There are many adjustment because earlier we have not passed any journal entry , so at the time of making

final account we have to adjust them . Name of items 1. Closing stock Adjustment entry Effect on trading and profit and loss account Closing stock Closing stock will account dr. write in the credit xxx side of trading account To trading account xxx Expenses Outstanding account dr. expenses will add xxx in expenses . if it is direct it will go to trading To accounts debit outstanding side , if it is exp. xxx indirect nature then it will go to the debit side of profit and loss account Advance It will deduct expenses a/c from respective dr. xxx expenses paid . To expenses account xxx Outstanding income account dr. xxx To income account xxx Income account dr. xxx To advance income account xxx Drawing account dr. Effect on balance sheet It will show as asset in the final account

2. outstanding expenses or expenses payable or expenses due but not paid

It will be the current liability so it will go to the liability side of balance sheet.

3. advance expenses

It will be the current asset so it will go to assets side of balance sheet

4. income receivable

It will add in the income and go to credit side of profit and loss account

It will show as asset in the assets side of balance sheet

5. income received in advance

It will deduct from the income received

It will shown as liability in the liabilities side of balance sheet

6 Goods use for personal

It will deduct from purchase in

It will deduct from capital in the

use

xxx To purchase account

the debit side of trading account

liabilities side of balance sheet =capital- drawing in goods It will not go to balance sheet

7. Destroyed of goods

= purchase drawing in goods loss by fire or It will shown in accident credit side of account Dr. trading account xxx And also in profit To trading and loss accounts debit side If there is no insurance It will also go to profit and loss account Profit and loss account dr. xxx

To loss by fire / accident 8. Depreciation It will go to the It will deduct from Depreciation account dr. debit side of profit fixed asset . Because xxx and loss account it decrease the value of asset To respective asset account =fixed asset xxxx depreciation 9. provisional If you have Net value of Deduct from debtor for doubtful make any provision for debts provision for doubtful debt = debtor new bad doubt ful account transfer to debts this year debts the its profit and loss provision or closing journal entry accounts debit balance of provision will passed side for bad debts Provision for doubtful debt account dr. xxx To Bad debts =total bad debt + closing balance or provision of doubtful debt or this year provision - opening balance

account xxx ( New bad debts which is not shown in trial balance will transfer to provision for doubtful debt account ) Commission account dr. xxx To outstanding commission

of provision for doubtful debts

10. Commission to manager

It will shown in the debit side of profit and loss account as o/s commission to manager If it charge on the amount after charging such commission then we will calculate = profit before commission X Rate/ 100+rate

It will shown as liability