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q7 1,02,510 Add: Correct amount of Rent & Rates 2,160 1,04,670 Less: Wrong amount of Sundry Debtors 8,310 96,360 Add: Correct amount of Sundry Debtors
q7 1,02,510 Add: Correct amount of Rent & Rates 2,160 1,04,670 Less: Wrong amount of Sundry Debtors 8,310 96,360 Add: Correct amount of Sundry Debtors 8,060 1,04,420 1,04,420 Note: (1) Repairs is an income in the case of a shoe manufacturing, therefore it will appear on the credit side of the Trial Balance. The Adjusted Trial Balance (Recasting of a Trial Balance) When final accounts are to be prepared, the ledger balances need to be updated to include the effects of transactions that are either unrecorded or recorded improperly, for example, outstanding expenses, deprecia- tion, closing stock, etc. Adjusting entries are necessary to bring the ledger balances to their proper levels. After all the necessary adjusting entries have been journalized and posted, a 2nd Trial Balance is prepared to prove that the ledger is still in balance and this 2nd Trial Balance is called the adjusted Trial Balance. This Trial Balance provides a complete listing of the account balances to be used in preparing the Final Accounts. The following illustration will clear the matter. Illustration 6 Mr Vijay Kumar has been carrying on wholesale trade in textiles from September 1, 2000. His Trial Balance as on December 31, 2016 is as follows: Name of Account Debit (3) Credit Salary 3.200 Rent 29.000 Sundry Debtors Loan from Mrs Vijay Kumar 60,000 Cash 4,000 Sundry Creditors 27,000 Interest paid in part on loan Mr Vijay Kumar's Capital 32.500 Sales 75,800 Purchases 92500 Furniture and Fixtures 20,000 Insurance Premium 2.400 1,95,300 1,95,300 Mr Vijay Kumar furnishes the following additional information: Salary due to his shop assistants on December 31, is 800. 2. Rent includes a deposit of 725,000, refundable by the landlord when the premises are vacated. Sundry Debtors represent the amounts invoiced but not yet collected, except for a sum of 2,200 shown as due from Mr Harinarayan in respect of goods sent to him on approval basis. Mr Harinarayan has to exercise his option by January 5, 2017, cost of the goods is 1,800. 4. Loan from Mrs Vijay Kumar taken on October 1, 2016 carries simple interest at the rate of 12 percent per year. The first instalment of 15,000 including interest falls due for payment on February 1, 2017. Inventory of mill goods in the shop on December 31, 2016 is 35,000 (cost). 6. All items of shop furniture were bought on October 1, 2016. They are expected to be useful for 20 years at the end of which they are to be scrapped. 7. Insurance premium for the period September 1, 2016 to August 31, 2017 has been paid. Required: (1) Post the entries to ledger accounts (date is not required); and, (2) Prepare adjusted Trial Balance as on December 31, 2016. 43,000 1.200 1. 3. 5
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