Simulation 1
How to Build Final Accounts
Trading and Profit and Loss Account
Horizontal Format
Illustrating posting of entries from the ledger accounts
(No Closing Stock)
Purchases
Bal b/d
Sales
600
Bal b/d
Rturns Outwards
Bal b/d
Returns Inwards
150
Bal b/d
Rent
Bal b/d
1200
300
Wages
100
Bal b/d
500
Rent received
Bal b/d
300
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Trading and Profit and Loss Account
for the month ending 31 March
Purchases
Sales
Returns Inwards
Returns outwards
Gross Profit c//d
Rent
Gross Profit b/d
Wages
Rent received
Net Profit
Would the Gross Profit be higher or lower if
there were closing stock?
Why?
How would we show this in the double entry accounts?
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Trading and Profit and Loss Account
Horizontal Format
(No stock balance at the start of the month.
Closing stock: Balance of £100 c/d)
Stock
Bal b/d
0
Trading
Bal c/d
Bal b/d
Trading and Profit and Loss Account
for the month ending 31 March
Purchases
Sales
Returns Inwards
Returns outwards
Gross Profit c//d
Closing Stock
Rent
Gross Profit b/d
Wages
Rent received
Net Profit
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Balance Sheet
Horizontal Format
Illustrating posting of entries from the ledger accounts
(No Closing Stock)
Motor vehicles
Bal b/d
Capital
20,000
Bal b/d
Debtors
Bal b/d
Drawings
350
Bal b/d
Bank
Bal b/d
50,000
500
Cash
39,100
Bal b/d
Loan
350
Creditors
Bal b/d
10,000
Bal b/d
150
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Balance Sheet as at 31 March
£
£
Fixed Assets
Capital (1 Mar)
Motor vehicles
add Net Profit
Current Assets
less Drawings
Stock
0
Debtors
Long term Liabilities
Bank
Loan
Cash
Current Liabilities
Creditors
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Balance Sheet
Horizontal Format
(No stock balance at the start of the month.
Closing stock: Balance of £100 c/d)
Balance Sheet as at 31 March
£
£
£
Fixed assets
Capital (1 Mar)
Motor vehicles
add Net Profit
Current Assets
less Drawings
Stock
Debtors
Long term Liabilities
Bank
Loan
Cash
Current Liabilities
Creditors
Assets have increased.
How is it that the Accounting Equation still holds true?
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Trading and Profit and Loss Account
Alternative Horizontal Format
(No stock balance at the start of the month.
Closing stock: Balance of £100 c/d)
Stock
Bal b/d
0
Trading
Bal b/d
100 Bal c/d
100
100
100
100
Trading and Profit and Loss Account
for the month ending 31 March
Cost of goods sold
Sales
Purchases
Less returns Inwards
less Returns Outwards
less Closing Stock
Gross profit c/d
Rent
Gross Profit b/d
Wages
Rent received
Net Profit
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Trading and Profit and Loss Account
Vertical Format
(No stock balance at the start of the month.
Closing stock: Balance of £100 c/d)
Trading and Profit and Loss Account
for the month ending 31 March
£
£
Sales
Less Returns Inwards
Less Cost of Goods Sold
Purchases
Less Returns Outwards
Less Closing Stock
Gross profit
Rent received
Less Exenses
Rent
Wages
Net Profit (Loss)
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com
Simulation 1
Balance Sheet
Vertical Format
Closing stock: Balance of £100 c/d)
Balance Sheet as at 31 March
£
£
Fixed Assets
Motor vehicles
Current Assets
Stock (31 March)
Debtors
Bank
Cash
Less Current Liabilities
Creditors
Net Current Assets (or Working Capital )
Less Long Term Liabilities
Loan
Net Assets
Financed by:
Capital (1 March)
add Net Profit
Less Drawings
Copyright ©2003 Ken Edwards. All rights reserved. www.accounting-is-fun.com
PDF created with pdfFactory trial version www.pdffactory.com