Page 154 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes Dr Profit and loss account Cr
for the year ended....................
` `
To Manager Salary 30,000 By Gross profi t B/d 1,00,000
To Office lighting 5,000 By Discount received 4,000

To Office Rent 15,000 By Dividend received 2,000
To Salary paid salesman 20,000 By Rent received 1,000
To Commission charges 10,000 By Interest received 500
To Legal charges 3,000 By Net Loss c/d* 24,500
To Bad debts 1,500
To Advertising charges 25,000
To Package charges 7,500
To Depreciation charges 10,000
To Repairs and maintenance 2,500
To Interest on loan 1,500
To Local taxes 1000
1,32,000 1,32,000
*Net loss is the excess of the expenses total in the debit side `24,500 over the incomes total in the credit side of the profi t and
loss account.

Task Calculate the cost of materials consumed from the following:
Opening Stock `
Raw materials 4,500
Work in Progress 12,000

Finished Goods 14,800
Sales 50,000
Purchases during the year 24,500
Carriage inwards 500
Closing stock—raw materials 1,500
Work in Progress 4,800

Finished Goods 2,700
Hint: ` 28000

Manufacturing Account

If in the business some goods are being manufactured along with the trading activities, a
manufacturing account is also prepared. In the case of trading activities (selling and purchasing
of goods) only, the Trading and Profit and Loss Account is prepared to compute the net profi t

which is discussed in the preceding pages. In case there is a manufacturing unit in the business
with the trading, such a businessman’s income statement will include:
1. Manufacturing Account
2. Trading Account
3. Profit and Loss Account

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