OUTSTANDING EXPENSES

TRIAL BALANCE

Salaries 5,000
Adjustment: Out standing salaries Rs.1,500
PROFIT AND LOSS ACCOUNT

Salaries 5,000
(+) Out standing 1,500 6,500

BALANCE SHEET
Outstanding salaries 1,500
 PREPAID EXPENSES
TRIAL BALANCE

Insurance 3,000
Adjustment: Prepaid insurance Rs. 500
PROFIT AND LOSS ACCOUNT

Insurance 3,000
Less: Prepaid 500 2,500

BALANCE SHEET
Prepaid insurance 500
 INCOME TO BE RECEIVED(INCOME ACCRUED)

TRIAL BALANCE
Interest 4,000

Adjustment: Income accrued Rs.2,500

PROFIT AND LOSS ACCOUNT
Interest 4,000
Add: Accrued 2,500 6,500

BALANCE SHEET
Accrued interest 2,500
 INCOME RECEIVED IN ADVANCE

TRIAL BALANCE
Rent 3,000

Adjustment: Income Received in advance Rs.1,000

PROFIT AND LOSS ACCOUNT
Rent 3,000
less: Received in advance 1,000 2,000

BALANCE SHEET
Income Received in advance 1,000
 DEPRECIATION
TRIAL BALANCE

Furniture 30,000

Adjustment: Provide 10% depreciation on Buildings

PROFIT AND LOSS ACCOUNT

Depreciation on
Furniture 3,000

BALANCE SHEET
Furniture 30,000
(-)Depreciation 3,000 27,000
 BAD DEBTS
TRIAL BALANCE

Debtors 20,000
Adjustment: write off 5% bad debts on debtors
PROFIT AND LOSS ACCOUNT

Bad debts 1,000

BALANCE SHEET
Debtors 30,000
(-)Bad debts 1,000 29,000
 INTEREST ON CAPITAL
TRIAL BALANCE

Capital 1,00,000
Adjustment: Provide 10% interest on Capital
PROFIT AND LOSS ACCOUNT

Interest on Capital 10,000

BALANCE SHEET
Capital 1,00,000
(+) Interest on Capital 10,000
1,10,000
 INTEREST ON DRAWINGS
TRIAL BALANCE

Drawings 2,000 Capital 1,00,000

Adjustment: Provide 10% interest on drawings
PROFIT AND LOSS ACCOUNT
Interest on Drawings 200

BALANCE SHEET
Capital 1,00,000
(-) Drawings 2,000
98,000
(-) Interest on drawings 200
97,800
 DRAWINGS
TRIAL BALANCE

Purchases 80,000 Capital 1,00,000

Adjustment: proprietor taken goods for personal use Rs.2,500
TRADING ACCOUNT
Purchases 80,000
(-)Drawings 2,500 77,500

BALANCE SHEET
Capital 1,00,000
(-) Drawings 2,500
 Hidden Adjustments
• Income Accrued
• Expenses to be paid (outstanding)
 INTEREST ON LOAN
TRIAL BALANCE

Interest paid on loan 600 10% Loan 8,000

PROFIT AND LOSS ACCOUNT
Interest on Loan 600
(+)Outstanding 200 800

BALANCE SHEET
10% Loan 8,000
Interest on loan 200
 INTEREST ON INVESTMENTS
TRIAL BALANCE

12% Investments 50,000 Interest on Investments 4,000

PROFIT AND LOSS ACCOUNT

Interest Investments4,000
(+) Accrued 2,000 6,000

BALANCE SHEET

12% Investments 50,000

Accrued interest 2,000