Department of Technical Education

Government of Andhra Pradesh

Name : N.sambaiah
Designation : Head of Section
Branch : DCCP
Instititute : Suvr & SR Govt.Polytechnic
for Women, Ethamukkala.
Year : I year
Subject : Accountancy –I
Subject code : CCP-102
Topic : Final Accounts (9.2)
Duration : 50 minutes
Sub-topic : Preparation of trading Accounts-3
(without adjustments)
Teaching a aids : PPTs
CCP102.124 1
Objectives

 On completion of the period, you would be able to

 Prepare the trading account (without adjustments)

CCP102.124 2
Last class assignment
Prepare trading account of Srikrishna & company,
Bangalore with the amounts given below for the year
ending 31 June,2007.
Stock (1.7.06) Rs. 2,500
Purchase 40,000
Return outwards 2,000
Sales 65,000
Return inwards 3,000
Wages 5,000
Freight & carriage 2,500
Commission paid 1,000
Discount Received 2,000
Duty & clearing charges 1,500
Rent to office 1,200
Stock 31-6-2007 9,000

CCP102.124 3
Solution to assignment 1 (given in the last
class)
Srikrishna Company , Bangalore Trading A/c
for the year ending 31st June,2007

Particulars Amount Particulars Amount

To opening stock 2,500 By sales 65,000
To purchases 40,000 less: retunns 3,000 62,000
less:returns 2,000 38,000
To Wages 5,000 By closing stock 9,000
To Freight & carriage 2,500
To Duty & Clearing
charges 1,500
To Gross profit (transferred 21,500
to profit & loss account) --------------- --------------
71,000 71,000
--------------- --------------

CCP102.124 4
Explanation
 Stock on 1-7-2006 is the stock at the beginning of
year. Hence it is called opening stock. It is debited
 Purchases is subtracted with Return outwards and
the net amount was shown
 Purchase returns are also called return outwards
 Sales is subtracted with return outwards and
credited. The another name of the sales returns is
return inwards
 Wages are direct expenses and hence debited
 Freight & carriage, duty & clearance belong to
purchases and hence they are debited
CCP102.124 5
Explanation (contd..)
 Commission paid, discount received: Both
expenses belongs to selling expenses and hence it
is not debited. It is to be debited to profit and loss
account
 Rent to office: belongs to office expenditure. It is to
be debited to profit and loss account. Hence it is
not debited
 Stock on 31-6-2007: This is closing stock. It is
credited
 After tallying the trading account, the gross profit is
calculated. The gross profit is transferred to profit
and loss account
CCP102.124 6
Exercise - 2
Prepare Trading Account for the following accounts of the
SRINIVASA Traders, Vizag as on 31st March 2007.

Stock at commencement
• Raw Materials 8,000
• Partly finished goods 25,000
• Finished goods 12,000 45,000

Purchases 50,000
Sales 90,000
Purchase returns 2,000
Sales returns 4,500
Carriage 4,000
Productive Wages 5,000
Factory expenditure 3,000

CCP102.124 7
Power 2,500
Cartage 3,500
Freight 500
Marine Insurance on Purchase 1,000
Stock at the end (31-03-2007)
• Raw Materials 8,000
• Partly finished goods 20,000
• Finished goods 25,000 55,000

CCP102.124 8
Solution to exercise
Trading account of Srinivasa Trader,Vizag as on 31st
March,2007.
Dr Cr
Particulars Amount Particulars Amout
Rs Rs.ps

To opening stock By Sales 90,000

a.Rawmaterial 8000 less:returns 4,500
b.semifinished
25000 ----------- 85,500
c.finshed goods 12000 45,000 By Closing Stock
Raw material 10000
---------- semi finished 20000
To purchases 50000 finished goods 25000 55,000
less returns 2000 48,000 ---------
---------

CCP102.124 9
Solution contd..
Particulars Amount Amout
Rs Particular
s Rs.ps

To carriage 4,000
To productive wages 5,000
To Factory expenses 3,000
To Power 2,500
To Cartage 3,500
To Freight 500
To marine insurance 1,000
To Gross Profit (transferred to 28,000
profit & loss act. ------------ -----------
1,40,000 1,40,500
------------ -------------

CCP102.124 10
Explanation to exercise

A. Opening stock: Stock at the beginning of the

year and they are in the form of raw-material,
semi-finished goods and finished goods. Hence
total amount is debited.
B. Net purchases (purchases – returns) is debited.
C. Net sales – ( sales – returns) is credited.
D. Carriage – belongs to purchases and it is
debited.

CCP102.124 11
A. Productive wages – wages are direct expenses
and debited.
B. Power and factory expenses – both are belongs
to factory expenses and hence it is debited.
C. Cartage, freight, marine insurance – they are
relating to purchases and they are debited.
D. Stock on 31-3-2007 – It is closing stock in the
form of raw material semi-finished goods and
finished goods. Total closing stock is credited.

CCP102.124 12
Summary

 Trading A/c contains only purchases, sales,

expenses relating to purchase or production,
opening store and closing stock
 It is prepared to know the gross profit or loss

CCP102.124 13
QUIZ

1. It the credit side is heavier than debit side of

trading A/c it is called
a) Gross loss
b) Gross profit
c) None

CCP102.124 14