Financial Statements With Adjustments: Submitted To:-Ms. Palak Bajaj Submitted By:-Chirag Verma
Financial Statements With Adjustments: Submitted To:-Ms. Palak Bajaj Submitted By:-Chirag Verma
Financial Statements With Adjustments: Submitted To:-Ms. Palak Bajaj Submitted By:-Chirag Verma
adjustments
Adjustment
Wages include 2,000/- for the erection of machinery
Trading account
Particular Amount Particular Amount
Wages 22,000
-transferred to machinery (2000) 20,000
Balance sheet
Liabilities Amount Assets Amount
Machinery 16,000
+installation expenses
transferred from wages a/c 2,000 18,000
SALES OF GOODS ON APPROVAL
BASIS
SOME TIME GOODS ARE SOLD TO THE CUSTMER ON
APROVAL(RETURN) BASIS
Eg if goods are likes by him, he may keep them and if they are not liked
by him, he may return them. Such goods cannot be regarded as sale
unless consent is receive during the accounting period
ACCOUNTING TREATEMENT:-
1) sales will be reduced on the credit side of TRADING ACCOUNT and
debtors will also be reduced an the asset side of the balance sheet
SALES OF GOODS ON APPROVAL BASIS
EXAMPLE: Extract from TRIAL BALANCE
Name of account L.F. DEBIT CREDIT
PURCHASE 76000
Adjustment
Goods costing 5,000/-were sent to the customer for ‘APPROVAL
BASIS’ for 6,400/- and had been recorded in books as actual sales.
Trading account
Particular Amount Particular Amount
By sales 210000
-goods on approval basis (6400) 2,03,600
By closing stock 20000
+ goods on approval basis 5000 25,000
BALANCE SHEET
Liabilities Amount Assets Amount
Debtor 36400
-goods on approval basis (6400) 30,000
By closing stock 20000
+ goods on approval basis 5000 25,000
GOODS SOLD AND DISPATCHED BUT
OMITTED TO BE RECOARDED
• Sometimes goods are sold and dispatched well, but omitted
to be recorded in books of accounts. The following entry will
be passed to make a record of such sales:-
Adjustment
Goods worth 5000/- were sold and dispatched but no entry
was passed to this effect
Trading account
Particular Amount Particular Amount
By sales 180000
+debtor 5000 1,85,000
Balance sheet
Liabilities Amount Assets Amount
Debtor 28000
+sales 5000 33,000
GOODS PURCHASED AND INCLUDED IN CLOSING
STOCK BUT OMMITED TO BE RECOARDED
• Sometimes goods are purchased and included in closing
stock well, but omitted to be recorded in books of accounts.
The following entry will be passed to make a record of such
purchase:-
Adjustment
Goods purchased 7,000/-were purchased and included in
stock but no entry was passed to record the effect
Trading account
Particular Amount Particular Amount
To purchase 109000
+creditors 7000 116000
Balance sheet
Liabilities Amount Assets Amount
Creditors 13000
+purchase 7000 20000
ABNORMAL LOSS
• Sometime losses occur due to some abnormal circumstances such
as accident, fire, flood, earthquakes, etc. Such losses are called
ABNORMAL LOSS ABNORMAL LOSS
LOSS OF FIXED
LOSS OF GOODS
ASSESTS
(1) Loss by accident a/c dr. (1) Loss by accident a/c dr.
to purchase a/c To purchase a/c
(2)Profit and loss a/c dr. (2)Insurance claim a/c dr.
To loss by accident a/c To Profit and loss a/c
To loss by accident a/c
LOSS OF GOODS
(A) When goods are not insured
Adjustment
Goods worth 2000 were lost by accident
Trading account
Particular Amount Particular Amount
To purchase 76000
-loss by accident (6000) 70000
Adjustment
Furniture worth 6000 were lost by accident. It was insured and the
insurance company admitted a claim of 4000/-
Trading account
Particular Amount Particular Amount
To purchase 76000
-loss by accident (6000) 70000
BALANCE SHEET
LIABILITIES Amount Assets Amount
Insurance company (claim) 4000
DEFERRED REVENUE EXPENDITURE
These are those expenditure which are revenue in nature but the
benefits of which are likely to be derived over a number of years.
Adjustment
¼ of the advertising expense belong to this year.
Profit and loss account
Particular Amount Particular Amount
TO ADVERTISING EXPENSES(1/4 of 2,00,000) 50,000
Balance sheet
Liabilities Amount Assets Amount
Advertising expenses 1,50,000
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