Department of Technical Education
Government of 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 (9.2)
Duration : 50 minutes
Sub-topic : Preparation of trading Accounts-3
(without adjustments)
Teaching a aids : PPTs
CCP102.124 1
Objectives
On completion of the period, you would be able to
Prepare the trading account (without adjustments)
CCP102.124 2
Last class assignment
Prepare trading account of Srikrishna & company,
Bangalore with the amounts given below for the year
ending 31 June,2007.
Stock (1.7.06) Rs. 2,500
Purchase 40,000
Return outwards 2,000
Sales 65,000
Return inwards 3,000
Wages 5,000
Freight & carriage 2,500
Commission paid 1,000
Discount Received 2,000
Duty & clearing charges 1,500
Rent to office 1,200
Stock 31-6-2007 9,000
CCP102.124 3
Solution to assignment 1 (given in the last
class)
Srikrishna Company , Bangalore Trading A/c
for the year ending 31st June,2007
Particulars Amount Particulars Amount
To opening stock 2,500 By sales 65,000
To purchases 40,000 less: retunns 3,000 62,000
less:returns 2,000 38,000
To Wages 5,000 By closing stock 9,000
To Freight & carriage 2,500
To Duty & Clearing
charges 1,500
To Gross profit (transferred 21,500
to profit & loss account) --------------- --------------
71,000 71,000
--------------- --------------
CCP102.124 4
Explanation
Stock on 1-7-2006 is the stock at the beginning of
year. Hence it is called opening stock. It is debited
Purchases is subtracted with Return outwards and
the net amount was shown
Purchase returns are also called return outwards
Sales is subtracted with return outwards and
credited. The another name of the sales returns is
return inwards
Wages are direct expenses and hence debited
Freight & carriage, duty & clearance belong to
purchases and hence they are debited
CCP102.124 5
Explanation (contd..)
Commission paid, discount received: Both
expenses belongs to selling expenses and hence it
is not debited. It is to be debited to profit and loss
account
Rent to office: belongs to office expenditure. It is to
be debited to profit and loss account. Hence it is
not debited
Stock on 31-6-2007: This is closing stock. It is
credited
After tallying the trading account, the gross profit is
calculated. The gross profit is transferred to profit
and loss account
CCP102.124 6
Exercise - 2
Prepare Trading Account for the following accounts of the
SRINIVASA Traders, Vizag as on 31st March 2007.
Stock at commencement
• Raw Materials 8,000
• Partly finished goods 25,000
• Finished goods 12,000 45,000
Purchases 50,000
Sales 90,000
Purchase returns 2,000
Sales returns 4,500
Carriage 4,000
Productive Wages 5,000
Factory expenditure 3,000
CCP102.124 7
Power 2,500
Cartage 3,500
Freight 500
Marine Insurance on Purchase 1,000
Stock at the end (31-03-2007)
• Raw Materials 8,000
• Partly finished goods 20,000
• Finished goods 25,000 55,000
CCP102.124 8
Solution to exercise
Trading account of Srinivasa Trader,Vizag as on 31st
March,2007.
Dr Cr
Particulars Amount Particulars Amout
Rs Rs.ps
To opening stock By Sales 90,000
a.Rawmaterial 8000 less:returns 4,500
b.semifinished
25000 ----------- 85,500
c.finshed goods 12000 45,000 By Closing Stock
Raw material 10000
---------- semi finished 20000
To purchases 50000 finished goods 25000 55,000
less returns 2000 48,000 ---------
---------
CCP102.124 9
Solution contd..
Particulars Amount Amout
Rs Particular
s Rs.ps
To carriage 4,000
To productive wages 5,000
To Factory expenses 3,000
To Power 2,500
To Cartage 3,500
To Freight 500
To marine insurance 1,000
To Gross Profit (transferred to 28,000
profit & loss act. ------------ -----------
1,40,000 1,40,500
------------ -------------
CCP102.124 10
Explanation to exercise
A. Opening stock: Stock at the beginning of the
year and they are in the form of raw-material,
semi-finished goods and finished goods. Hence
total amount is debited.
B. Net purchases (purchases – returns) is debited.
C. Net sales – ( sales – returns) is credited.
D. Carriage – belongs to purchases and it is
debited.
CCP102.124 11
A. Productive wages – wages are direct expenses
and debited.
B. Power and factory expenses – both are belongs
to factory expenses and hence it is debited.
C. Cartage, freight, marine insurance – they are
relating to purchases and they are debited.
D. Stock on 31-3-2007 – It is closing stock in the
form of raw material semi-finished goods and
finished goods. Total closing stock is credited.
CCP102.124 12
Summary
Trading A/c contains only purchases, sales,
expenses relating to purchase or production,
opening store and closing stock
It is prepared to know the gross profit or loss
CCP102.124 13
QUIZ
1. It the credit side is heavier than debit side of
trading A/c it is called
a) Gross loss
b) Gross profit
c) None
CCP102.124 14
