Professional Documents
Culture Documents
Balance of capital needs to be carried forward. Separate payable account for salaries payable is necessary instead of accounts payable. Accounts Payable is used for purchases of stocks. In practice, separate accounts are opened for purchases of fixed asset and the account credited is the vendor (from where you are purchasing assets if on credit). In this question instead of crediting payable or accounts payable, you may simply open a vendor's payable (because supplier name is not provided). Only assets, liabilities and capital balances are brought forward. Expenses and Revenue accounts are closed (entered) in P & L statements. It is better to open all accounts, if someone are not reflected in trial balance and only are the part of adjustment/transaction.
TRIAL BALANCE Cash Bank Capital Furniture Vehicles Sales Purchase Expenses Debtors Suppliers Salaries expenses Dr 15,000 10,000 20,000 50,000 150,000 78,000 15,000 120,000 150,000 20,000 328,000 328,000 Cr 28,000
TRANSACTIONS 1. Owner invested cash Rs. 50,000 2. Furniture purchased on credit worth Rs. 10,000 3. Sales on credit worth Rs. 70,000 4. Purchases worth Rs. 5,000 on cash 5. Furniture of value Rs. 10,000 was sold Rs. 5,000 6. Supplier was paid through cheque Rs. 10,000 7. Salaries not paid worth Rs. 7,000 1. Cash Capital 50,000 50,000
2. Furniture 10,000 Account payable 10,000 (Preferably Furniture Vendor A/C, to distinguish b/w Purchases on Credit and Furniture purchase on credit) 3. Account receivable Sales 4. Purchase Cash 5. Cash Furniture 6. Supplier or A/P Bank 5,000 5,000 5,000 5,000 10,000 10,000 70,000 70,000
Purchase C/D
5,000 65,000 70,000 10,000 10,000 28,000 50,000 78,000 5,000 25,000 30,000
BANK O/B
Supplier
Cash C/D
VEHICLES O/B
78,000 5,000 83,000 15,000 15,000 120,00 0 70,000 190,00 0 10,000 140,00 0 150,00 0 O/B 150,000 150,000
EXPENSES O/B
TRIAL BALANCE Cash Bank 00.00 Capital 78,000 Furniture 25,000 Vehicles 50,000 Sales 220,000 Purchase 83,000 Expenses 15,000 Debtors 190,000 Suppliers 140,000 Salaries expenses 27,000 Account payable (furniture) 10,000 Account payable (salaries expenses) 7,000 455,000 455,000 PROFIT/LOSS Sales Less: Purchases Gross Profit Less: Salaries Less: Expenses Less: Loss Net Profit 220,000 (83,000) 137,000 (27,000) (15,000) (5,000) 90,000 Dr 65,000 00.00 Cr