From the following Balances of Jayashri Traders, you are required to prepare Trading Account for the year ended 31/03/2019

Particulars	Debit   Amount (₹)	Credit  Amount (₹)
Opening Stock	41,000
Purchases	59,000
Purchases Returns		7,000
Sales Returns	1,600
Sales		1,03,000
Wages	3,400
Carriage Inward	1,000
Royalty	4,000
Total	1,10,000	1,10,000

 
 Closing Stock ₹ 40,000 

Solution：  

In the Books of Jayashri Traders for the year ended 31st March 2019.

Trading Account 

Particulars	Amount      (₹)	Amount         (₹)	Particulars	Amount           (₹)	Amount         (₹)
To Opening Stock		41,000	By Sales  (-) Sales Return	1,03,000  (1,600)	1,01,400
To Purchase  (-) Purchase Return	59,000  (7,000)	52,000
To Wages		3,400
To Carriage inward		1,000
To Royalty		4,000	By Closing Stock		40,000
To Gross Profit		40,000
		1,41,400			1,41,400

Explanation：

1) Opening Stock

Opening Stock is a number of goods in the organization. Opening Stock is always comes in debit side of Trading account because Trading account is made to record the all trading activities. 

Journal Entry for Opening Stock：

Trading A/c       Dr.

    To Opening Stock A/c

2) Purchase and Purchase Return

When goods bought in business in accounts we write Purchase and Sometimes certain goods get damage or supplied extra goods we write Purchase Return. As we have done Trade of goods therefore Purchase and Purchase Return are debited to debit side of Trading Account.

Journal Entry for Purchase and Purchase Return：

A) Trading A/c       Dr.

            To Purchase A/c

B)  Purchase Return A/c       Dr.

            To Trading A/c

We Subtract Purchase Return from Purchase because the number of goods which are return are to be less from the goods are bought.

3) Sales and Sales Return

When goods are sold we write Sales and the goods which are sold and return into business are Sales Return. As it is also a trade of goods therefore credited to credit side.

Journal Entry for Sales and Sales Return

A) Sales A/c       Dr.

          To Trading A/c 

B) Trading A/c        Dr.

          To Sales Return A/c

4) Wages, Carriage inward and Royalty.

Wages, Carriage inward and Royalty are the expenses of Trading Activities. Therefore stated in Trading Account.

Journal Entry for Wages, Carriage inward and Royalty.

Trading A/c       Dr.

      To Wages A/c

      To Carriage inward A/c

      To Royalty A/c

5) Closing Stock 

Closing Stock is the number of goods which are unsold for the given date.

Journal Entry for Closing Stock 

Closing Stock A/c     Dr.

      To Trading A/c

6) Gross Profit 

Gross Profit is the amount of which is incurred from Trade before others revenue.

Trading A/c         Dr.

      To Profit & Loss A/c

(Being Gross Profit transferred to Profit & Loss A/c)