel

Lighting and Heating

Factory expenses

Wages

Less Closing Stock

Cost of Good sold

Gross profit

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4/17

Prepare Trading account form the given

information for X LTD. For the year 31st

December 2006 Opening stock- 40,000

Purchases- 1,75,000

Sales- 3,03,000 Return Inwards- 3,000

Return Outwards- 5,000

Wages 30,000 Carriage outwards- 10,000

Carriage Inwards 5,000

Closing Stock- 65,000


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. .

2006Particulars Rs. Rs. Rs.

SalesLess Sales return

3,03,0003,000 3,00,000

Opening stock

Purchases

Less purchase return

Carriage Inward

Wages

Less Closing Stock

Cost of Good sold

Gross profit

1,75,000

5,000

5,000

30,000

40,000

1,70,000

35,000

2,45,000

65,000

1,80,000

1,20,000


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Profit and loss AccountParticulars Rs Rs.

Management expenses (Admin.

Salaries, Office rent and Taxes,Telephone, stationary, Insurance, audit

fees, Legal Charges, Electricity)

By Gross profit b/d

Maintenance Expenses ( Repairs and

Depreciation)

Other Income( dis.,

Comm. Recd.)Selling and Distribution Expenses

( Advertisement, Carriage

Outward,Bad Debts, Commission)

Non Trading Income

( Interest, rent,

dividend)

Financial expenses ( Interest ,Discount on bills)

Abnormal gains( Profit on investment

and sale of an \asset)

Abnormal Losses( Loss by fire, sale

of an asset)


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Profit and Loss account ( New System)

Particulars Rs Rs. Rs

Gross ProfitAdd: Other Income( Discount and Comm.Recd.)

Add: Non Trading income ( Rent, Int.and Div.)

Add: abnormal gains ( Profit on asset sales)

Less:Management Expenses

Less: Maintenance Expenses

Less: Selling and Distribution Expenses

Less: Financial expenses

Less: Abnormal Losses

Net profit Transferred to capital account

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repare ro t an oss account or t . or t e year

31st Dec. 2006

Discount Recd.- 12,000

Dividend Recd.- 16,000

Profit on Sale of an asset- 16,000

Salaries to sales people- 15,000

Salaries to Administrative- 25,000

Telephone Charges- 1,500

Audit Fees 1,000

Depreciation on Furniture- 200 Bad Debts 200

Interest paid on loans- 200

Loss by Fire- 3,000


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ro an oss accoun or . or e year

Dec. 2006Particulars Rs Rs. Rs

Gross ProfitAdd: Other Income( Dis. Recd.)

Non Trading income (Div. Recd.

Abnormal gains ( Profit on asset sale)

Less:Mgt. Expenses ( Admin. Salary)

Telephone Charges and Audit Fees

Less: Maintenance Expenses( Dep.)

Less: Selling &Dist.Exp(sales Salary)Bad debts

Less: Financial expenses ( Interest)

Less: Abnormal Losses ( Fire loss)

Net profit Transferred to capital account

25,000

2,500

15,000

200

12,000

16,000

16,000

27,500

200

15,200

200

3,000

1,20,000

44,000

1,64,000

46,100

1,17,900


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Balance SheetRs Rs Rs

Fixed Assets:Land, Building, Plant and Machinery, Furniture

Current Assets:

Stock, Debtors, Bills Receivable, Cash at Bank,

Cash and Hand

Current Liabilities:

Creditors,Bills Payable, Outstanding Expenses

Working CapitalNet Asset Employed Financed By:

Capital

Add: Net Profit

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11/17

Prepare the Balance Sheet for X Ltd.on

31st Dec 2006

Land: 2,00000 Bills Payable: 50,000

Cash in Hand : 20,000 Stock : 1,50,000 Creditors : 1,00,000 Plant : 9,87,900

Bills Receivable : 50,000 Debtors: 2,50,000

Cash In Hand : 20,000 Outstanding exp.: 50,000 Capital 13,60,000


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Treatment of AdjustmentsClosing Stock: If this item is given inside the trial

balance then only mention as Current assets inBalance Sheet.

But if given in adjustments then show the same intrading account as well as in Current Asset side of

Balance Sheet. Outstanding Expenses : ( due for accounting

period but not paid) Add this amount in theparticular expense either in trading or P&L A/c andshow as Current Liabilities in Balance Sheet.

Prepaid Expenses: (Expenses paid in advance)Deduct this amount in the particular expense either

in trading or P&L A/c and show as Current Assets in


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Outstanding Income: (Income due in accounting period but

still not received) Add this amount in the particular income

in P&L A/c and show as Current Assets in Balance Sheet.

Income Received in advance: (Income received in advance

by business before it being earned by the business.) Deduct

this amount in the particular income in P&L A/c and show

as Current Liabilities in Balance Sheet. Depreciation: Show this amount in the P&L A/c and deduct

form that particular fixed asset in the Balance Sheet.

Interest on Capital: Show this amount as Financial expense

P&L A/c and added in capital in Balance Sheet.


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Bad Debts andProvision forBad debts: In Profit

and loss account ( Selling and distribution expenses)

Bad Debts ( if Given in Trial balance)Add: New Bad Debts ( given in Adjustment)

Add: New provision D/D (given in Adjustment)

Deduct: Old Provision (if given inside trial Balance)

Balance Sheet: In Current assets:

Debtors

Deduct: New Bad debts

Deduct: New provision


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Trading account for X Ltd. For the year Dec 2006

Particulars Rs. Rs. Rs

Sales 2,31,440

Opening stock 38,500Purchases 1,10,000

1,100 1,08,900

Expenses

Wages 35,200Less: Erection wages 1,100 34,100

Gas 2,970

Freight 9,900

Factory Lighting 1,100 48,070

1,95,470

Less: closing stock 72,600

Cost of Goods Sold 1,22,870

Gross profit 1,08,570


16/17

Profit and loss account for X Ltd. For the year Dec 2006

Particulars Rs. Rs. Rs.

Gross Profit 1,08,570

Add: Interest 1,100

+ Outstanding Interest 3,300 4,400

1,12,970

Less: Management expenses

Salaries 13,200

Office Expenses 2,750

Postage 1,540

Insurance 1,760

Rent 2,860Commission to manager(10/110*44,880) 4,080 26,190

Less: Maintainenece Expenses

Depriciation Machinery (1,15,500*331/3%) 38,500

Furniture (5,500*10%) 550

Property (66,000*5%) 3,300

Tools (2,200- 1,760) 440 42,790Less: Selling and Distribution

Bad Debts ( New and old) 1,320

Add: New provision 1,430

Less: Old provision 880 1,870

Less: Financial expenses Discount 1,320 72,170

Net profit


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Balance Sheet of Sh Govind Ld as on Dec 2006

Rs. Rs. Rs.

Fixed Assets

Plant and Machinery 99,000

Add( New machinery and Wages) 16,500

Less: Depreciation 38,500 77,000Property 66,000

Less: Depreciation 3,300 62,700

Furniture 5,500

Less: Depreciation 550 4,950

Tools 2,200

Less: Depreciation 440 1,760 1,46,410

Current assets

Closing Stock 72,600

Debtors 29,260

( less bad debts and new provision) 2,090 27,170

Loan 44,000

Add Outstanding Interest 3,300 47,300Cash at bank 29,260

Cash in Hand 2,640

Current Liabilities

Bills Payable 5,500

Creditors ( 44,000+15,400 machinery) 59,400

Outstanding Manger commission 4,080

Working Capital ( CA- CL) 1,09,990

T tal Financin Fixed A + W 2 5 4

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