Originally Posted by xaara~hussain

I am confused about the following "adjustments" and their double entries. If someone can clarify with their entries, I would be Glad:


1. The directors proposed dividend at 10% paid-up capital (share capital given in trial balance is 100,000)

2. Provide for the manager's renumeration at 10% of net profit before tax.

3. Provide for income tax Rs.19,827

4. Closing Stock was valued at retail price Rs. 105600, 20% higher than cost price.

5. One month's rent at Rs. 45 per month was due on closing date i.e 30th june. (the rent given in trial balance is Rs. 495)

6. A provision of Rs. 4,000 for taxes in respect of profits is considered necessary.

7. Interest accrued on investments is Rs. 1,375 (investments in trial balance are 1,44,475)

8. Managing director's commission is Rs. 3,250 and Rs. 750 for company's contribution to their staff provident fund (provident fund in TB is 18,750)

9. Apprentice fee to be adjusted for four years (amount in TB is 4,000)

10. Unused machinery purchased of 1,800 was wrongly included in closing stock.

11. Insurance premium 2,400 was wrongly included in machinery repairs.


p.s how to treat these items if given in Trial balance;

1. Interim dividend
2. Staff provident fund
3. profit & loss (Credited in trial balance)
4. Interest on investments
5. unclaimed dividend
6. dividend paid
7. share capital-1000 shares of r.s 10 each fully paid (10.000)
8. Loan to managing director