Question

When purchase adjusted is given in trial balance than closing stock come in balance sheet or not?

Answer 1

Some firms like toshow a figure of cost of goods sold for proper comparison with sales. These firms will adjust the purchases for opening and closing stocks. The entries which they pass are two :

(a) Purchases A/C   Dr

        To Opening Stock

By this entry, the opening stock is closed and the amount of purchases is increased.

(b) Closing Stock A/C   Dr

          To Purchases A/C    

By this entry, the amount of purchases is reduced and a new account, closing stock A/C  is opened. This will appear in the trial balance. This account represents an asset and should, therefore, appear only in the Balance Sheet.Adjusted Purchases ,of course, will be transfered to the trading A/C