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SUMMARISED PRESENTATION OF ADJUSTMENT

 

 Adjustments at a Glance

Adjustments Journal Entry Adjustment in Trading

And P/L A/c

Adjustment in Balance

Sheet

1. Closing Stock Closing Stock A/c Dr.

To Trading A/c

Posted at the credit side of

Trading A/c

Shown at the assets side
2. Depreciation Depreciation A/c Dr.

To Asset A/c

Posted at the debit side of

P/L A/c

Shown as deducted from concerned

assets

3. Appreciation Asset A/c Dr.

To Appreciation A/c

Posted at the credit side of

P/L A/c

Shown as added to concerned

asset

4. Outstanding

expenses

Expenses A/c Dr.

To Outstanding

Expenses A/c

Added to the concerned

expense at the debit _side of

P/L or Trading A/c

Shown at the liabilities side
5. Prepaid

expenses

Prepaid Expenses A/c Dr.

To Expense A/c

Deducted from the concerned

expense at the debit side of

P/L A/c

Shown at the assets side
6. Accrued

income

Accrued Income A/c Dr.

To Income A/c

Added to the concerned

income at the credit side of

P/L A/c

Shown at the assets side
7. Unearned

income

 

Income A/c Dr.

To Unearned Income A/c

Deducted from concerned in-

come at the credit side

Shown at the liabilities side
8. Interest on

capital

Interest on Capital A/c Dr.

To Capital A/c

Posted at the debit side of

P/L A/c

Added to capital at the

liabilities side

9. Interest on

Drawings

 

Drawings A/c Dr.

To   Interest on Drawings

Posted at the credit side of

P/L A/c

Deducted from capital at the

liabilities side

10. Interest on

investment

investment A/c Dr.

To interest on Investment

Posted at the credit side of

P/L A/c

Added to investment at the

assets side

II. Interest on

Loans

(borrowed)

Interest on loans A/c Dr.

To Loan A/c

Posted at the debit side of

PIL A/c

Added to loan at the liabilities

side

12. Interest on

Loans

(advanced)

Loans A/c Dr.

To Interest on Loans A/c

Posted at the credit side of

P/L A/c

Added to loan at the assets side
13. Bad debts Bad Debts A/c Dr.

To Debtors A/c

Posted at the debit side of P/L A/c Deducted from debtors at the assets side
14. Provision for

bad debts

P/L A/c Dr.

To Provision for

Bad debts A/c

Posted at the debit side of

P/L A/c

Deducted from debtors at the

assets side

15. Provision for

discount on

debtors

 

P/L Ac Dr.

To Provision for discount

on debtors

Posted at the debit side of

P/L A/c

Deducted from debtors at the

assets side

16. Provision for

discount on

creditors

Provision for Discount on

creditors A/c Dr.

To P/L Ac

Posted at the credit side of

P/L A/c

Deducted from creditors at the liabilities side
I 7. Accidental loss

of stock

Loss of Stock A/c Dr.

To Trading A/c

or To Purchases A/c

Deducted from Purchases or

Posted at the credit side of

Trading A/c and also at the

debit side of P/L A/c

No Effect
18. Accidental loss

of goods (If

l11sured)

(Partial

Admission

of claim)

Insurance Co. A/c Dr.

Loss of Stock A/c Dr.

To Trading A/c

Insurance Co. A/c will be

shown with the amount of

claim admitted by Co., loss

of stock will be shown with

the amount of the claim not

admiued at the credit side of

Trading A/c. Loss of the

stock will also be shown at

the debit side of PIL A/c

Insurance Co. A/c will be shown at the Assets side with the amount of claim admitted as debtor
19. Loss of Assets

by fire

(If 110t insured)

Loss by fire A/c Dr.

To Asset A/c

Loss by fire A/c will be

shown at the debit side of

P/L A/c

Loss will be deducted from the concerned asset at the assets side
20. Accidental loss

of Assets

(if insured)

(Partial

admission of

claim)

Insurance Co. A/c Dr.

Loss by fire A/c Dr .

To Assets A/c

Loss by fire A/c will be

shown at the debit side of

P/L A/c

Insurance Co. A/c will be shown at the assets side. Loss by fire A/c will be deducted from the Assets
21. Outstanding

Manager’s

commission

P/L A/c Dr.

To Outstanding

manager’s commission

Manager’s commission A/c

will be shown at debit side of

P/L A/c

Shown at the liabilities side of Balance sheet
22. Goods sent on

sale or return

basis treated as

sales (cost of

goods $ 6000

included  in sales

$ 8000)

Sales A/c Dr. 8000

To Debtors A/c 8000

And

Stock A/c Dr. 6000

To Trading A/c 6,000

 

$ 8000 will be deducted

from sales and $ 6000 will

be added to closing stock at

the credit side of Trading A/c

$ 8,000 deducted from debtors
23 . Goods taken by

the proprietor

for personal

use

Drawing A/c Dr.

To Purchases A/c

Amount of goods taken by

the proprietor will be de-

ducted from purchases in

Trading A/c

Amount of goods taken by the proprietor will be deducted from capital at the liabilities side.
24. Goods given as

charity

Charity A/c Dr.

To Purchases A/c

Deducted from purchase at

the debit side of trading A/c

Deducted from capital at the liabilities side
25. Goods distributed as free

samples

Advertising A/c Dr.

Or

Free Samples A/c Dr.

To Purchases A/c

Posted at the debit side of

P/LA/c

Also deducted from purchases A/c

No effect
26. Wages paid for

construction of

building was

debited to

wages A/c

Building A/c Dr.

To Wages A/c

The amount will be deducted

from wages at the debit side

of Trading A/c

The amount will be added to

building at the assets side

27. Goods in tran-

sit (Goods were

not Received

although titles

to goods were

received)

 

Goods in Transit A/c Dr.

To Supplier’s A/c

No effect Goods in transit A/c- will be shown at the assets side. Supplier’s A/c will be shown at liabilities side
28. Remuneration

paid to employee

was debited to his personal A/c

 

Salaries A/c Dr.

To Employee’s Personal

A/c

Added to salaries at the debit

side of P/L A/c

Deducted from debtors at the

assets side

29. Deferred

Revenue

Expenditure

paid for future

benefits (e.g.

Advertisement

expenditure)

(i) Advertising A/c Dr.

To Bank

(with total amount)

(ii) P/L A/c Dr.

To Advertising

(with installment amortized or written off)

Debacle to P/L A/c (with the

amortized value)

Shown at the assets side with unamortized amount.