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Byju's Answer
Standard XI
Accountancy
Trial Balance Categorisation
The Trial bal...
Question

The Trial balance of Mr. A shows the balance of Opening stock Rs 20,000, what will be the treatment ?

A
Debited to the Trading Account
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B
Debited to the Profit & Loss Account
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C
Deducted from the closing stock in the Balance Sheet.
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D
None of these
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Solution

The correct option is B Debited to the Trading Account
Purchases is debited as it an expense of goods sold in that year. In addition to this, opening stock is also debited for the reason stated in the above content. This is done for finding the actual gross profit. If opening stock is not debited, gross profit will be overstated.

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Q. From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Opening stock 25,000 Sales 7,00,000
Furniture 16,000 Creditors 72,500
Purchases 5,55,300 Bank Overdraft 50,000
Carriage Inwards 4,700 Provision for bad and doubtful debts 2,100
Bad debts 1,800 Discount 500
Wages 52,000 Capital 2,00,000
Debtors 80,000 Purchases Return 20,000
Sales Return 15,000
Rent 24,000
Miscellaneous Expenses 3,400
Salaries 68,000
Cash 8,900
Drawings 14,000
Buildings 1,60,000
Advertising 10,000
Interest on Bank Overdraft 7,000
10,45,100 10,45,100

Adjustments
1. Closing stock valued at ₹ 36,000.
2. Private purchases amounting to ₹ 5,000 debited to purchases account.
3. Provision for doubtful debts @ 5% on debtors.
4. Sign board costing ₹ 4,000 includes in advertising.
5. Depreciate furniture by 10%.
Q. From the following Trial Balance, prepare Trading Account, Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at the date:
Debit Balances
₹
Credit Balances
₹
Purchases
3,00,000
 Sales
4,79,760
Drawings
3,500
 Purchases Return
12,200
Plant and Machinery
1,23,000
 Capital
5,90,000
Motor Vehicles
1,76,000
 Creditors
11,870
Building
3,80,000
 Bank Loan
33,700
Sundry Debtors
80,000
Stock in Trade (1.4.2017)
8,400
Sales Return
1,800
Wages
2,800
Carriage Inwards
890
Carriage Outwards
300
Telephone Charges
3,290
Salaries
12,000
Insurance and Taxes
31,200
Printing and Stationery Expenses
1,350
Cash in Hand
3,000
11,27,530
11,27,530

Following adjustments are to be considered:
(i) Closing Stock ₹ 15,270.
(ii) Printing and Stationery expenses due ₹ 58,650.
(iii) Outstanding liabilities for salaries ₹ 12,000
(iv) An old machine value at ₹ 12,000 (Book Value of which was ₹ 2,000) was given in exchange for a new machine purchased on 1st April, 2017. The machine given in exchange was not recorded in the books. Cheque issued for new machine purchased was accounted in the books of account.
(v) Depreciation @ 10% p.a. is to be provided on all fixed assets except building.
Q. The Trial Balance shows the following balances as at 31st March, 2017:-
Dr. Balances (₹) Cr. Balances (₹)
Purchases 60,000 Capital 1,13,075
Sales Returns 1,500 Sales 1,27,000
Plant and Machinery 90,000 Purchases Returns 1,275
Opening Stock 40,000 Discount Received 800
Discount Allowed 350 Sundry Creditors 20,000
Bank Charges 100 Bills Payable 5,000
Sundry Debtors 45,000
Salaries 7,000
Wages 10,000
Freight : In 1,000
Freight : Out 1,200
Rent, Rates and Taxes 2,000
Advertisements 2,000
Cash at Bank 7,000
2,67,150 2,67,150

Closing Stock was valued at ₹ 35,000. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date.
Q. From the following balances, prepare Trading and Profit and Loss Account and Balance Sheet:
Debit Balances:
₹
 Debit Balances (Contd.):
₹
Machinery
3,50,000
 Rent
45,000
Debtors 2,70,000 Sundry Expenses 20,000
Drawings 90,000 Carriage 15,000
Purchases 9,50,000 Credit Balances:
Wages 5,00,000 Capital 10,00,000
Bank 1,50,000 Creditors 1,40,000
Opening Stock 2,00,000 Sales 14,50,000
Closing Stock was valued at ₹ 30,000.
Q.

If 'adjusted purchases' and 'closing stock' are given in the trial balance, will you transfer 'closing stock' to trading account? Give reason.

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