Dr. Shah 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 31st March, 2008.
Receipts
Amount
Payments
Amount
To Cash Introduced
100000
By Furniture
150000
To Visits
100000
By Equipment
20000
To Receipts From Dispensary
54500
By Drugs
15000
To Sundry Receipts
13000
By Salary
4000


By Rent
6000


By Conveyance
8000


By Stationery
5600


By Lighting
10000


By Journals
1200


By Drawings
17700


By Balance C/f
30000

267500

267500
Adjustments:
Receipts in arrears are: Visits Rs. 1,500 and Dispensary Rs. 19,000.
The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are also Rs. 3,000.
50% of the amount spent on conveyance was for domestic use.
Stock of drugs in hand at the close of the year was worth Rs. 200.
Depreciate furniture at 5% p.a. and equipments at 10% p.a.  Furniture and equipment purchased on 1st April 2007.
Solution: In the books of Dr. Shah
Income and Expenditure A/c for the year ended 31.03.08
Expenditure
Amount
Amount
Income
Amount
Amount
To Drugs
14800

By Visits
100000

(+) Outstanding
3000
17800
(+) Outstanding
1500
101500
To Salary
4000

By Receipts from Dispensary
54500

(+) Outstanding
1800
5800
(+) Outstanding
19000
73500
To Rent

6000
By Sundry Receipts

13000
To Conveyances
8000




(-) Drawings
-4000
4000



To Stationery

5600



To Lighting

10000



To Journals

1200



To Depreciation





Furniture
7500




Equipment
2000
9500



To Surplus
[Income over Expenditure]

128100





188200


188200

Balance Sheet as on 31.03.08

Liability
Amount
Amount
Asset
Amount
Amount
Capital Fund
100000

Furniture
150000

(-) Drawings
-17700

(-) Depreciation
-7500
142500

82300

Equipment
20000

(-) Conveyance Drawings
-4000

(-) Depreciation
-2000
18000

78300

Stock of Drugs

200
(+) Surplus
128100
206400
Cash balance

30000
Outstanding Expenses


Outstanding Incomes


Salary
1800

Visit
1500

Drugs
3000
4800
Dispensary
19000
20500


211200


211200