Page 64 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 4: Final Accounts

Notes
Example: Prepare trading account of M/s Sundar and Sons as on 31 March 2010
st

Opening stock on 1 April 2009 50,000
st
Purchases
Cash 1,20,000
Credit 1,00,000
Sales
Cash 40,000
Credit 1,00,000
Purchase Returns 20,000
Carriage Inwards 10,000
Marine insurance on purchase 6,000
Other direct expenses 4,000
Sales Returns 30,000
st
Stock as on 31 March 2010 10,000
In this problem, return outwards and inwards are given in addition to cash and credit purchases
and sales of a firm to find out the net purchases and the net sales of the firm.

Net Sales = Cash Sales+ Credit Sales – Sales Returns
Net Purchases = Cash Purchases + Credit Purchases – Purchase Returns
Solution
st
Trading Account for the year ended 31 March 2010
Dr Cr

Particulars Particulars
To Opening Stock 50,000 By Cash Sales 40,000
To Cash Purchase 1,20,000 Add: Credit Sales 1,00,000
Add: Credit Purchase 1,00,000 By Total Sales 1,40,000
To Total Purchase 2,20,000 Less: Sales Return 30,000
Less: Purchase Return 20,000 By Net Sales 1,10,000
To Net Purchase 2,00,000 By Closing Stock 10,000
To Carriage Inwards 10,000 By Gross Loss c/d 1,50,000
To Marine Insurance 6,000
To Other Direct Expenses 4,000
2,70,000 2,70,000
To Gross Loss B/d 1,50,000

Gross Loss is due to an excess of the debit side total over the credit side total.

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