Final Account Adjustments and their double Effects



Adjustments
Ist Effects
II nd Effect
1.      Closing Stock
Trading A/c Credit Side
Asset Side
2.      Outstanding Expenses
Add to the Respective Expense on Debit Side
Liability Side
3.      Prepaid Expenses
Deduct from the Respective Expenses on the Debit Side
Asset Side
4.      Income Received in Advance
Deduct from the Respective Income on the Credit Side
Liability Side
5.      Income Receivable
Add to the Respective Income on the Credit Side
Asset side
6.      Depreciation
Debit side of Profit and Loss A/c
Deduct Depreciation from the Respective Assets
7.      Interest on Capital
Debit side of Profit & Loss A/c
Partners' Capital or Current A/c Credit Side
8.      Interest on Drawings
Credit side of Profit & Loss A/c
Partners' Capital or Current A/c Debit Side
9.      Interest on Loan
Debit side of Profit & Loss A/c
Add Interest to Loan on Liability Side
10.   Interest on Investments
Credit Side of Profit & Loss A/c
Add Interest to Investments on Asset Side
11.   Insured Goods Destroyed, Damaged, Stolen and Insurance Claim admitted
Full Value of goods to Credit side of Trading Account
Insurance Claim admitted to Asset Side and the Balance amount to Profit & Loss A/c Debit side.
12.   Uninsured goods Destroyed , Damaged, stolen
Full Value of goods to Credit side of Trading Account
Full value of goods to Debit side of Profit & Loss A/c.
13.   Goods distributed as free samples
Trading A/c Credit side
Profit & Loss A/c Debit Side
14.   Goods withdrawn by a partner
Trading A/c Credit Side
Debit side of Partners' Capital / Current A/c
15.   Unrecorded purchase of goods
Add to Purchases on the Debit side of Trading Account
Add to Sundry Creditors on the Liability side
16.   Unrecorded Sales
Add to Sales on the Credit side of Trading Account
Add to Debtors on the Asset side
17.   Commission to Partners as percentage to Gross Profit
Debit side of Profit & Loss A/c
Partners' Capital / Current A/c Credit Side
18.   Sale of goods Included in the Sale of Asset
Add to Sales on the Credit Side of Trading Account
Add to respective Asset on the Asset Side.
19.   Sale of an Asset included in the Sale of Goods
Deduct from Sales on the Credit side of Trading Account
Deduct from respective Asset on the Asset Side.
20.   Advertisement Expenses paid for More than One years
Show Current year amount of Advertisement on the Debit side of Profit & Loss Account
The balance amount of Advertisement is to be shown on the Asset Side.
21.   Carriage Paid on purchase of new machinery included in carriage inwards
Deduct from carriage inward on the debit side of the Trading Account.
Add the Same amount to Machinery on the Asset Side.
22.   Goods Purchased for the construction of Building included in Purchases
Deduct from the Purchases on the debit side of Trading Account
Add the same amount to Buildings on the Asset side.
23.   Repairs to Asset included in Asset
Profit & Loss Account Debit Side
Deduct from respective Asset on the Asset side before calculating depreciation.
24.   Bills Receivable included a dishonoured bill
Deduct from Bills Receivable
Add to Debtors
25.   Bills Payable included a dishonoured bill
Deduct from Bills Payable
Add to Creditors