Dr. Arjun Patil - Financial Statements

Dr. Arjun Patil commenced Medical practice on 1.4.2006. He has prepared the following Receipts and payments account for the year ended 31.3.2007. [September, 2009]

Receipts and Payments Account for the year ended 31^st March 2007

Receipts	Amount (Rs.)	Payments	Amount (Rs.)
To Cash Introduced (Capital Fund)	30,000	By Furniture	40,000
To Income from Visits	40,000	By Honorarium to Doctor	10,000
To Receipts from Dispensary	80,000	By Equipments	50,000
To Miscellaneous receipts	1,000	By Purchase of Drugs	10,000
To Interest on Investments	500	By Compounder's Salary	12,000
To Receipts from Operation Fees	10,000	By Rent of Dispensary	6,000
		By Conveyance Charges	2,000
		By Stationery	600
		By Operation Expenses	8,000
		By Lighting	400
		By Journals and Newspapers	800
		By Telephone Expenses	500
		By Investments	7,200
		By Balance c/d (Cash)	14,000
TOTAL	1,61,500	TOTAL	1,61,500

Adjustments

i. Rs. 5,000 were still to be received on account of the visits.

ii. Compounder's salary of Rs. 3,000, Bill of stationery Rs. 1,000 and Rent of dispensary Rs. 1,000 are outstanding.

iii. 25% amount of conveyance charges were for private use.

iv. Stock of Drugs on hand was estimated at Rs. 2,000.

v. Furniture and Equipments are to be depreciated at 10%.

Required: Prepare Income and Expenditure Account for the year ended 31^st March 2007 and Balance Sheet as on that date from the above information.

Solution: In the books of Dr. Arjun Patil

Income and Expenditure Account for the year ended 31^st March 2007

Expenditure	Details (Rs.)	Amount (Rs.)	Income	Details (Rs.)	Amount (Rs.)
To Honorarium to Doctor		10,000	By Income from Visits	40,000
To Drugs Consumed:			(+) Outstanding	5,000	45,000
Purchase of Drugs	10,000		By Receipts from Dispensary		80,000
(-) Closing Stock	(2,000)	8,000	By Miscellaneous Receipts		1,000
To Compounder's Salary	12,000		By Interest on Investment		500
(+) Outstanding	3,000	15,000	By Receipts from Operation Fees		10,000
To Rent of Dispensary	6,000
(+) Outstanding	1,000	7,000
To Conveyance Charges	2,000
(-) Drawings (25%)	(500)	1,500
To Stationery	600
(+) Outstanding	1,000	1,600
To Operation Expenses		8,000
To Lighting		400
To Journals & Newspapers		800
To Telephone Expenses		500
To Depreciation:
Furniture (10% on 40,000)	4,000
Equipments (10% on 50,000)	5,000	9,000
To Surplus (Excess of Income over Expenditure)		74,700
TOTAL		1,36,500	TOTAL		1,36,500

Balance Sheet as on 31^st March 2007

Liabilities	Details (Rs.)	Amount (Rs.)	Assets	Details (Rs.)	Amount (Rs.)
Capital Fund (Opening)	30,000		Furniture	40,000
(-) Drawings (Conveyance)	(500)		(-) Depreciation (10%)	(4,000)	36,000
	29,500		Equipments	50,000
(+) Surplus	74,700	1,04,200	(-) Depreciation (10%)	(5,000)	45,000
Outstanding Expenses:			Investments		7,200
Salaries	3,000		Cash Balance (from R&P A/c)		14,000
Rent	1,000		Outstanding Income (Visits)		5,000
Stationery	1,000	5,000	Stock of Drugs		2,000
TOTAL		1,09,200	TOTAL		1,09,200

Difficult Words & Meanings

Commenced:Started or began.

Receipts and Payments Account:A summary of cash and bank transactions over a period, showing money received (receipts) and money paid out (payments).

Honorarium:A voluntary payment given to a person for services for which fees are not legally or traditionally required.

Dispensary:A place where medicines are prepared and given out, often part of a doctor's clinic or hospital.

Miscellaneous:Consisting of various items or types that are not easily categorized.

Investments:Assets purchased with the hope that they will generate income or appreciate in value in the future.

Compounder:A person who prepares and dispenses medicines; similar to a pharmacist's assistant.

Conveyance:The cost of travel or transportation.

Stationery:Writing materials like paper, pens, envelopes, etc.

Adjustments:Changes made to accounts at the end of an accounting period to accurately reflect income, expenses, assets, and liabilities.

Outstanding:Not yet paid (for expenses) or not yet received (for income) by the end of the accounting period.

Depreciation:The decrease in the value of an asset over time due to use, wear and tear, or obsolescence.

Income and Expenditure Account:A financial statement for non-profit organizations (or professionals) showing income earned and expenses incurred during a period, resulting in a surplus or deficit. Similar to a Profit & Loss Account.

Balance Sheet:A financial statement that shows a company's or individual's assets, liabilities, and capital (or equity) at a specific point in time.

Capital Fund:The initial and accumulated capital or net worth of a non-profit organization or professional.

Surplus:The amount by which income exceeds expenditure.

Liabilities:A company's or individual's financial debts or obligations.

Assets:Resources with economic value that an individual or company owns or controls with the expectation that they will provide future benefit.

Drawings:Money or goods withdrawn by the owner from the business for personal use.

Dr. Arjun Patil commenced Medical practice on 1.4.2006. He has prepared the following Receipts and payments account for the years 31.3.2007. [September, 2009]