The journal entries necessary to transfer opening stock, purchases, sales and returns to the Trading Account are called closing entries, as they serve to close these accounts. These are as follows: 1. For transfer of opening stock, net purchases and direct expenses to Trading A/c. Trading A/C Dr. To Stock (Opening) A/C To Purchases A/c To Direct Expenses A/C (Being opening stock, purchases and direct expenses transferred to Trading Account 125 2. Dr. For transfer of net sales and closing stock to Trading A/c Sales A/C Stock (Closing) A/C Dr. To Trading A/C (Being sales, closing stock transferred to Trading Account 3. Dr. For Gross Profit Trading A/C To Profit & Loss A/C (Being gross profit transferred to Profit and Loss Account) (6) For Gross Loss Profit & Loss A/C Dr. To Trading A/C (Being gross loss transferred to Profit and Loss Account) Illustration 1: From the following balances extracted from the booles of Mr. Bansi Lal, prepare the Trading Account for the year ending 31 March, 2006. Purchases 42,500 Wagen 5,000 Mfg, expenses 1,950 Op. Stock 10,000 Sales 67,500 Sales retums Carriage inwards 100 Purchases returns Freight and duty 5,000 Stores consumed 50 200 200 Power 300 The value of stock unsold in Rs. 12,000