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There will you disclose the effects of the following adjustments during the preparation of final accounts of a partnership firm :

(1) Closing stock of stationery

(2) Unrecorded credit sales

(3) Commission payable to partner on net profit

(4) Goods withdrawn by partner for personal use.

(5) Interest on debit balance of Partners’ current account

(6) Certain amount is written off from leasehold property

(7) Receivable income (outstanding income)

(8) Prepaid expenses

(9) Discount reserve on debtors.

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Adjustments Treatment
(1) Closing stock of stationery (i) Will be deducted from stationery expense, on the debit side of Profit and Loss A/c.

(ii) On asset side of Balance sheet, as closing stock of stationery.

(2) Unrecorded Credit sales (i) Will be added to sales A/c, on the credit side of Trading A/c

(ii) Will be added to debtors, on asset side, in Balance-sheet.

(3) Commission payable to partner on net profit. (i) Debit side of profit and loss Appropriation A/c

(ii) Credit side of Partner’s capital/current A/c

(4) Goods withdrawn by partner for personal use (i) Will be deducted from purchase A/c, on debit side of Trading A/c.

(ii) Debit side of partners’ capital/current A/c.

(5) Interest on debit balance of partner’s current account (i) Debit side of partners current A/c

(ii) Credit side of profit-loss Appropriation A/c.

(6) Certain amount is written off from leasehold property. (i) Debit side of Profit and Loss A/c. leasehold asset written off.

(ii) Deducted from leasehold asset on asset side of balance sheet.

(7) Receivable income (Outstanding income) (i) Will be added to respective income, on credit side of Profit and Loss A/c.

(ii) Balance sheet -Asset side.

(8) Prepaid expense (i) Will be deducted from respective expense, on debit side of Trading A/c or on debit side of Profit and Loss A/c.

(ii) Balance sheet -Asset side.

(9) Discount reserve on debtors (i) Debit side of Profit and Loss A/c

(ii) Will be deducted from debtors, on asset side of Balance sheet.

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