Dr. Subhash Raje started practice as a medical practitioner on 1st April, 2007. He gives you the Receipts & Payments Accounts for the year 2007 – 08 and the adjustments to be made. Prepare his Income and Expenditure Account and Balance sheet for 2007 -08.

Receipts and payments account for the year ended 31^st March, 2008.

Receipts	Amount	Payments	Amount
To Cash Introduced	107500	By Furniture	50000
To Visits	84000	By Equipment	40000
To Receipts From Dispensary	64000	By Drugs	35000
To Sundry Receipts	12000	By Salary	24000
		By Rent	6000
		By Conveyance	18000
		By Stationery	5600
		By Lighting	10000
		By Journals	1200
		By Drawings	37700
		By Balance C/f	40000
	267500		267500

Adjustments:

1.    Receipts in arrears are: Visits Rs. 11,500 and Dispensary Rs. 9,000.

2.    The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are also Rs. 3,000.

3.    40% of the amount spent on conveyance was for domestic use.

4.    Stock of drugs in hand at the close of the year was worth Rs. 4,200.

5.    Depreciate furniture at 5% p.a. and equipment at 10% p.a.  Furniture and equipment purchased on 1^st April 2007.

Solution: In the books of Dr. Subhash Raje

Income and Expenditure A/c for the year ended 31.03.08

Expenditure	Amount	Amount	Income	Amount	Amount
To Drugs	30800		By Visits	84000
(+) Outstanding	3000	33800	(+) Outstanding	11500	95500
To Salary	24000		By Receipts from Dispensary	64000
(+) Outstanding	1800	25800	(+) Outstanding	9000	73000
To Rent		6000	By Sundry Receipts		12000
To Conveyances	18000
(-) Drawings	-7200	10800
To Stationery		5600
To Lighting		10000
To Journals		1200
To Depreciation
Furniture	2500
Equipment	4000	6500
To Surplus [Income over Expenditure]		80800
		180500			180500

Balance Sheet as on 31.03.08

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	107500		Furniture	50000
(-) Drawings	-37700		(-) Depreciation	- 2500	47500
	69800		Equipment	40000
(-) Conveyance Drawings	-7200		(-) Depreciation	- 4000	36000
	62600		Stock of Drugs		4200
(+) Surplus	80800	143400	Cash balance		40000
Outstanding			Outstanding
Salary	1800		Visit	11500
Drugs	3000	4800	Dispensary	9000	20500
		148200			148200