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#1
Thursday, February 21, 2008
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here is the problem
A.O.A,
Actually i have issue in worksheet, i hv gone through books, bt nt satisfied. The problem which lies is about the Opening inventory and vise versa closing inventory. As opening inventory reflects as DEBIT in Trial balance, bt while making an adjustment at year end, wt should be the adjusting entry passed for closing inventory????? Samreen
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CoNfIdEnCe iS tHe kEY 2WrDs sUccEESS!! sAm     
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#2
Thursday, February 21, 2008
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hi !! I am Nauman from Accounts group.. I read ur post regarding the opening/closing inventory. I havent worked with worksheets but am quite expert in final accounts preparation. U can ask me for guidance, if required.
Fee Aman Allah
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#3
Saturday, February 23, 2008
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here is the prob(part ii, fr mr. Nouman)
A.O.A,
OK SIR, THN wl u tell me the basic position of opening stock and closing stock as far as final accounts are concrned.opening stock is our asset??if yes, thn y it reflect on DR side in Income statment??? Samreen
__________________
CoNfIdEnCe iS tHe kEY 2WrDs sUccEESS!! sAm
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#4
Saturday, February 23, 2008
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A.O.A,
Look, the thing is that when you are making the worksheet, treat the income statement columns as sort of a T account. You might know that in Pakistan income statement is more appropriately known as Profit and Loss account. Since it is assumed that all the opening inventory is sold, so it is credited and income statement is debited. Notice that it is not the opening inventory that gets debited but the income statement. Here are the entries Dr. Income statement Cr. Opening Inventory Dr. Closing Inventory Cr. Income Statement Hope this helps. Nabeel
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#5
Sunday, February 24, 2008
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opening stock is an asset definitely. And it is shown as a debit because when stock is bought, cash is paid (credit entry in cash ledger) and purchases are debited. Therefore, all the purchases are debited. Since opening stock is also purchases (though unsold), it will be treated as a debit entry.
This was a rudimentary explanation but i hope u mite have understood. Last edited by Aarwaa; Sunday, February 24, 2008 at 01:10 AM.
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#6
Sunday, February 24, 2008
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Problem Continuing!!
A.O.A,
Got it, and thnx 2 both of u, plz clear me about UNEARNED COMMISSION & DRAWAINGS, with reference to worksheet as well as final accounts!! (as unearned Comm is our liability,thus will be reflected in balance sheet, bt whch head wl be debited, if comm, then wt wl be its status) Samreen
__________________
CoNfIdEnCe iS tHe kEY 2WrDs sUccEESS!! sAm
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#7
Wednesday, February 27, 2008
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A.O.A,
The adjustment for unearned commission arises when we have credited everything received from commission to commission income, without regard to the fact that this whole amount may or may not be related to the current year. Suppose on Dec.1 we receive Rs. 10,000 commission income, but this includes 2,000 as advance for the next year. The actual but conceptually incorrect entry is Dr. Cash 10000 Cr. Commission income 10000 Since we want commission income account to show 8000, we will make the following adjusting entry on Dec 31 Dr. Commission income 8000 Cr. Unearned Commission 8000 Quote:
Dr. Commission income 2000 Cr. Unearned Commission 2000 Last edited by Xeric; Friday, May 22, 2009 at 11:34 PM.
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#8
Wednesday, February 27, 2008
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continuing!!
A.O.A,
Sir, i hv read, and also going through M.A.GHANI book, but unearned income is our liability, and will be reflected in our balance sheet, as we are paid for services we have not yet provided. what abt drawings? proprietor taken some goods amounting Rs.5,000 for personal use from business? Wht wl b entry? should it be deducted from capital?bt drawaing is our expns, so sould b reflected in P/L. Please clarify in detail. Thanks alooooooot
__________________
CoNfIdEnCe iS tHe kEY 2WrDs sUccEESS!! sAm
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#9
Thursday, February 28, 2008
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It is true that unearned income is a liability and will be reflected in the balance sheet. In the next year when we have actually rendered the services, then this liability will convert into income by this entry
Dr. Unearned Commission Cr. Commission income Drawing is not an expense of the business, but a reduction in capital. If goods are taken out of the business for personal use, then the entry will be Dr. Drawings Cr. Purchases The whole amount in the drawings account is closed to the capital account at year end Dr. Capital Cr. Drawings The above two entries could have been combined like this Dr. Capital Cr. Purchases Well, sAm, for a better understanding of all this stuff, you can read the Accounting book of Meigs and Meigs.
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