Page 23 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes
Example: From the following information, prepare the Profit & Loss account.

Debit Credit
` `
Gross profit from the trading account 1,00,000

Manager Salary 30,000
Offi ce lighting 5,000
Offi ce Rent 15,000
Local Taxes 1,000
Salary paid to salesmen 20,000
Commission charges paid 10,000
Legal charges paid 3,000
Bad debts 1,500

Advertising charges 25,000
Package charges 7,500
Discount allowed 3,000
Discount received 4,000
Dividend received 2,000
Rent received 1,000
Depreciation charges 10,000
Repairs and Maintenance 2,500
Interest on loans 1,500 500
Solution:

Dr Profit and Loss Account for the year ended …………………………… Cr
` `
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.

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