Following is the Balance sheet and receipts and payments account of the Memorial Hospital, Sawantwadi. Prepare Income and expenditure account for the year ended on 31.3.2010 and the balance sheet as on that date. (March 2011)

Balance sheet as on 1.4.2009

Liabilities	Rs.	Assets	Rs.
Capital fund	1004000	Cash in hand	6000
Outstanding		Cash at bank	34000
Salaries	22000	Land and Building	800000
Medicine Bill unpaid	6000	Furniture	70000
		Equipments	120000
		Outstanding Subscriptions	2000
	1032000		1032000

Receipt and payments account For the year ending 31.3.2010

Receipts	Amount (Rs.)	Payments	Amount (Rs.)
To Balance b/d		By Salaries (including of the previous year)	110000
Cash in hand	6000	By Medicines	52000
Cash at bank	34000	By Equipments purchases	20000
To subscription (includes Rs. 2000 received for previous year)	130000	By Taxes	3000
to Sale of Furniture (Book Value Rs. 30000)	20000	By General Expenses	8600
To Donations (Revenue)	44000	By Balance C/d
To Life membership Fees	25000	Cash in Hand	15400
		Cash at bank	50000
	259000		259000

Consider the following adjustments.

1.    Outstanding subscription Rs. 12000.

2.    Capitalize the amount of membership fees.

3.    Prepaid taxes Rs. 500.

4.    Outstanding Salary Rs. 12000.

5.    Write off depreciation Rs. 20000 from Land and Building and Rs. 30000 from Equipments.

6.    Outstanding Medicine bill as on 1.4.09 is still due.

Solution: In the books of Memorial Hospital, Sawantwadi.

Income and Expenditure A/c for the year ended 31.03.10

Expenditure	Amount	Amount	Income	Amount	Amount
To Loss on sale of Furniture		10000	By Subscription	130000
To Salaries	110000		(-) Last year Amount	-2000
(-) Last Year Amount	-22000			128000
	88000		(+) Outstanding	12000	140000
(+) Outstanding	12000	100000	By Donations		44000
To Medicines		52000
To Taxes	3000
(-) Prepaid	-500	2500
To General Expenses		8600
To Depreciation
Land & Building	20000
Equipments	30000	50000	By Deficit [Expenditure Over Income]		39100
		223100			223100

Balance Sheet as on 31.03.10

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	1004000		Furniture		40000
(+) Membership Fees	25000		Equipments	140000
	1029000		(-) Depreciation	-30000	110000
(-) Deficit	39100	989900	Cash in hand		15400
Outstanding Medicine Bill of Last Year		6000	Cash at bank		50000
Life Membership Fees	25000		Land & Building	80000
(-) Capitalisation	-25000	NIL	(-) Depreciation	20000	780000
Outstanding Salaries of Current Year		12000	Outstanding Subscription of Current year		12000
			Prepaid Taxes		500
		1007900			1007900