Learn-Accounting and Computer: November 2016

Example 2

M/s A &S Enterprise

Trial Balance

As on 31^st Dec 2014

Particulars	Debit	Credit
Stock as at 1^st Jan 2014	28,000
Capital		500,000
Drawings	12,000
Cash	13,500
Bank A/c	47,600
Creditors A/c		38,300
Debtors A/c	45,500
Furniture A/c	200,000
Machinery A/c	325,000
Purchase A/c	127,000
Purchase return A/c		4,800
Sales A/c		278,000
Sales return A/c	5,600
Salary A/c	8,000
Discount A/c		1,500
Rent A/c	8,500
Insurance A/c	1,250
Carriage A/c	850
Bad debts A/c	1,250
Provision for bad debts A/c		2,150
Freight A/c	700
	824,750	824,750

Adjustments

1. Closing stock was valued at Rs. 34,000

2. Outstanding Salary Rs. 2,000 and Outstanding Rent Rs. 1,000

3. Prepaid Insurance Rs. 250

4. Write off Rs. 500 as further Baddebts

5. Provide provision for bad debts at 5% on debtors

6. Depreciate Machinery at 10% and Furniture at 5%

From desk top open Tally,

Then you will get Company information window. If you get Gateway of Tally, Press Alt + F1 to close the company

Then create a new company using the option create company. See the fig.

Give company name and other details.

After creating company, create every ledgers from Accounts info- Ledgers- in multi ledgers, create

Then you will get multiple ledger creation windows. Then create every ledger except cash like the picture given below

after this save it by pressing Ctrl+ A

for giving the amount of cash,
in single ledger select Alter- then select cash
in opening Balance give the amount of Cash Rs. 13,500 see the Picture.

After that check the Trial Balance from Gateway of Tally- Display- Trial Balance then press F5 for ledger wise display

See the adjustments

1. Closing stock was valued at Rs. 34,000

For giving the value of closing stock, from Gateway of Tally- Accounts info- Ledgers- Alter- Stock(which you already given), then in closing balance give company date ie 01-04-2014 and accept it by pressing enter key

2. Outstanding Salary Rs. 2,000 and Outstanding Rent Rs. 1,000

Outstanding expense means expense due but not paid. So it is a liability to the business. So it shown on the liability side if the Balance sheet and in Trading and profit or Loss A/c it should be added to the concerned expenses. The journal entry is that,

Expense A/c ………………………….Dr

Outstanding expense

In this example salary and rent are outstanding. So the journal entry for this,

Salary A/c …………………………….Dr

Outstanding Salary A/c

In Tally you should give the journal entry.

From Gateway of Tally Accounting Voucher

Every adjustment are non cash transactions. So select Journal voucher by pressing F7

Here in

Dr. Salary A/c 1000

Cr. Outstanding Salary A/c 1000

for creating Outstanding salary Press Alt + C( it is the short cut key for secondary ledger creation) outstanding salary under the head of current liabilities

Prepaid insurance Rs 250

Prepaid expanse means expense paid in advance. So it is an asset to the business so it shown on the asset side of the balance sheet. In the trading and profit or loss account, it will be deducted from the concerned expense. The journal entry is that,

Prepaid expense A/c………………. Dr.

Expenses A/c

The above example,

Dr. prepaid insurance (current asset)

Cr. Insurance

For creating prepaid insurance press ALT +C and create it under the of current asset

Write off Rs 500 as further bad debts

Bad debts refer to irrecoverable portion of sundry debtors. That is the amount that the form has not been able to realize from its debts. It is regarded as a loss and shown on the debit side of the Profit& Loss A/c. In the Balance sheet it deducted from Sundry Debtors. The journal entry is that,

Bad debts A/c…………..Dr

Sundry debtors

Provide provision for bad debts @ 5% on sundry debtors

It is a normal course business operation that sum debts prove irrecoverable, which means that the amount to be realized from them becomes bad. In view of this, an attempt is made to bring in certain element of certainty in the amount irrespect of bad debts charged every year against income. This attempt takes the form of maintaining a provision designed to cover the loss of bad debts is called provision for bad debts. It created from sundry debtors. So in the balance sheet it deducted from sundry debtors. It is an expense to the business, so it shown on the debit side of profit & loss A/c. the journal entry is that,

Provision for bad debts A/c ………….Dr.

Sundry debtors

In the above example,

Dr Provision for bad debts A/c

Cr sundry debtors A/c

For calculating the amount of provision, press ALT+ C on the amount column, it will be activated the calculator area. Here you should type (45500-500)*5% then press enter key then you will get the correct amount on the amount column

Depreciate machinery @10% and furniture @5%

Depreciate means declining value of asset due to wear & tear or usage or passage of time. It is business expenditure, so it shown on the debit side of the profit or Loss A/c. in the balance sheet, it is deducted from the concerned asset. The journal entry is that,

Depreciation A/c ……………Dr,

Fixed asset A/c

In the above example,

Dr. Depreciation on machinery A/c (under indirect expense)

Cr. Machinery A/c

For calculating amount press ALT+C on the amount column, then type 325000*10% then press enter key.

Depreciation on furniture

Dr. Press ALT +c depreciation on furniture A/c press ALT +C 200000*5%

Cr. furniture A/c

Result

Gate way of tally- profit & Loss A/c

For detailed result press ALT +F1

For close this window ESC key

Balance sheet

Gate way of tally- Balance sheet for detailed result Press ALT +F1

If you want to check the Trail Balance

Gate way of tally –display-trail balance

For detailed result press ALT +f1

For ledger wise display Press F4

If you want to see the journal entry-

Gate way of tally- display –day book

Pages

Example 2