Accounting Problem: Vidya Mandir High School
From the following Balance Sheet and Receipts and Payments A/c of Vidya Mandir High School, Alibag, prepare Income and Expenditure Account for the year ended 31st March, 2008 and Balance Sheet as on that date.
Balance Sheet as on 1st April, 2007
Liabilities | Amount (₹) | Assets | Amount (₹) |
---|---|---|---|
Entrance Fees | 6,000 | Furniture | 16,800 |
Capital Fund | 1,03,800 | Laboratory | 20,000 |
Library | 25,000 | ||
Investment | 40,000 | ||
Cash in hand | 1,000 | ||
Cash at bank | 3,000 | ||
Outstanding Tuition Fees | 4,000 | ||
Total | 1,09,800 | Total | 1,09,800 |
Receipts and Payments A/c for the year ended 31st March, 2008
Receipts | Amount (₹) | Payments | Amount (₹) |
---|---|---|---|
To Balance b/d: | By Furniture Purchased | 5,400 | |
Cash in hand | 1,000 | By Salaries | 60,000 |
Cash at bank | 3,000 | By Rent | 28,000 |
To Tuition Fees | 80,000 | By Sundry Expenses | 15,200 |
To Term Fees | 26,200 | By Annual Gathering Expenses | 11,300 |
To Government Grant | 16,000 | By Insurance | 4,000 |
To Donation for Library | 30,000 | By Closing Balance: | |
To Interest on Investment | 2,000 | Cash at Bank | 34,300 |
Total | 1,58,200 | Total | 1,58,200 |
Adjustments
- Tuition fees still receivable are ₹ 10,000.
- Salaries still payable are ₹ 30,000.
- Insurance premium is paid for one year ending 30.09.2008.
- Rent paid in advance ₹ 4,000.
- Depreciate furniture and library at 10% on the closing balances of the assets.
Solution: In the Books of Vidya Mandir High School, Alibag
Income & Expenditure A/c for the Year Ended 31st March, 2008
Expenditure (Dr.) | Amount (₹) | Income (Cr.) | Amount (₹) |
---|---|---|---|
To Salaries Add: Outstanding | 60,000 30,000 90,000 |
By Tuition Fees Less: O/s Last YearAdd: O/s Current Year | 80,000 (4,000) 10,000 86,000 |
To Rent Less: Prepaid | 28,000 (4,000) 24,000 |
By Term Fees | 26,200 |
To Sundry Expenses | 15,200 | By Government Grant | 16,000 |
To Annual Gathering Expenses | 11,300 | By Interest on Investment | 2,000 |
To Insurance Less: Prepaid (6 months) | 4,000 (2,000) 2,000 |
By Deficit | |
To Depreciation On FurnitureOn Library | 2,220 2,500 4,720 |
(Excess of Expenditure over Income transferred to Capital Fund) | 17,020 |
Total | 1,47,220 | Total | 1,47,220 |
Balance Sheet as on 31st March, 2008
Liabilities | Amount (₹) | Assets | Amount (₹) |
---|---|---|---|
Capital Fund Less: Deficit | 1,03,800 (17,020) 86,780 |
Furniture Add: New PurchaseLess: Depreciation @ 10% | 16,800 5,400 (2,220) 19,980 |
Entrance Fees | 6,000 | Laboratory | 20,000 |
Library Fund (Donation) | 30,000 | Library Less: Depreciation @ 10% | 25,000 (2,500) 22,500 |
Outstanding Salaries | 30,000 | Investment | 40,000 |
Cash at Bank | 34,300 | ||
Outstanding Tuition Fees | 10,000 | ||
Prepaid Insurance | 2,000 | ||
Prepaid Rent | 4,000 | ||
Total | 1,52,780 | Total | 1,52,780 |
Notes for Students
This section explains the accounting treatments and the technical improvements made to this page.
Accounting Working Notes
- Tuition Fees: Last year’s outstanding fees (₹4,000) received this year are removed from the current year's income. The current year's outstanding fees (₹10,000) are added to income and shown as an asset.
- Salaries: Outstanding salaries (₹30,000) are an expense for this year, so they are added to the salaries paid and also shown as a liability on the Balance Sheet.
- Prepaid Insurance: The policy ends on 30.09.2008, which is 6 months into the next financial year. Therefore, 6 months of the premium is prepaid. Calculation: (₹4,000 / 12 months) * 6 months = ₹2,000. This is deducted from the expense and shown as an asset.
- Prepaid Rent: The amount paid in advance (₹4,000) is deducted from the rent expense for the current year and listed as an asset.
- Depreciation: Calculated at 10% on the closing balance of the assets. Furniture: 10% of (₹16,800 Opening + ₹5,400 New) = 10% of ₹22,200 = ₹2,220. Library: 10% of ₹25,000 = ₹2,500.
- Entrance Fees: Since this was in the opening Balance Sheet, it is treated as capitalized and is carried forward to the closing Balance Sheet's liability side.
Page & Code Improvements
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