2. Transferring items on the credit side such as sales, purchase returns and closing stock.

Since all the above items are credit balances in the trial balance, we need to transfer them to the credit side of the Trading A/c. Hence, we credit the Trading A/c and debit all these accounts thereby closing these accounts and transferring the balances to the Trading A/c.

Sales A/c    Dr. xxx
Purchase Returns A/c  Dr. xxx
Closing Stock A/c  Dr. xxx 
To Trading A/c    xxx

(Being transfer of sales, purchase returns and closing stock to the Trading A/c)

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