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 31st 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 31st 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 31st 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 31st 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.