Trial Balance with Adjustments (Trading, Profit and loss and Balance sheet)

A trial balance is a statement showing the balances, or

total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts. Helps preparing Financial Statements. It is normally prepared at the end of an accounting year. However, an organization may prepare a trial balance at the end of any chosen period, which may be monthly, quarterly, half yearly or annually depending upon its requirements.

 Some common errors revealed by the trial

balance: Error in totaling of subsidiary books. Error in showing account balances in wrong column of the trial balance, or in the wrong amount. Omission in showing only on one account balance in the trial balance. Error in the calculation of a ledger account balance. Error while posting a journal entry. Error in recording a transaction in the journal: making a reverse entry.

Particular Accounts Title

L.F.

DEBIT

CREDIT

Adjustments

Adjustment in Trading A/c

Shown on the Credit Side
Add to the respective items on the debit side Deducted from the concerned item on the debit side

Adjustment in P/L A/c

Or added to the respective items on the debit side Deducted from the concerned item on the debit side Added to the respective items on the credit side Deducted from the concerned item on the credit side Shown on the debit side

Adjustment in Balance Sheet

Shown on the assets side
Shown on the liabilities side. Shown on the assets side Shown on the assets side Shown on the liabilities side

1. Closing Stock
2. Outstanding Expenses 3. Prepaid Expenses

4. Accrued Income

5. Unearned Income

6. Depreciation

Deducted from the concerned asset on the asset side

 Q.3. The following Information has been extracted

from the books of M/s Ram Prasad & Sons on 31st March, 2007. Prepare a trial balance, profit and loss and Balance sheet.

PARTICULARS Machinery Rent

AMT.

PARTICULARS 4,000 Capital 250 Sundry Debtors .

AMT. 9,000 4,400

Cash at Bank
Interest Received Wages Sales

1000 Bills Receivables .

300 General Expenses 1000 Purchases 16,000 Opening Stock

2900
800 8000 6000

Sundry Creditors .
Commission. Salaries

4,500 Rent
250 500

450

Cash in hand

500

 Outstanding Salary Rs.450

Depreciate Machinery by 10%

Wages Outstanding Rs. 50 Rent Prepaid amounting to Rs.100

Closing Stock was valued at Rs. 8000

Particulars
Machinery Rent Cash at Bank Interest Received Wages Sales Sundry Creditors . Commission. Salaries

L.F.

Debit
4000 250 1000

Credit

300 1000

16000
4500 250 500 500

Cash in hand

Particulars of Accounts
Capital
Sundry Debtors . Bills Receivables . General Expenses Purchases Opening Stock Total

L.F .

Debit

Credit

9000
4400 2900 800 8000 6000 29800 29800

Particulars
Opening stock Wages 1000

Amt
6000 1050

Particular
Sales Closing stock 16000 8000

+O/s wages 50 Purchases Gross Profit Total 8000 8950 24000 24000

Particulars
To Rent 450 (-)Prepaid (100) To Commission To General exp.

Amt

Particulars
By Gross Profit

Amt
8950 300

350 250 800

By Interest rec.

To Salaries
+ O/S

500
450 950 400

To Depreciation

To Net Profit
total

6500
9250 9250

Liabilities O/S Salary O/S Wages Capital Creditors 9000 Net profit +6500

Amt 450 50 15500 4500

Assets Closing stock Prepaid rent Machinery 4000 (-) Depreciation (400) Cash At Bank Cash in Hand Debtors

Amt 8000 100 3600 1000 500 4400

Bills Receivable Total 20500

2900 20500