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

CCP102.134 1
Objectives of the lesson

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

 Write Journal entries required for preparation of Trading

account and Profit and Loss account.

CCP102.134 2
 Problem-1
Write Journal entries and prepare Trading account and Profit and
Loss account of Sri Vishnu Brothers, Madras for the year ending
31-3-06, from the following
Purchases Rs.14,000 Salaries Rs 4,500
Sales 35,000 Traveling expenses 1,200
Wages 9,500 Discount allowed 650
Advertisement 2,000 Interest received 750
Opening stock 7,500 Commission received 2,200
Factory expenses 600 Carriage outward 600
Office expenses 750 Power 1,500
Trade expenses 800 Rates and taxes 900
Return outwards 1,000 Salesmen commission 1,600
Clearing charges 800 Octroi 400
Freight 500 -------------------------------------------
Sales 900 Closing stock 16,500

CCP102.134 3
Accounts to be transferred to
debit side of trading account
1. Net purchases
2. Wages
3. Opening stock
4. Factory expenses
5. Clearing charges
6. Freight
7. Power
8. Octroi

CCP102.134 4
Account to be transferred to
credit side of trading account

1. Net sales
2. Closing stock

CCP102.134 5
Accounts to be transferred to
debit side of profit and loss account

1. Advertisement
2. Office expenses
3. Trade expenses
4. Salaries
5. Traveling expenses
6. Discount allowed
7. Carriage outward
8. Rates and taxes
9. Salesmen commission.

CCP102.134 6
Accounts to be transferred to
credit side of profit and loss account

1. Gross profit
2. Interest received
3. Commission received.

CCP102.134 7
Solution
Journal entries of Srivishnu traders, Madras

Date Particulars L.F Debit Credit

Rs Ps Rs. Ps
31-3-06 Sales account Dr 900
To Sales returns account 900
(Being sales returns transferred

to sales account)
-------------------------------------------- 1000
Return outwards account Dr 1000
To Purchases account
(being purchase returns
transferred to purchase account)
--------------------------------------------

CCP102.134 8
 Journal entries contd.

231-3-06 Trading account Dr 33,800

To Purchases account 13,000
To Wages account 9,500
To Opening stock account 7,500
To Factory account 600
To Clearing charges account 800
To Freight account 500
To Power account 1,500
To Octroi account 400
(Being direct expenses transfer to Trading
account)
--------------------------------------------------------------
-

CCP102.134 9
Journal entries.. Contd.

31-3-06 Sales account Dr 34,100

To Trading account 34,100
(Being sales transferred to trading account)
---------------------------------------------------------------
Closing stock account Dr 16,500
To Trading account 16,500
(Being closing stock valued and taken into
accounts)
---------------------------------------------------------------
Trading account Dr 16,800
To Profit and loss account 16,800
(Being Gross profit transferred to profit and
loss account.
---------------------------------------------------------------

CCP102.134 10
Journal entries.. contd

31-3- Profit and loss account Dr 13,000

06 To advertisement account 2,000
To Office expenses account 750
To Trade expenses account 800
To Salaries account 4,500
To Traveling expenses account 1,200
To Discount allowed account 650
To Carriage outward account 600
To Rate and taxes account 900
To Salesmen commission 1,600
account
(Being all the balances of expenditure
accounts ( those not entered in trading
account) are debited to profit and loss
account)
-----------------------------------------------------------
--
CCP102.134 11
 Journal entries .. Contd..

31-3-06 Interest received account Dr 750

Commission received account Dr 1200
To Profit and loss account 1950
(Being the interest and
commission received transferred to
profit and loss account)
---------------------------------------------------
Profit and loss account Dr 5750
To Capital account 5750
(Being the net profit transferred to
capital account)
---------------------------------------------------
-

CCP102.134 12
Trading account of Sri Vishnu Traders, Madras for the year
ending 31-3-06.
Dr Cr
Particulars Amount Particulars Amount
Rs Ps Rs Ps
To Opening stock 7,500 By Sales 35,000
To Purchases 14,000 Less: returns 900 34,100
Less: returns 1,000 13,000 By Closing stock 16,500
To Wages 9,500
To Factory expenses 600
To Clearing charges 800
To Freight 500
To Power 1,500
To Octroi 400
To Gross profit (transferred 16,800
to profit and loss account) --------------- -----------
50,600 50,600
--------------- ------------

CCP102.134 13
 Profit and loss account of Sri Vishnu Traders, Madras
for the year ending 31-3-06.

Dr Cr
Particulars amount Particulars Amount

Rs. Ps Rs. Ps
To Advertisement account 2,000 By Gross profit 16,800
To Office expenses account 750 By Interest received 750
To Trade expenses account 800 By Commission received 1,200
To Salaries account 4,500
To Traveling expenses 1,200
To Discount allowed 650
To Carriage outward 600
To Rates and taxes 900
To Salesmen commission 1,600
To Net profit (transferred to capital 5,750
account) ------------ -------------
18,750 18,750
------------ -------------S

CCP102.134 14
Conclusion

 Journal entries are passed to transfer a/c’s in to

trading and p and l a/c’s

CCP102.134 15
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

CCP102.134 16
 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..

CCP102.134 17
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 -------------
Closing Stock: 6500 -----------------

CCP102.134 18