Appendix 4: Journal Entries of Adjustment Entries

S.No.
1
2
3
4
5
6
7
8
9
10

Transaction
Closing Stock
Outstanding Expenses
Prepaid Expenses
Outstanding Incomes
Income received in
advance
Depreciation charged
on properties
Bad debts
Interest charged on
capital
Interest charged on
drawing
Provision for bad or
doubtful debts

Debit
Closing Stock A/c
Expenses (Name) A/c
Prepaid Expenses (Name) A/c
Outstanding Income (Name)
A/c
Income (Name) A/c

Credit

Depreciation A/c

Trading A/c
Outstanding Expenses (Name)
A/c
Expenses (Name) A/c
Income (Name) A/c
Income (Name) Received in
Advance A/c
Asset (Name) A/c

Bad Debts A/c

Interest on Capital A/c

Sundry Debtors (Customer )A/c

Capital A/c

Capital A/c

Interest on Drawing A/c

Profit & Loss A/c

Provision for doubtful debts A/C

Appendix 5: Final Accounts-Treatment of Adjustments

If given in the trial Balance

If given in adjustments

S.No.

Closing Stock

Transaction

Balance Sheet-Assets (Current

Assets)

Outstanding Expenses

Balance Sheet-Liability Side

(Current Liabilities)

Prepaid Expenses

Balance Sheet-Asset Side

(Current Assets)

Outstanding Incomes

Balance Sheet-Asset Side

(Current Assets)

Income received in
advance

Balance Sheet-Liability Side

(Current Liabilities)

Bad debts

P/L A/c-Debit Side

Depreciation charged on
properties

P/L A/c-Debit Side

Interest charged on
capital

P/L A/c-Debit Side

Interest charged on
drawing

P/L A/c-Credit Side

10

Provision for bad or

doubtful debts

P/L A/c-Debit Side

Trading A/c-Credit Side

Balance Sheet-Assets (Current
Assets)
Trading/P & L A/c-Debit side
(Add to concerned expenses)
Balance Sheet-Liability Side
(Current Liabilities)
Trading/P & L A/c-Debit side
(deduct from concerned
expenses)
Balance Sheet-Asset Side
(Current Assets)
Trading/P & L A/c-Credit side
(Add to concerned incomes)
Balance Sheet-Asset Side
(Current Assets)
Trading/P & L A/c-Credit side
(deduct from concerned
Incomes)
Balance Sheet-Liability Side
(Current Liabilities)
P/L A/c-Debit Side (add to
existing bad debts, if any)
Balance Sheet-Assets side
(Deduct from Sundry debtors)
P/L A/c-Debit Side
Balance Sheet-Assets side
(Deduct from concerned
Assets)
P/L A/c-Debit Side
Balance Sheet-Liability Side
(Add to capital)
P/L A/c-Credit Side
Balance Sheet-Liability Side
(Deduct from capital)
New PBD + Bad Debts-Old
PBD = Positive-P/L A/c-Debit
Side
New PBD + Bad Debts-Old
PBD = Negative-P/L A/cCredit Side
Balance Sheet-Asset Side
(Deduct from Sundry debtors
after deducting bad debts if
any)