Journal proper refer to the special types of journals which occur occasionally. Journal proper contents opening entries and closing entries.
Journal entries made at the end of the accounting period is known closing entries.
The closing entry is used to transfer data in the temporary accounts to permanent account.
These entries are related to balance sheet or income statement accounts.
The purpose of the closing entry in the income statement is to bring the temporary journal account balances to zero for the next accounting period.
The sequence of the closing process and the associated closing entries are as under:
Transfer all expenses and income related to trading account:
Debited trading account and credited opening stock, sales return and all expenses of trading account.
Debited purchase return, sales, closing stock and credited trading account.
Transfer gross profit or gross loss to profit and loss account:
If gross profit, trading account is debited and profit and loss account is credited.
If gross loss, profit and loss account is debited and trading account is credited.
Transfer all expenses income related to profit and loss account:
Debited profit and loss account and credited all expenses of profit and loss account.
Debited all the incomes and credited profit and loss account
Transfer net profit or net loss to capital account:
If net profit, profit and loss account is debited and capital account is credited.
If net loss, capital account is debited and profit and loss account is credited.
PROBLEM: 3
Following extracted information is given to you:
Opening stock Purchase Insurance Wages Import duty Sales return Carriage inward Carriage outward Salary |
35,000 100,000 2,000 10,000 5,000 10,000 3,000 5,000 50,000 |
|
Depreciation Discount received Discount allowed Interest paid Commission received Purchase return Closing stock Sales |
10,000 3,000 4,000 1,000 4,000 2,000 50,000 250,000 |
|
Required: (1) Training account; (2) Profit and loss account; (3) Closing entry
Trading Account
Particulars |
|
Amount |
Particulars |
|
Amount |
To Opening stock To Purchase Less: Return To Wages To Import duty To Carriage inward To Gross profit |
100,000 -2,000 |
35,000
98,000 10,000 5,000 3,000 139,000 |
By Sales Less: Return By Closing stock |
250,000 -10,000
|
240,000 50,000 |
290,000 |
290,000 |
Profit and Loss Account
Particulars |
Amount |
Particulars |
Amount |
To Salary To Insurance To Carriage outward To Depreciation To Discount allowed To Interest paid To Net profit
|
50,000 2,000 5,000 10,000 4,000 1,000 74,000 |
By Gross profit By Discount received By Commission received
|
139,000 3,000 4,000 |
146,000 |
146,000 |
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BASIC JOURNAL ENTRIES IN NEPALI http://tiny.cc/uaakkz
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CAPITAL AND REVENUE http://tiny.cc/peakkz
SINGLE ENTRY SYSTEM http://tiny.cc/n19jkz
NON-PROFIT ORGANIZATION (NON-TRADING CONCERN http://tiny.cc/j09jkz
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Journal Entries
Date |
Particulars |
|
LF |
Amount |
Amount |
|
Trading account To Opening stock To Purchase To Wages To Import duty To Carriage inward To Sales return (Being- accounts transferred to trading account) |
Dr
|
|
1,63,000 |
35,000 1,00,000 10,000 5,000 3,000 10,000
|
|
Sales account Purchase return Closing stock To Trading account (Being- accounts transferred to trading account) |
Dr Dr Dr
|
|
2,50,000 2,000 50,000 |
|
|
Trading account To Profit and loss account (Being- gross profit transferred to P&L account) |
Dr
|
|
1,39,000 |
1,39,000 |
|
Profit and loss account To Salary To Insurance To Carriage outward To Depreciation To Discount allowed To Interest paid (Being- accounts transferred to P&L account) |
Dr
|
|
72,000 |
50,000 2,000 5,000 10,000 4,000 1,000
|
|
Discount received Commission received To Profit and loss account (Being- accounts transferred to P&L account) |
Dr Dr
|
|
3,000 4,000 |
7,000 |
|
Profit and loss account To Capital account (Being- profit transferred to capital account) |
Dr
|
|
74,000 |
74,000 |
*******
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 3
The following information is given by BG Traders on 31st December:
Trading, Profit and Loss account
Particulars |
Amount |
Particulars |
Amount |
|
To Opening stock To Purchase To Wages To Carriage To Gross profit c/d |
85,000 325,000 35,000 20,000 260,000 |
By Sales By Closing stock |
650,000 75,000 |
|
725,000 |
725,000 |
|
||
To Salary To Advertisement To Carriage outward To Depreciation To Printing and stationery To Rent To Net Profit c/d |
155,000 14,000 12,000 15,000 4,500 27.500 54,500 |
By Gross profit b/d By Commission earned By Dividend received |
260,000 7,500 15,000 |
|
282,500 |
282,500 |
|
Required: Closing entries
***********
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