Question

from the following trial balance of akbar, prepare Trading, Profit and loss Account for the year ended 31st march, 2001 and balance Sheet as on that date​

Answer 1

Answer:

all you have marked in trial balance is correct but work manager salary is indirect cost which will come in profit and loss account and liabilities side of balance sheet and and commission will be shown on debit side of profit and loss account and bank loan will be shown in liabilities side of balance sheet because it is liability .

In adjustments :

1 closing stock will come in trading account credit side and in assets side of balance sheet and capital in trial balance will be shown in starting of liabilities in balance sheet.

2depreciation of plant and machinery and furniture will be shown in debit side of profit and loss account and they will be deducted from furniture and plant and machinery in the asset side of balance sheet.

3 appreciation of land and building will be shown in credit side of profit and loss account and in assets side of balance sheet.

4 office rent paid in advance will be subtracted from rent in the profit and loss account in the debit side of profit and loss account and it is prepaid expense so it will come in assets side of balance sheet.

5 rent receivable and dividend receivable will come in credit side of profit and loss account and in assets side of balance sheet because it is accrued income.

6 commission received in advance will be deducted from commission in profit and loss and will come in liabilities side of balance sheet.

7 interest on capital will come in debit side of profit and loss account and it will be added in capital in liabilities side on the other hand interest on drawing is an income for firm so it will come in credit side of profit and loss account and added in the drawings account in the balance sheet and drawings will be deducted from capital account in the liabilities side.