Trading account format and accounting trading and profit and loss account examples in balance sheet. Different solved problems in trading profit and loss a/c in final accounts format for carriage outwards.
Learning Objectives:
-
Prepare trading and profit and loss account and balance sheet.
Example 1:
From the following balances extracted from the books of X & Co., prepare a trading and profit and loss account and balance sheet on 31st December, 1991.
| $ | $ | ||
| Stock on 1st January | 11,000 | Returns outwards | 500 |
| Bills receivables | 4,500 | Trade expenses | 200 |
| Purchases | 39,000 | Office fixtures | 1,000 |
| Wages | 2,800 | Cash in hand | 500 |
| Insurance | 700 | Cash at bank | 4,750 |
| Sundry debtors | 30,000 | Tent and taxes | 1,100 |
| Carriage inwards | 800 | Carriage outwards | 1,450 |
| Commission (Dr.) | 800 | Sales | 60,000 |
| Interest on capital | 700 | Bills payable | 3,000 |
| Stationary | 450 | Creditors | 19,650 |
| Returns inwards | 1,300 | Capital | 17,900 |
The stock on 21st December, 1991 was valued at $25,000.
Solution:
X & Co.
Trading and Profit and Loss Account
For the year ended 31st December, 1991
| To Opening stock | 11,000 | | | By Sales | 60,000 | ||
| To Purchases | 39,000 | | | Less returns i/w | 1,300 | ||
| Less returns o/w | 500 | | |
|
58,700 | ||
|
|
38,500 | | | By Closing stock | 25,000 | ||
| To Carriage inwards | 800 | | | ||||
| To Wages | 2,800 | | | ||||
| To Gross profit c/d | 30,600 | | | ||||
|
|
| |
|
||||
| 83,700 | | | 83,700 | ||||
|
|
| |
|
||||
| To Stationary | 450 | | | By Gross profit b/d | 30,600 | ||
| To Rent and rates | 1,100 | | | ||||
| To Carriage outwards | 1,450 | | | ||||
| To Insurance | 700 | | | ||||
| To Trade expenses | 200 | | | ||||
| To Commission | 800 | | | ||||
| To Interest on capital | 700 | | | ||||
| To Net profit transferred to capital a/c | 25,200 | | | ||||
| | | ||||||
|
|
| |
|
||||
| 30,600 | | | 30,600 | ||||
|
|
| |
|
X & Co.
Balance Sheet
As at 31st December, 1991
| Liabilities | $ | | | Assets | $ | |
| Creditors | 19,650 | | | Cash in hand | 500 | |
| Bills payable | 3,000 | | | Cash at bank | 4,750 | |
| Capital | 17,900 | | | Sundry debtors | 30,000 | |
| Add Net profit | 25,200 | | | Bill receivable | 4,500 | |
|
|
43,100 | | | Stock | 25,000 | |
| | | Office equipment | 1,000 | |||
|
|
| |
|
|||
| 65,750 | | | 65,750 | |||
|
|
| |
|
|||
Example 2:
The following trial balance was taken from the books of Habib-ur-Rehman on December 31, 19 ….
| Cash | 13,000 | |
| Sundry debtors | 10,000 | |
| Bill receivable | 8,500 | |
| Opening stock | 45,000 | |
| Building | 50,000 | |
| Furniture and fittings | 10,000 | |
| Investment (Temporary) | 5,000 | |
| Plant and Machinery | 15,500 | |
| Bills payable | 9,000 | |
| Sundry creditors | 20,000 | |
| Habib’s capital | 78,200 | |
| Habib’s drawings | 1,000 | |
| Sales | 100,000 | |
| Sales discount | 400 | |
| Purchases | 30,000 | |
| Freight in | 1,000 | |
| Purchase discount | 500 | |
| Sales salary expenses | 5,000 | |
| Advertising expenses | 4,000 | |
| Miscellaneous sales expenses | 500 | |
| Office salary expenses | 8,000 | |
| Misc. general expenses | 1,000 | |
| Interest income | 1,000 | |
| Interest expenses | 800 | |
|
|
|
|
| 2,08,700 | 2,08,700 | |
|
|
|
Closing stock on December 31, 19 … was $10,000
Required: Prepare income statement/trading and profit and loss account and balance sheet from the above trial balance in report form.
Solution:
Habib-ur-Rehman
Income Statement/Profit and Loss Account
For the year ended December 31, 19…..
| Gross sales | 100,000 | ||
| Less: Sales discount | 400 | ||
|
|
|||
| Net Sales | 99,600 | ||
Cost of Goods Sold: |
|||
| Opening stock | 45,000 | ||
| Purchases | 30,000 | ||
| Add: Freight in | 1,000 | ||
|
|
|||
| 31,000 | |||
| Less purchase discount | 500 | ||
|
|
|||
| Net purchases | 30,500 | ||
|
|
|||
| Cost of goods available fort sale | 75,500 | ||
| Less closing stock | 10,000 | ||
|
|
|||
| Cost of goods sold | 65,500 | ||
|
|
|||
| Gross profit | 34,100 | ||
Operating Expenses: |
|||
| Selling Expenses: | |||
| Sales salary expenses | 5,000 | ||
| Advertising expenses | 4,000 | ||
| Misc. selling expenses | 500 | ||
|
|
9,500 | ||
| General Expense: | |||
| Office salaries expenses | 8,000 | ||
| Misc. general expenses | 1,000 | ||
|
|
9,000 | ||
|
|
|||
| Total operating expenses | 18,500 | ||
|
|
|||
| Net profit from operations | 15,600 | ||
Other Expenses and Incomes: |
|||
| Interest income | 1,000 | ||
| Interest expenses | 800 | ||
|
|
|||
| Net increase | 200 | ||
|
|
|||
| Net income | 15,800 | ||
|
|
|
Habib-ur-Rehman
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
You may also be interested in other articles from “final accounts” chapter: |
Jennifer edwards 
Rubab Ali
mohan
exlent information in the web site
why are the accounts on on on side such that there is no debit and credit side
i sarcascally need help on this accounting process this is my courses of studies?