Discuss the accounting treatment of the following transaction:
Mr. Pankaj receives Rs. 1,500 per month as rent. In the year ending 31st March 2017, he received Rs. 22,000 as rent.

Deduct Rs. 4,000 from credit side of profit & loss account

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Add Rs. 4,000 to debit side of trading account

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Deduct Rs. 4,000 from credit side of trading account

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Add Rs. 4,000 to debit side of profit & loss account

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Solution

The correct option is C Deduct Rs. 4,000 from credit side of profit & loss account
Sometimes, a certain income is received but the whole amount of it does not belong to the current period. The portion of the income which belongs to the next accounting period is termed as income received in advance or an Unearned Income. Income Received in advance is adjusted by recording the following entry:
Concerned Income A/c Dr.
To Income Received in Advance A/c
The effect of this entry will be that the balance in the income account will be equal to the amount of income earned for the current accounting period, and the new account of income received in advance will be shown as a liability in the balance sheet.
For example, Mr. Pankaj receives Rs. 1,500 per month. In then year ending 31st March 2017, he received Rs. 22,000 as rent. The accounting treatment will be:
= 22,000 - (1,500 X 12)
= 22,000 - 18,000
= Rs. 4,000
The amount of Rs. 4,000 will be deducted from credit side of profit and loss account.

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Prepare Trial Balance from the following information:

Capital Rs.50,000; Bank Loan Rs.20,000; Trade payables Rs.18,000; Rent outstanding Rs.4,000. Capital reserve Rs.5,000; Commission received Rs.3,000; Bad debts Rs.5,000. Plant & Machinery Rs.60,000; Goodwill Rs.16,000; Carriage inwards Rs.2,500; Carriage outwards Rs.1,500; Trade Receivables Rs. 10,000; Profit and Loss (Dr.) Rs.5,000.

Rectify the following errors:

(a)	Salary paid Rs 5,000 was debited to employee’s personal account.
(b)	Rent Paid Rs 4,000 was posted to landlord’s personal account.
(c)	Goods withdrawn by proprietor for personal use Rs 1,000 were debited to sundry expenses account.
(d)	Cash received from Kohli Rs 2,000 was posted to Kapur’s account.
(e)	Cash paid to Babu Rs 1,500 was posted to Sabu’s account.

From the following trial balance of Varshney and Sons, prepare trading account and profit and loss account for the year ending 31st December, 2016 and a balance sheet as on that date.

$\begin{matrix} Particulars & Amt. (Rs.) & Particulars & Amt. (Rs.) Opening Stock & 10, 400 & Capital & 32, 000 Purchases & 31, 000 & Creditors & 4, 000 Sales Return & 600 & Sales & 40, 000 Debtors & 8, 000 & Commission & 5, 480 Building & 10, 000 & Rent & 4, 000 Machinery & 7, 200 Furniture & 3, 200 Bills Receivable & 4, 000 Salaries & 3, 200 Tax & 400 Insurance & 600 Carriage on Purchases & 1, 800 Trade Expenses & 600 Travelling Expenses & 880 Wages & 2, 000 Cash & 1, 600 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 85, 480 - ------ - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 85, 480 - ------ - \end{matrix}$

Adjustments:

(i) Closing stock Rs. 24,000

(ii) Rent due but not received Rs. 200.

(iii) Commission to the extent of Rs. 280 received in advance.

Rectify the following errors

(i) Salary paid Rs. 5,000 was debited to employee's personal account.

(ii) Rent paid Rs. 4,000 was posted to landlord's personal account.

(iii) Goods withdrawn by proprietor for personal use Rs 1,000 were debited to sundry expenses account.

(iv) Cash received from Kohli Rs. 2,000 was posted to Kapur's account.

(v) Cash paid to Babu Rs. 1,500 was posted to Sabu's account.

(vi) Goods sold to Rohan on credit amounting to Rs. 700 were omitted from the accounts although cash received subsequently from him stands posted to his credit.

(vii) On 31st March, goods of the value of Rs. 6,000 were returned by Rohan and were taken into stock on the same date but entry was not passed in the books.

Q. Gross Profit Rs 1,20,000, Rent Rs 10,000, Salary Rs 30,000, Commission paid Rs 14,000 Interest on Loan Rs 10,000. Advertising Rs 8,000, Discount received Rs 6,000, Printing & Stationery Rs 4,000, Legal charges Rs 10,000, Bad Debts Rs 2,000, Depreciation Rs 4,000, Interest received Rs 8,000, Loss by life Rs 6,000. The net Profit for the year is :

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Discuss the accounting treatment of the following transaction:Mr. Pankaj receives Rs. 1,500 per month as rent. In the year ending 31st March 2017, he received Rs. 22,000 as rent.

Discuss the accounting treatment of the following transaction:
Mr. Pankaj receives Rs. 1,500 per month as rent. In the year ending 31st March 2017, he received Rs. 22,000 as rent.