Adjusted Purchases and Closing Stock
If the amount of the closing stock is already known and is recorded in the books, it is given in the Trial Balance itself. If it is so, it means that both the opening as well as closing stocks have been adjusted in the purchases. Therefore, the opening stock will not appear in the Trial Balance but only the adjusted purchases and closing stock will appear. Adjusted purchases is ascertained by adding the opening stock to net purchases (ie., cash purchases + Credit purchases - purchases returns) and subtracting the closing stock there from. In other words, Adjusted purchases = Net Purchases + Opening Stock - Closing stock. In such a situation, adjusted purchases is shown on the debit side of the Trading Account but the closing stock is not shown on the credit side of the Trading Account because it already stands adjusted in purchases, ie., deducted from the total amount of the Opening Stock and purchases. The closing stock will be shown only on the assets side of the Balance Sheet under Current Assets.