Page 190 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes Balance Sheet of Mr. Alok
as on 31.3.2011
Liabilities ( ) Assets ( )
Capital 1,57,000 10,000 Cash in hand 5,000
+ Net Profit +17,550 Land & Building 80,000
1,74,550 Accrued Taxes 2,000
– Drawings (5000+4000) –9,000 1,65,550 Furniture 20,000
Bank Overdraft 20,000 Plant & Machinery 50,000
Bills Payable 21,000 + Erection +5,000
Creditors 40,000 55,000
– Common 6,000 34,000 – Depreciation –5,500 49,500
Sales Tax payable 25,000 Investments 20,000
+ Accrued Int 1,000 21,000
Debtors 25,000
– Common 6,000
19,000
+ Varun 5,000
24,000
– Approval 5,000
Poor 19,000
950 18,050
Bills receivable 10,000
Stock 44,000
Deferred Advertisement 16,000
2,65,550 2,65,550

7. Closing Stock: The stock of goods remaining unsold at the end of the trading period is
called closing stock.
Adjusting Entry
Closing Stock Account Dr.
To Trading Account
Accounting Treatment

(i) To be entered on the credit side of the trading account.
(ii) To be entered on the asset side of the balance sheet.
8. Interest on Loan and Investments:
If the business has taken a loan and interest is paid, then interest being a loss, is immediately
charged/debited to Profit & Loss A/c, but if interest is accrued but not paid because of the
terms of contract of business, then it must be provided for in books of account, otherwise
operational results would not be accurate but incomplete and defective.
(i) For Interest on Loan Payable
Profit & Loss Account Dr.
To Interest on Loan Account
Interest on Loan payable is added to the amount of Loan in the liability side of the
Balance Sheet and also shown in the debit side of Profit & Loss Account.

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