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 31^st 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 1^st 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