Preparation of Final Accounts - 3

12th BOOK KEEPING BY AJAYSANTHOSH MOURYA

Illustration : 3

The Trial Balance as on 31st March 2004 shows Sundry debtors as Rs.12,000 and bad debts as Rs.300.

No adjustment given.

 

Illustration : 4

The Trial Balance as on 31st March 2004 shows the following:

    Dr.                           Cr.

Sundry Debtors                                   40,800                       ––

Bad debts written off                              1,400                      ––

Adjustment: Write off Rs.800/- as bad debts.

 

Note:

In the above example, Trial Balance shows Rs.1,400 as Bad debts. This means the double entry in respect of Rs.1,400 i.e.debiting Bad debts and crediting Sundry debtors is already completed. Hence Rs.1,400 found in the Trial Balance will not affect the sundry debtors of Rs.40,800.

But for the adjustment given outside the Trial Balance, the adjustment has to be done after the preparation of Trial Balance and this would result in increasing bad debts by Rs.800 and decreasing debtors by Rs.800.