Financial Accounting Lecture 12 Ali Traders Trial Balance

Financial Accounting Lecture – 12 Ali Traders Trial Balance As On January 31, 20 -Title of Account Code Dr. Rs. Cash Account 01 35, 000 Bank Account 02 130, 000 Capital Account 03 Furniture Account 04 15, 000 Vehicle Account 05 50, 000 Purchases Account 06 60, 000 Mr. A (Creditor) 07 15, 000 Sales 08 95, 000 Mr. B (Debtor) 09 15, 000 Salaries 10 5, 000 Expenses 11 20, 000 Expenses Payable 12 Total 1 200, 000 20, 000 330, 000

Financial Accounting Lecture – 12 Accounting Equation Assets = Capital + Liabilities Assets = 35, 000+130, 000+15, 000+50, 000+15, 000= 245, 000 Capital = 200, 000 Liabilities = 15, 000 + 20, 000 = 35, 000 Capital + Liabilities = 235, 000 2

Financial Accounting Lecture – 12 Ali Traders Trial Balance As On January 31, 20 -Title of Account Code Dr. Rs. Cash Account 01 35, 000 Bank Account 02 130, 000 Capital Account 03 Furniture Account 04 15, 000 Vehicle Account 05 50, 000 Purchases Account 06 60, 000 Mr. A (Creditor) 07 15, 000 Sales 08 95, 000 Mr. B (Debtor) 09 15, 000 Salaries 10 5, 000 Expenses 11 20, 000 Expenses Payable 12 Total 3 200, 000 20, 000 330, 000

Financial Accounting Lecture – 12 Balance Sheet of Ali Traders Name of the Entity (Ali traders) Balance Sheet As At (January 31, 20 --) Liabilities Particulars Capital Profit and Loss Account Current Liabilities Mr. A 15, 000 Exp. payable 20, 000 Total Assets Amount Rs. Particulars 200. 000 Fixed Assets 10, 000 Amount Rs. 65, 000 Furniture 15, 000 210, 000 Vehicle 50, 000 35, 000 Current Assets Mr. B 15, 000 Bank 130, 000 Cash 35, 000 245, 000 Total 4 180, 00 0 245, 00

Financial Accounting Lecture – 12 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20 -Particulars Amount Rs. Assets Fixed Assets Current Assets 65, 000 180, 000 Total 245, 000 Liabilities Capital Profit and Loss Account 200, 000 10, 000 Current Liabilities 210, 000 35, 000 Total 245, 000 5

Financial Accounting Lecture – 12 Working Capital = Current Assets – Current Liabilities 6

Financial Accounting Lecture – 12 Cost of Sales & Closing Stock • Closing Stock – The Value of goods unsold at the end of the accounting period. • Cost of Sales = Purchases – Closing Stock. 7

Financial Accounting Lecture – 12 Treatment of Closing Stock • Closing Stock = 1, 000 • Cost of goods sold => 60, 000 - 1, 000 = 59, 000 8

Financial Accounting Lecture – 12 Ali Traders Profit and Loss Account Name of the Entity (Ali Traders) Profit and Loss Account for the Month Ending January 31, 20 -Particulars Amount Rs. Income / Sales / Revenue Amount Rs. 95, 000 Less: Cost of Goods Sold ( 60, 000 1, 000 ) (59, 000) Gross Profit (59, 000) 36, 000 Less: Administrative Expenses Net Profit (25, 000) 11, 000 9

Financial Accounting Lecture – 12 Treatment of Closing Stock • Closing Stock = 1, 000 • Current assets => 180, 000 + 1, 000 = 181, 000 10

Financial Accounting Lecture – 12 Value of Stock Used = Opening Stock + Purchases Closing Stock 11

Financial Accounting Lecture – 12 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20 -Particulars Amount Rs. Assets Fixed Assets Current Assets (180, 000 + 1, 000) 65, 000 181, 000 Total 246, 000 Liabilities Capital Profit and Loss Account 200, 000 11, 000 Current Liabilities 210, 000 35, 000 Total 246, 000 12

Financial Accounting Lecture – 12 Utilization of Fixed Assets • Dividing total cost by life of the asset. • Rs. 65, 000 / 50 months = Rs. 1, 300 monthly charge 13

Financial Accounting Lecture – 12 Treatment of Depreciation • Rs. 1, 300 is treated as expense. • Fixed assets => 65, 000 - 1, 300 = 63, 700 • This net amount of Rs. 63, 700 is referred to as Book Value OR Written Down Value (WDV) 14

Financial Accounting Lecture – 12 Ali Traders Profit and Loss Account Name of the Entity (Ali Traders) Profit and Loss Account for the Month Ending January 31, 20 -Particulars Amount Rs. Income / Sales / Revenue Amount Rs. 95, 000 Less: Cost of Goods Sold ( 60, 0001, 000 ) Gross Profit Less: Administrative Expenses Depreciation Net Profit (59, 000) 36, 000 (25, 000) (1, 300) (26, 300) 9, 700 15

Financial Accounting Lecture – 12 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20 -Particulars Amount Rs. Assets Fixed Assets (65, 000 – 1, 300) Current Assets (180, 000 + 1, 000) 63, 700 181, 000 Total 244, 700 Liabilities Capital Profit and Loss Account 200, 000 9, 700 Current Liabilities 209, 700 35, 000 Total 244, 700 16

Financial Accounting Lecture – 12 Distribution of Profits / Drawing 17

Financial Accounting Lecture – 12 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20 -Particulars Amount Rs. Assets Fixed Assets (65, 000 – 1300) Current Assets (181, 000 - 5, 000) 63, 700 176, 000 Total 239, 700 Liabilities Capital Profit and Loss Account Drawing 200, 000 9, 700 (5, 000) Current Liabilities Total 204, 700 35, 000 18 239, 700