E T B I C MBA AGU

How to adjust Prepaid Expenses in Final Accounts.

How to treat the adjustment "Insurance & Rental" to be charged Respectively" . Please show the answer in Adjusted Trial Balance then from adjusted trial balance to P&L and Balance Sheet.

Book balance is as follows as at 31-12-94
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asked Jun 21, 2016 in Trial Balance, Profit & Loss Account and Balance Sheet by Shaws (19 points) 404 views

1 Answer

0 votes

First of all you must understand the meaning of this adjustment.  Figures given in the Trial Balance are amounts paid during 1994 on account of Rent and Insurance for more than one period.  The amounts given in adjustments are expenses of 1994. 

The difference between the amounts given in Trial Balance and the amounts given in adjustments is to be treated as an asset in the Balance Sheet.  Journal entries for carrying out the adjustments are as follows:

 

answered Jun 22, 2016 by jbsclasses (3,967 points)
Thank you Sir.
The question is for trading and p/l a/c and balance sheet. In trial balance interest on loan is provided rs 300.In adjustment interest on loan at 6% p.a.  is unpaid for six months. The amount of loan taken was rs 9500. In solutions rs 585 Is debited to p/l a/CA's interest on loan. My question is that why rs 570 is not debited rather rs 585 was debited because by calculation total interest on loan is rs 570.
Dear Dikshit, can you please upload a copy of the question and answer?
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