DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : N.Sambaiah
Designation : Head of the section
Branch : DCCP
Institute : Suvr and SR GPW,
Ethamukkala.
Year : I year
Subject : Accountancy-I
Subject Code : CCP102
Topic : Final Accounts
Duration : 50 minutes
Sub Topic :preparation of final accounts
with adjustment.
Teaching Aids : PPT, Animations

CCP102.144 1
Objectives:
On completion of the period, student would be
able to:

 Prepare final accounts with adjustments

CCP102.144 2
Recap:
In the previous classes we have
discussed the following adjustments and
their treatment in the final accounts.
They are:
 a) General expenses includes insurance premium of
Rs.1200. Insurance is paid up to 30.6.2008
 In general, Insurance premium is paid for one year

CCP102.144 3
 A sum of Rs. 1200 was paid for one year i.e. for the
period of 1-7-07 to 30-6-08. In our problem, the
accounting year ends by 31-3-08. Here one quarter
amount i.e. Rs. 300 is paid for the next accounting
period
 Hence, Rs. 300 is the amount paid in advance

CCP102.144 4
Recap (continued..)
 B) Loan of Mr. Venkat: The loan was taken on 1-7-07.
The accounting year was ending on 31-3-08. The period
,for which interest is to be calculated is 9 months (i.e. 31-
3-08 - 1-7-07). Hence, the interest is calculated at 12%
for the 9 months

 Two home work problems are given in the previous class.

The same is verified in this class and if any mistakes are
there, they are explained to them individually

CCP102.144 5
Final accounts –Solution- 8
Trading and profit and loss account of Sita & Company
for the year ending 31-3-08
Dr Cr

Particulars amount Rs. Particulars Amount

Ps Rs. Ps

To Opening stock 60,000 By Sales 10,50,000

To Purchases 4,60,000 Less: returns 7,000
Less: returns 6,500 4,53,500 ---------- 10,43,000
To Wages 95,000 By Closing stock 75,000
Less:Erection charges25,000 70,000
To Power 45,000
To carriage inwards 23,000
To Gross profit 4,66,500
--------------- --------------
11,18,000 11,18,000
-------------- --------------

CCP102.144 6
Final accounts-solution-8 contd..
Trading, and profit and loss account of Sita & co. for the year
ending 31-3-08
Dr Cr
Particulars Amount Particulars Amount
Rs. Ps Rs. Ps

To Carriage outwards 35,000 By Gross Profit 4,66,000

To Salaries 1,60,000
Add: outstanding 12,000 1,72,000
To Sundry expenses
To Insurance 6000
Less: Prepaid 1500
To Depreciation account:
Machinery 20,000
Patents 15,000
To Res.for doubtful debts
15,000
To Net profit (transferred
to capital accounts ------------
4,500
4,66,500
CCP102.144 7

35,000
 Final accounts – solution – 8.contd
Balance Sheet of Sita and Company as on 31-3-08
Liabilities Amount Assets Amount
Rs. Ps Rs. Ps.

Capital 7,00,000 Land and premises 4,50,000

Add: Net profit 1,97,750 Add: Shed charges 25,000 4,75,000
8,97,750 Machinery 2,00,000
Less: Drawings 60,000 8,37,750 Less: Depreciation 20,000 1,80,000
Creditors 1,15,000 Patents 50,000
Outstanding expenses Less: Depreciation 15,000 35,000
Salary 12,000 Debtors 1,45,000
Less: Reserve 7,250 1,37,750
Closing stock 75,000
Cash in Bank 55,000
Cash in hand 5,500
Prepaid expenses
Insurance 1,500
------------ --------------
9,64,750 9,64,750
CCP102.144 8
Final accounts – solution – 9.
Mr. Lakshman Trading account for the year ending 31-3-08
Dr Cr
Particulars amount Rs. Particulars Amount
Ps Rs. Ps

To Opening stock 45,000 By Sales 4,95,000

To Purchases 3,90,000 Less: returns 6,500 4,88,500
Less: returns 1,600 3,88,400 By closing stock 56,000

To Freight & duty 800

To Gross profit (transferred 1,10,300
to profit and loss account) ------------- -------------
5,44,500 5,44,500
------------- -------------

CCP102.144 9
 Mr. Lakshman Profit and Loss account for the year ending 31-3-08
Dr Cr

Particulars amount Particulars Amount

Rs. Ps Rs. Ps
To Salaries and wages 16,000 By Gross Profit 1,10,300
To Rent and rates 12,000 By discount received 1,000
To Printing and stationery 1,800 By rent received 3,600
To Trade expenses 2,500 Less: Received in advance 1,800
To Postage and telegrams 500 ------- 1,800
To Insurance 1200
Less: prepaid 300 900
To carriage outwards 400
To Depreciation account
Plant & Machinery 7500
Furniture and fixtures 400 7,900
To bad debt (400 + 400) 800
To Reserve for bad debt 530
Less: Existing reserve 300 230
To Net Profit (transferred to 70,070
capital account) -------------- ---------------
1,13,100 1,13,100

CCP102.144 10
 Balance Sheet of Mr. Lakshman as on 31-3-08

Liabilities Amount Assets Amount

Rs. Ps Rs. Ps.

Capital account 90,000 Cash in hand 3,000

Less: Drawings 16,000 Cash at bank 16,400
Plant and machinery 70,000
74,000 1,44,070 Add: additions 10,000
Add:Net profit 70,070 20,000 80,000
Sundry creditors Less: Depreciation 7,500 72,500
Income received but not Furniture and Fixtures 8,000
earned 1,800 Less: Depreciation 400 7,600
Rent Debtors 11,000
Less: Bad debts 400 10,600
Less: Reserve 530 10.070
56,000
Closing stock
------------ Expenses paid in advance 300
- unexpired insurance 1,65,870
1,65,870
CCP102.144 11
Final accounts – solution – 9..contd
Note: Calculation of depreciation on Plant and machinery
Plant and Machinery on 1-4-2007 Rs. 70,000
Plant and machinery purchased on 1-10-07 10,000
Total cost 80,000
Depreciation for 70,000 – one year - 70,000x10/100= 7,000
Depreciation for 10,000 – 6 months (31.3.2008 – 1-10-2008)
10,000 x 10/100 x 6/12 = 500
--------
Total depreciation 7,500
---------

CCP102.144 12
Summary:
 Explanation is given on new point of when the
machinery and plant purchased in the middle of
the year
 A) Depreciation is calculated for one year for the
equipment existing from the beginning of the
year.
 B) The machinery and equipment purchased in
the middle of the year, depreciation is calculated
from the date of the purchase of the machine or
equipment

CCP102.144 13
Assignment-10
From the following Trail Balance of Mr. Rahman, Gudur as on 31-3-08,
prepare Trading and Profit and Loss account and Balance Sheet.

Debit Balances Rs. Credit Balance Rs

Stock as 1-4.2007 8,500 Capital 45,000

Buildings 30,000 Sales 1,16,700
Machinery 20,000 Purchase returns 800
Furniture 12,000 Creditors 20,000
Debtors 15,000
General expenses 3,000
Drawings 10,000
Cash in hand 5,000
Purchases 54,000
Sales returns 600
Wages 10,500
Power and fuel 4,200
Salaries 7,500
Carriage inwards 2,200
-------------- ---------------
1,82,500 1,82,500

CCP102.144 14
Assignment -10 continued..

Adjustments:
2. Charge interest 5% on drawings.
3. Charge interest 10% on capital.
4. Written off bad debts Rs. 1000.
5. Outstanding wages Rs. 1500.
6. Depreciate machinery by Rs. 2000 and Furniture by
Rs.600.
7. Stock as on 31-3-08 Rs. 16,000.

CCP102.144 15
Assignment -10 continued..
From the following trial balance of Mr. Sachin of Bombay as on 31-3-08, you
are required to prepare Trading account, Profit and Loss account and
Balance Sheet as on date after making the necessary adjustments.

Particulars Debit Credit

Cash in hand 8,000

Cash at bank 2,10,000
Furniture and fixtures 45,000
Factory rent 6,000
General expenses 5,500
Salaries 29,000
Rent and Rates 6,000
Sundry debtors 26,000
Commission 6,500
Capital 6,00,000
Sundry creditors 65,000
Bills payable 25,000

CCP102.144 16
Assignment -10 continued…
Return outwards 15,000
Discount 3,800
Bank Loan 1,00,000
Sales 4,70,200
Stock as on 1-4-07 54,000
Buildings 3,20,000
Purchases 2,70,000
Bills receivable 60,000
Carriage 4,000
Wages 16,000
Return inwards 8,000
Machinery 2,00,000
Bad debts 5,000
-------------- ------------
12,79,000 12,79,000
--------------- -------------

CCP102.144 17
Assignment -10 continued…
Adjustments:
2. Provide Reserve for doubtful debts at 5%.
3. Depreciate machinery by 10%.
4. Salaries outstanding Rs. 1000.
5. Interest to be paid to Bank loan at 12%.
6. Discount to be received Rs.1200.
7. Closing stock as on 31-3-08 Rs. 66,000.

CCP102.144 18
Quiz
1.Trading account is a _______.
a) Real A/c
b) Nominal A/c
c) Personal A/c

CCP102.144 19