Question

Where will you disclose the effects of the following adjustments during the preparation of final accounts of a partnership firm ?

(1) Goods given for advertisement.

(2) Unrecorded purchase

(3) Interest on credit balance of current account of partner

(4) Pre received income.

(5) Outstanding /unpaid expenses

(6) Discount reserve on creditors 

7) Interest on drawings of a partner.

(8) Provision for doubtful debts

(9) Interest on loan given by partner to the firm

(10) Depreciation on assets.

Answer 1

Effects of adjustments :

(1) Goods given for advertisement	– On debit side of profit and loss A/c (As adv. Exp.) – On debit side of Trading A/c Subtract it from purchase A/c
(2) Unrecorded purchase	– On debit side of Trading A/c (Added it to purchase A/c) – On capital-Liability side of Balance sheet (Add it to creditors)
(3) Interest on credit balance of current account of a partner	– On debit side of profit and loss Appro. A/c – On credit side of partners current A/c
(4) Pre received income	– On credit side of profit and loss A/c (Subtract it from respective income) – On capital-Liability side of Balance sheet
(5) O/s or unpaid expense	– On debit side of Trading /profit- loss A/c (Add it to respective expense) – On capital-liability side of Balance sheet
(6) Discount reserve on creditors	– On credit side of profit and loss A/c – On capital -Liability side of Balance sheet (Add it to creditors)
(7) Interest on drawings of a partner	– On debit side of capital/ current A/c – On credit side of profit-loss Appro. A/c
(8) Provision for doubtful debts	– On debit side of profit-loss A/c – On Asset-receivable side of Balance sheet (Subtract it from debtors)
(9) Interest on loan given by partner to the firm	– On debit side of profit-loss A/c – On capital-liability side of Balance sheet
(10) Depreciation on asset	– On debit side of profit-loss A/c – On Asset-receivable side of Balance sheet (Subtract it from respective asset)