What are the entries to be passed for Preparing final accounts?
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Preparing final accounts
a.) Closing Stock
Following entry will be passed:
Closing stock account – Debit
Trading account - Credit
b.) Depreciation
Following entry will be passed:
Depreciation account – Debit
Fixed asset account – Credit
c.) Outstanding Expenses
Following entry will be passed:
Expenses account – Debit
Outstanding account - Credit
d.) Prepaid Expenses
Following entry will be passed:
Prepaid expenses account – Debit
Expenses account – Credit
e.) Accrued Income
Following entry will be passed:
Accrued Income account – Debit
Income account - Credit
f.) Income received in advance
Following entry will be passed:
Income account – Debit
Income received in advance account - Credit
g.) Bad debts
Following entry will be passed:
Bad Debts account – Debit
Sundry Debtors account - Credit
h.) Provision for doubtful debts
Following entry will be passed:
Provision for Doubtful Debts account – Debit
Sundry Debtors account - Credit
i.) Provision for discount on Debtors
Following entry will be passed:
Provision for Discount for Debtors account – Debit
Sundry Debtors account - Credit
j.) Interest on Capital
Following entry will be passed:
Interest on capital account – Debit
Capital account - Credit
k.) Drawings
Following entry will be passed:
Drawing account – Debit
Sales account - Credit
l.) Deferred revenue expenditure written off
Following entry will be passed:
Deferred revenue expenditure written off account – Debit
Deferred revenue expenditure account - Credit
m.) Abnormal Loss
Following entry will be passed:
Abnormal Loss account – Debit
Stock destroyed account – Credit
If the organization has insured the stock with the insurance company then the insurance company settles the claim, either in full or part. In that case the following entry will be passed:
Insurance company account – Debit
Abnormal loss account – Debit
Stock destroyed - Credit
n.) Goods distributed as free samples
Following entry will be passed:
Advertisement account – Debit
Sales account - Credit
o.) Goods sent on approval basis:
Goods sent on approval basis should not be treated as sales till the goods are finally approved by the customer because property in goods is not transferred until the said period is over. If the goods sent on approval basis are treated as sales then closing stock will be increased by the cost of such goods sent on approval basis.
p.) Commission payable to the manager:
Following entry will be passed:
Commission account – Debit
Commission payable account – Credit
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