Page 169 - ISCDEBK-XI

20.2 Double Entry Book Keeping—ISC XI

Treatment of Items of Adjustment Appearing in the Trial Balance

Item given in Trial Balance Treatment in Profit & Loss Account Treatment in Balance Sheet
1. Closing Stock — Shown in the Assets side as a Current Asset.
2. Outstanding — Shown in the Liabilities side as a Current
Expenses Liability.
3. Prepaid Expenses — Shown in the Assets side as a Current Asset.
4. Accrued Income — Shown in the Assets side as a Current Asset.
5. Unearned Income/ — Shown in the Liabilities side as a Current
Income Received Liability.
in Advance
6. Depreciation Shown in the Debit side of the Profit —
& Loss A/c.

Solved Questions

Illustration 1.
Given below is the Trial Balance of M/s. Gupta & Sons as at 31st March, 2022:
Heads of Accounts Dr. Balances Cr. Balances
` `
Capital .................................................................................................................... ... 7,20,000
Drawings .................................................................................................................... 40,000 ...
Sales .................................................................................................................... ... 10,15,000
Purchases .................................................................................................................... 6,20,000 ...
Stock in Trade on 1st April, 2021 .................................................................................................................... 20,000 ...
Sales Return .................................................................................................................... 12,000 ...
Purchases Return .................................................................................................................... ... 15,000
Sundry Debtors .................................................................................................................... 80,000 ...
Sundry Creditors .................................................................................................................... ... 30,000
Rent .................................................................................................................... 22,000 ...
Electricity .................................................................................................................... 16,000 ...
Other Expenses .................................................................................................................... 32,000 ...
Wages .................................................................................................................... 1,12,000 ...
Cash in Hand .................................................................................................................... 1,22,000 ...
Cash at Bank .................................................................................................................... 6,32,000 ...
Advance to Supplier .................................................................................................................... 72,000 ...
Total 17,80,000 17,80,000

Additional Information:
(i) On scrutiny it is found that bank balance as per Bank Statement of Current Account on
31st March, 2022 was ` 5,78,000. A cheque of ` 70,000 was collected from a debtor returned
dishonoured and a cheque of ` 16,000 was deposited by another debtor directly.
(ii) Closing stock as on 31st March, 2022 was ` 40,000.
(iii) Purchases return ` 2,000 was wrongly posted as sales return but correctly debited to
Supplier’s Account.
(iv) Purchases Book is found overcast by ` 6,000.
(v) Sales Book is found undercast by ` 2,000.
You are required to: (1) redraft the Trial Balance, and (2) prepare Final Accounts of
M/s. Gupta & Sons.