It is also known additional information.
Almost all the adjustment entry effects dual aspect.
One is debit and other is credit.
There are a number of adjustments to be made while finalizing the financial statements.
But our discussion will be limited to the following adjustments (limited by the curriculum):
1 |
Dividend |
13 |
Bad debts, provision and discount |
2 |
Transfer to reserve and fund |
14 |
Recovery of bad debts |
3 |
Adjustment of tax |
15 |
Goods loss by fire and insurance claim |
4 |
Closing stock |
16 |
Goods distribute as free sample |
5 |
Outstanding expenses |
17 |
Manager’s commission |
6 |
Prepaid expenses |
18 |
Bonus or pension to employees |
7 |
Accrued revenue or income |
19 |
Create reserve or fund |
8 |
Unearned or prepaid revenue |
20 |
Goods sold on sale or return basis |
9 |
Depreciation on assets |
21 |
Hidden adjustment: |
10 |
Appreciation on assets |
|
(a) Interest on loan or debenture |
11 |
Written off or amortized |
|
(b) Interest on investment |
12 |
Purchase or sale of fixed assets |
|
(c) Monthly rent and salary |
Stock is also known as inventory and merchandise.
Every organization wants to sell maximum or entire purchase goods but it is not possible.
In every accounting year, there remain some unsold goods.
These unsold goods are called closing stock.
It valued at cost value or market value which is less in cost.
According to question, there may be closing stock of finished goods, work in progress and raw materials.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
ADJUSTMENT: 4A
Extracted Trail Balance
Particulars |
Debit |
Credit |
Closing stock |
Nil |
|
|
|
|
Additional information:
Closing stock has cost value $/₹/Rs 250,000 and market value Rs 230,000.
Required: Show effect on final accounts
SOLUTION
Journal Entry
Date |
Particulars |
|
LF |
Amount |
Amount |
|
Closing stock account |
Dr |
|
230,000 |
|
|
To Trading account |
|
|
|
230,000 |
|
(Being- closing stock recorded) |
|
|
|
|
Trading Account
Particulars |
Amount |
Particulars |
Amount |
|
|
By Closing stock |
230,000 |
|
|
|
|
Balance Sheet
Liabilities |
Amount |
Assets |
Amount |
|
|
Current assets: |
|
|
|
Closing stock |
230,000 |
|
|
|
|
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Click on link for YouTube videos |
|
Share (Accounting for Share) |
|
Share in Nepali |
|
Debentures |
|
Final Account: Class 12 |
|
Final Account in Nepali |
|
Work Sheet |
|
Ratio Analysis (Accounting Ratio) |
|
Fund Flow Statement |
|
Cash Flow Statement |
|
Theory Accounting Xii |
|
Theory: Cost Accounting |
|
Cost Accounting |
|
LIFO−FIFO |
|
Cost Sheet, Unit Costing |
|
Cost Reconciliation Statement |
ADJUSTMENT: 4B
Extracted Trail Balance
Particulars |
Debit |
Credit |
Closing stock (ending inventory) |
172,000 |
|
|
|
|
Required: Show effect on final accounts
SOLUTION
Trading Account
Particulars |
Amount |
Particulars |
Amount |
|
|
By Closing stock |
Nil |
|
|
|
|
Balance Sheet
Liabilities |
Amount |
Assets |
Amount |
|
|
Current assets: |
|
|
|
Closing stock |
172,000 |
|
|
|
|
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