Illustration Problems with Solutions - Adjustment entries and accounting treatment of adjustments

Illustration 1

Show necessary entries to adjust the following on 31st December, 2017.

i.               Outstanding salaries Rs.  1,200

ii.               Outstanding rent Rs.  300

iii.               Prepaid insurance premium Rs.  450

iv.               Interest on investments accrued Rs.  400

v.               Bad debts written off Rs.  200

Solution

Illustration 2

Pass adjusting entries for the following on 31st March, 2018.

i.               Charge interest on drawings at Rs.  50

ii.               Write off bad debts by Rs.  500

iii.               Depreciate furniture by Rs.  1,000

Solution

Illustration 3

Sundry debtors as per trial balance as on 31^st March, 2016 is Rs.  10,000.

Adjustment: Write off bad debts amounting to Rs.  300.

Give adjusting entry and show how these appear in the final accounts as on 31st March, 2016.

Solution

Illustration 4

Sundry debtors as per trial balance Rs.  26,000

Bad debts as per trial balance Rs.  1,000

Adjustment: Additional bad debts amounted to Rs.  2,500

Give adjusting entry and show how these appear in the final accounts on 31st March, 2016.

Solution

Illustration 5

An abstract of the trial balance as on 31st December, 2016 is as follows:

Particulars Rs.

Sundry Debtors    20,000

Bad debts   500

Adjustment: Create a provision for bad and doubtful debts @ 5% on sundry debtors. Pass the adjusting entry and show how these items will appear in final accounts.

Solution

Provision for bad and doubtful debts = Rs.  20,000 x 5/100 = Rs.  1,000

Illustration 6

Abstracts from the trial balance as on 31st March, 2016:

Adjustments:

i.               Additional bad debts Rs.  2,000

ii.               Create 5% provision for bad and doubtful debts

You are required to pass necessary adjusting entries and show how these items will appear in final accounts.

Solution

Working note:

Provision for bad and doubtful debts = ` 50,000 x 5/100 = Rs. 2,500

Illustration 7

Abstracts from the trial balance as on 31st December, 2016:

Adjustments:

i.               Additional bad debts amounted to Rs.  4,000.

ii.               Create a provision for bad and doubtful debts @ 5% on sundry debtors.

Pass necessary adjusting entries and show how the different items appear in final accounts.

Solution

Working note:

Provision for bad and doubtful debts = Rs.  1,00,000 x 5/100 = Rs.  5,000

Illustration 8

Abstracts from trial balance as on 31st December, 2016 are as follows:

A provision for doubtful debts @ 5% and a provision for discount @ 2% on sundry debtors are to be maintained by the trader. Show how these items would appear in the final accounts.

Solution

Working note: