Question

only for account toppers

Answer 1

Entries are as under for Trading A/C -

Trading a/c --- Dr.    42, 875

  To Purchases                 37.500

   To Carriage Inward          375

   To Wages a/c               5,000

(Being all direct expenses of business transferred to trading a/c)

Sales a/c --- Dr. 95,000

         To. Trading A/c 95000

(Being sales recorded in trading a/c)

Trading a/c - Dr.   52125

        To P&L a.c       52125

(Being gross profit transferred to P&L a/c)

Assets and any liabilities will not be recorded in Journal Proper, please note that carefully.

Entries in P&L A/c -

P&L a/c -- Dr. 7650

    To Discount  150

         Carriage Outward  600

         Salaries 3600

         Bad Debts 750

        Trade Expenses 2,550

(Being indirect expenses recorded in P&L a/c)

Commission a/c  Dr  2125

Discount a/c  Dr.       175

     To P&L A/c 2300

(Being all indirect incomes transferred and recorded to P&L a/c)

Subtract all expenses from gross profit, add all incomes to gross prfit and calculate net profit of the business.

Profit or Loss A/c - Dr. 46,775

    To Ram's Capital A/c 46,775

(Being net profit transferred to capital a/cs)