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.

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 1^st 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 31^st 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

1. Tuition fees still receivable are ₹ 10,000.
2. Salaries still payable are ₹ 30,000.
3. Insurance premium is paid for one year ending 30.09.2008.
4. Rent paid in advance ₹ 4,000.
5. 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 31^st 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 31^st 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

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Notes

Accounting Working Notes

1. 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.
2. 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.
3. 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.
4. Prepaid Rent: The amount paid in advance (₹4,000) is deducted from the rent expense for the current year and listed as an asset.
5. 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.
6. 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.