Accounting Adjustments examples

At the end of financial year, there are lots of accounting adjustments which we need to do in the financial statements. For this purpose, we pass the adjustment journal entries. By taking, artificial figures, we are teaching the examples of main accounting adjustments.


1. Closing Stock at the end of year = Rs. 10,000

Adjustment Entry

Closing Stock Account Dr. 10000

Trading Account Cr. 10000

Treatment in Trading Account 

Shown Rs. 10000 closing stock  on the credit side of trading account

Treatment in Profit and Loss Account 

No

Treatment in Balance Sheet 

Shown Rs. 10,000 closing stock on the assets side


2. Outstanding expenses ( wages Rs. 15000+ salary Rs. 5000) = Rs. 20,000

Adjustment Entry

Wages   Account Dr. 15000

Salary Account Dr. 5000

Outstanding Wages  Account  Cr. 15000

Outstanding Salary  Account  Cr. 5000


Treatment in Trading Account 

If outstanding expense is direct expense, then it will add to respective direct expenses. For example, Rs. 15000 is outstanding wages, it will add in wages account in the debit side of trading account.

Treatment in Profit and Loss Account 

balance Rs. 5000 is of outstanding salary which will add in salary account in the debit side of profit and loss account

Treatment in Balance Sheet 

Shown total outstanding expenses on the liabilities side of balance sheet.

3. Prepaid Expenses ( Carriage inward Rs. 12000 + Carriage outward Rs. 10000) = Rs. 22000

Adjustment Entry


Prepaid Carriage Inward   Account Dr. 12000

Prepaid Carriage Outward Account Dr. 10000

Carriage Inward  Account  Cr. 12000

Carriage Outward   Account  Cr. 10000


Treatment in Trading Account 

If prepaid  expense is direct expense, then it will deduct  to respective direct expenses. For example, Rs. 12000 is prepaid carriage inward, it will deduct from carriage inward  account in the debit side of trading account.

Treatment in Profit and Loss Account 

balance Rs. 10000 is of prepaid carriage outward  which will deduct from carriage outward  account in the debit side of profit and loss account

Treatment in Balance Sheet 

Shown total prepaid  expenses on the asset  side of balance sheet.

4. Depreciation of  Office Machine = Rs. 40000

Adjustment Entry


Depreciation of Office Machine Account Dr. 40000


Machine  Account  Cr. 40000


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Shown Depreciation Rs. 40,000 in the debit side of profit and loss account.

Treatment in Balance Sheet 

Deducted Rs. 40000 depreciation from machine in asset side of balance sheet.


5. Accrued Income = Rs. 5000


Adjustment Entry


   Accrued Income Account Dr. 5000


 Income Account  Cr.


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Added Rs. 5000 to respective income on credit side.


Treatment in Balance Sheet 

Shown Rs. 5000 on the asset  side of balance sheet.

6. Unearned Income = Rs. 7000

Adjustment Entry


Income  Account Dr. 7000


Unearned Income  Account  Cr. 7000


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Deducted Rs. 7000 from respective income on credit side of profit and loss account.

Treatment in Balance Sheet 

Shown total  unearned income on the liabilities  side of balance sheet.

7. Interest on Capital = Rs. 20000

Adjustment Entry


Interest on capital account Dr. 20000

Capital Account Cr. 20000


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Shown Rs. 20000 interest on capital  on debit side of profit and loss account


Treatment in Balance Sheet 

Added to the capital on the liabilities side.


8. Interest on Drawing = Rs. 15000

Adjustment Entry


Drawing Account Dr. 15000

Interest on Drawing Account Cr. 15000


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Shown on the Credit side of profit and loss account

Treatment in Balance Sheet 

Added to drawing and then deducted from capital in the liabilities side of balance sheet.


9. Interest on Loan = Rs. 24000

Adjustment Entry


Interest on Loan Account Dr.

Loan Account Cr.


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Shown on the debit side of profit and loss account

Treatment in Balance Sheet 

Added to Loan on the liabilities side of balance sheet.


10. Bad Debts = Rs. 60000

Adjustment Entry


Bad debts account Dr. 60000

Debtors Account ( Mohan+Sohan +Sita ) Cr. 60000


Treatment in Trading Account 

No

Treatment in Profit and Loss Account 

Added to bad debts Rs. 60000  (given in the trial balance ) on the debit side of profit and loss account.


Treatment in Balance Sheet 

Deducted Rs. 60,000 from debtors on the assets side of balance sheet.

Related : Adjustments of Final Accounts 

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Accounting Education: Accounting Adjustments examples
Accounting Adjustments examples
Accounting Education
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