Department of Technical Education

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
Duration : 50 minutes
Sub-topic :Journal entries required for
preparation of Trading and Profit
and Loss account
Teaching a aids : PPT’S

CCP102.135 1
Objectives of the lesson

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

 Write Journal entries required for preparation of

Trading account and Profit and Loss account.

CCP102.135 2
Assignment – 1.
From the following information of XYZ company write journal entries and
prepare Trading and Profit and Loss account for the year ending 31-3-07.

Purchases Rs. 16,000 Discount (Cr) Rs. 780

Opening stock 12,500 Commission (Dr) 980
Office Lighting 700 Interest on Bank loan 1,500
Sales 28,500 Trade expenses 800
Carriage on sales 1,200
Purchase returns 2,000 -------------------------------------------
Carriage on purchases 900 Stock on 31-3-07 Rs. 18,600
Sales returns 1,500
Wages 2,500
Cartage 750
Salaries 3,500
General expenses 1,300

CCP102.135 3
solution to assignment -1
Journal Entries

Date Particulars L.f Debit Credit

Rs Ps
Rs Ps

31-3-07 Purchases returns account Dr 2,000

Purchases account 2,000
(Being purchase returns
transferred to purchase account)
---------------------------------------------
-do- Sales account Dr 1,500
Sales returns account 1,500
(Being sales returns transferred
to sales account)
---------------------------------------------

CCP102.135 4
Journal entries .. Contd..

Date Particulars LF Dr Cr

31-3-07 Trading account Dr 30,650

To Purchases account 14,000
To Opening stock account 12,500
To Carriage on purchases 900
To Wages account 2,500
To Cartage account 750
(Being all direct expenses
transferred to Trading account)
-------------------------------------------
Sales account Dr 27,000
To Trading account
-do- (Being net sales transferred to 27,000
Trading account.
------------------------------------------

CCP102.135 5
Journal entries.. Contd..

Date Particulars LF Dr Cr
31-3-07 Closing stock account Dr 16,000
To Trading account 16,000
(Being closing stock valued
and taken into account)
---------------------------------------
-do- Trading account Dr 12,350
To Profit and Loss 12,350
account
(Being Gross profit
transferred to Profit and Loss
account)
----------------------------------------

CCP102.135 6
Journal entries .. Contd..

Date Particulars LR Dr Cr
31-3-07 Profit and loss account Dr 9,980
To Office lighting account 700
To Carriage on sales account 1,200
To Salaries account 3,500
To General expenses account 1,300
To Commission account 980
To Interest on bank loan
account 1,500
To Trading expenses account 800
(Being all expenses except the
items entered in trading account
are transferred)
---------------------------------------------

CCP102.135 7
Ledger accounts
Trading account account as on 31-3-07

Dr Cr
particulars Amount particulars Amount
Rs. Ps Rs Ps
To Opening stock 12,500 By Sales 28,500
To Purchases 16,000 Less: returns 1,500 27,000
Less: returns 2,000 14,000 16,000
To Carriage on 900 By Closing stock
purchases 2,500
To Wages 750
To Cartage 12,350
To Gross profit -------------- ----------
(transferred to profit 43,000 43,000
and loss account) -------------- ------------

CCP102.135 8
 Ledger accounts .. contd

Profit and loss account as on 31-3-07

Dr CR

Particulars Amount Particulars Amount

Rs. Ps Rs. Ps

To Office lights 700 By Gross profit 12,350

To Carriage on sales 1,200 By Discount 980
To Salaries 3,500
To General expenses 1,300
To Commission 980
To Interest on bank loan 1,500
To Trade expenses 800
To Net profit (transferred to 3,150
capital account) ----------- ------------
13,130 13,130
----------- ------------

CCP102.135 9
Assignment – 2
Journal Entries
Date particulars LF Amount Amount
Rs Ps Rs Ps

31-12-07 Return outwards account Dr 2,000

To purchases account 2,000
(Being purchase returns
transferred to purchases
account)
-------------------------------------------
Sales account Dr
-do- 3,000
Return inwards account 3,000
(Being sales returns transferred
to sales account)
-------------------------------------------

CCP102.135 10
Assignment ..2 contd

Rent 5,000
Return inwards 3,000
Wages 17,600
Sundry Creditors 15,000
Miscellaneous receipts 600
Drawings 50,000
Furniture and fittings 82,000
------------------ -------------
2,87,600 2,87,600
----------------- -------------

CCP102.135 11
 Assignment --2
From the following Trial Balance of Saleem Traders, write closing journal entries and prepare
trading account and profit and loss account for the year ending 31-12-07.

particulars Debit Credit

Rs. Ps Rs. Ps
Capital 1,00,000
Stock on 1-1-07 18,000
Cash 2,000
Sundry Debtors 6,000
Purchases 80,000
Sales 1,70,000
Return outwards 2,000
Freight 400
Salaries 20,000

Contd..

CCP102.135 12
Journal entries .. Contd..

31-12-07 Trading account Dr 1,17,600

To Opening stock account 18,000
To Purchases account 78,000
To Freight account 4,000
To Wages account 17,600
(Being all direct expenses accounts
transferred to Trading account)
----------------------------------------------------
-do- Sales account Dr 1,67,000
To Trading account 1,67,000
(Being sales transferred to trading
account)
--------------------------------------------------------

CCP102.135 13
Journal entries ..contd..

31-12-07 Closing stock account Dr 6,500

To Trading account 6,500
(Being opening stock transferred Trading
account)
-do- ------------------------------------------------------------------- 55,900
Trading account Dr 55,900
To Profit and loss account
(Being gross profit transferred to P/L account)
-do- ------------------------------------------------------------------ 25,000
Profit and Loss account Dr 20,000
To Salaries account 5,000
To Rent account
(Being salaries and rent transferred to P/L
account)
-------------------------------------------------------------------
CCP102.135 14
Journal entries .. Contd..

31-12-07 Miscellaneous receipts account Dr 600

To Profit and Loss account 600
(Being misc. receipts transferred Profit
and Loss account)
-----------------------------------------------------------
-
-do- 31,500
Profit and Loss account Dr 31,500
To Capital account
(Being net profit transferred to Capital
account)
-----------------------------------------------------------
-

CCP102.135 15
Ledger accounts

Trading and Profit and Loss account as on 31-12-07

Dr Cr
Particulars Amount Particulars Amount
Rs. Ps Rs. Ps

To Opening stock account 18,000 By Sales account 1,70,000 1,67,000

To Purchases account 80,000 Less: returns 3,000 6,500
Less: returns 2,000 78,000 By Closing stock
To Freight account 4,000
To Wages account 17,600
To Gross profit (transferred to Profit 55,900
and Loss account) ----------- ------------
1,73,500 1,73,500
------------ ------------
To Salaries account 20,000 By Gross profit 55,900
To Rent account 600 By Miscellaneous receipts account 600
To Net profit (transferred to Capital 31,500
account) ------------- ------------
56,500 56,500
-------------- ------------

CCP102.135 16
Summary

 Journal entries are passed to prepare trading a/c

closing journal entries are the must to prepare final
a/c’s

CCP102.135 17
Quiz

1. Purchase returns a/c is__________ to purchase a/c

a) Debited
b) Credited

CCP102.135 18
Quiz

2. Opening stock is_______ and closing stock is________

to trading a/c
a) Debited, Credited
b) Credited, Debited

CCP102.135 19
Assignment

1. Pass Journal Entries for the following :

Jan 1, 2007 opening stock 10,000
Purchases 25,000
Factory wages 70,000
Returns inwards 1,000
Returns outwards 500
Closing stock 35,000
Office expenses 10,000
Depreciation 1,500

CCP102.135 20