Chapter 2: Accounts of ‘Not for Profit’ Concerns

Balbharati Solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board.


Chapter 2: Accounts of ‘Not for Profit’ Concerns


Select the most appropriate alternative from those given below.


Write the Word/ Term/ Phrase which can substitute of the following statement


State whether the following statement is True or False with reasons


Fill in the blank


Answer in one sentence only.


Find odd one



Complete the Table:

Sr. No.

Income ()

Expenditure ()

Surplus/Deficit ()

1

10,000

___________ ?

5,000 (Deficit)

2

8,000

___________ ?

4,000 (Surplus)

3

___________ ?

15,000

8,000 (Surplus)

4

7,500

9,000

___________ ?

5

15,000

11,300

___________ ?


FOR SOLUTION CLICK HERE


Complete the Table:


Salaries paid during the year


Sr.

No

Total 

Prepaid/Outstanding

Expenditure for the year

1

1,100

Prepaid

100

_____ ?

2

2,700

Prepaid

_____ ?

2,000

3

8,250

Prepaid

_____ ?

6,650

4

1,200

Outstanding

200

_____ ?

5

_____ ?

Outstanding

600

5,100

6

1,800

Outstanding

_____ ?

2,200


FOR SOLUTION CLICK HERE

 

Complete the Table:


Rent received during the year

Sr.No

Total Received 

Rent received in Advance/Accrued

Income for the year 

1

1,300

Received in Advance

200

_____ ?

2

_____ ?

Received in Advance

400

1,400

3

2,650

Received in Advance

_____ ?

2,000

4

_____ ?

Accrued

290

3,190

5

1,700

Accrued

_____ ?

2,150

6

2,600

Accrued

500

_____ ?


FOR SOLUTION CLICK HERE


Calculate the following

 

10 % p.a. Depreciation on Furniture  50,000 (for three months) FOR SOLUTION CLICK HERE


12% p.a. Interest on Bank loan  80,000 for 1 year. FOR SOLUTION CLICK HERE


Opening stock of stationery  5,000, purchases of stationery  7000, outstanding stationery bill  12,000, closing stock  1000. What is the amount of stationery consumed? FOR SOLUTION CLICK HERE


Salary  10,000, outstanding salary  5,000. Calculate the salary to be debited to  Income and Expenditure Account. FOR SOLUTION CLICK HERE


Library Books  _________ ? Less 10 % Depreciation  5,000 =  45,000. FOR SOLUTION CLICK HERE

Practical Problems | Q 1 | Page 114


(Calculation of stationery consumed during the year)


Liabilities

Amt. ₹

Amt. ₹

Assets

Amt. ₹

Amt. ₹




Stock of Stationery


400

 

Receipts and Payments Account for the year ending 31.03.2019


Receipts

Amt. ₹

Amt. ₹

Payments

Amt. ₹

Amt. ₹




By Stationery Purchased


6,300


Adjustments :


1.  1,000 Outstanding for Stationery bill.


2. Stock of Stationery as on 31.03.2019 was valued at 1,800


With the above information, calculate the amount of Stationery consumed during the year and show its presentation in final Accounts of a concern.


Solution: 


In the books of _____________


Income and Expenditure Account for the year ended 31st March, 2019


Expenditure

Amount (₹)

Amount (₹)

Income

Amount (₹)

Amount (₹)

To Stationery Consumed during the Year






Opening Stock

400





Add: Stationery Purchased during the Year

6,300





Add: Credit Purchase of Stationery (Outstanding bill)

1,000






7700





Less: Closing Stock of Stationery

1800

5,900





Practical Problems | Q 2 | Page 115


Balance Sheet as on 01.04.2018


Liabilities

Amt. ₹

Amt. ₹

Assets

Amt.  ₹

Amt .₹

Subscription received in Advance for 2018 - 19

20,000


Outstanding Subscription






2016 - 17

26,000





2017 - 18

35,000

61,000

 


Receipts and Payments Account for the year ending 31.03.2019.



Liabilities

Amt. ₹

Amt. ₹

Assets

Amt.  ₹

Amt .₹

Subscription received in Advance for 2018 - 19

20,000


Outstanding Subscription






2016 - 17

26,000





2017 - 18

35,000

61,000


Adjustments :


Outstanding Subscription for 2018 - 19 is  32,000

With the above information present the item Subscription in Income and Expenditure Account for the year ended 31.03.2019 Balance Sheet as on the date.


Solution: 


In the books of ________________

Income and Expenditure Account for the year ended 31st March 2019


Expenditure

Amount (₹)

Amount (₹)

Income

Amount (₹)

Amount (₹)




By Subscription

4,10,000





Add: Outstanding Subscription for Current Year 2018–19

32,000






4,42,000





Add: Subscription of Current Year received in Advance in the Previous Year 2017–18

20,000

4,62,000


Balance Sheet as on 31st March 2019


Liabilities

Amt (₹)

Amt (₹)

Assets

Amt (₹)

Amt (₹)

Subscription received in Advance for the Year 2019 – 20


21,000

Outstanding Subscription for






Add: Year 2018–19 (Current year)

32,000





Add : Year 2016–17 (26,000 – 23,000)

3,000





Add : Year 2017–18 (35,000 – 30,000)

5,000

40,000


Working Note :


Outstanding subs. given in the balance sheet as on 01 – 04 – 2018 are  26,000 (for 2016–17) and  35,000 (for 2017 – 18). Against that as shown in receipt – Payment A/c  23,000 and  30,000 are received respectively. Means  3,000 and  5,000 are still outstanding which are known in the current year balance sheet.


Practical Problems | Q 3 | Page 115


Receipts and Payments Account for the year ending 31.03.2018.


Receipts

Amt. ₹

Amt. ₹

Payments

Amt.₹

Amt. ₹

To Subscriptions






2016 - 17

2,000





2017 - 18

60,000





2018 - 19

4,500

66,500





Adjustments :


Subscription Outstanding for the year 2017 - 18 is  6,000.

During previous year Subscription received in advance for 2017 - 18 is  2,000.

Outstanding subscription of 2016 - 2017 is  2,500

With the help of the above information present the item Subscription in Income and Expenditure Account for the year ending 31.03.2018 and Balance Sheet as on that date.


Solution: 


In the books of _____________________

Income and Expenditure Account for the year ended 31st March, 2018


Expenditure

Amount (₹)

Amount (₹)

Income

Amount (₹)

Amount (₹)




By Subscription (Year 2017–18)

60,000





Add: Outstanding Subscription of Current Year 2017–18

6,000





Add: Subscription received in Advance of Current Year in Previous Year

2,000

68,000


Balance Sheet as on 31st March, 2018


Liabilities

Amt (₹)

Amt (₹)

Assets

Amt (₹)

Amt (₹)

Subscription received in Advance in the Current Year for the Year 2018 – 19


4,500

Outstanding Subscription for Current Year (2017–18)


6,000




Outstanding Subscription for the Year 2016 – 17 (2,500 – 2,000)


500


Practical Problems | Q 4 | Page 116


Following is the Receipts and Payments Account of “Satara Sports Club” Satara Prepare Income and Expenditure Account for the year ending 31.03.2019.


Receipts and Payments Account for the year ending 31.03.2019.


Receipts

Amt ₹

Amt ₹

Payments

Amt ₹

Amt ₹

To Balance b/d



By Salaries


5,000

Cash in hand

4,500


By Rent (Including ₹ 2,000 for 2017 - 18)


5,000

Cash at Bank

12,000

16,500

By Electricity Charges


1,450

To Subscription



By Fixed Deposit


60,000

2017 - 18

4,000


By Printing and Stationery


750

2018 - 19

44,500


By General Expenses (Including ₹ 500 paid for next year)


5,500

2019 - 20

3,500

52,000

By Sports Material Purchased


40,000

To Entrance fees


8,000

By Balance c/d



To Donation for Building fund


70,000

Cash in Hand

8,900


To Interest


600

Cash at Bank

25,000

33,900

To Sale of furniture

(Book Value ₹ 8000)


4,500






1,51,600



1,51,600

Adjustments:


1) Outstanding Subscription for Current Year is  4,500

2) Outstanding Rent for Current Year amounted to  1,000

3) Entrance Fees are to be treated as Revenue Income

4) Stock of Sports Material as on 01.04.2018  6,000 and on 31.03.2019  14,000


Solution: 


In the books of ‘ Satara Sports Club’ Satara


Income and Expenditure Account for the year ended on 31st March 2019


Expenditure

Amount ₹

Amount ₹

Income

Amount ₹

Amount ₹

To Salaries


5,000

By Subscription received for 2018 – 19

44,500


To rent

5,000


Add: Outstanding Subscription for Current Year

4,500

49,000

Add: Outstanding rent of Current Year

1,000


By Entrance Fees


8,000

Less: rent received for the Year 2017 – 18

2,000

4,000

By Interest


600

To Electricity Charges


1,450




To Printing and Stationery


750




To General Expense

5,500





Less: Amount Paid for Next Year

500

5,000




To Sports Material Consumed






Opening Stock

6,000





Add: Sports Material Purchased in Current Year

40,000






46,000





Less: Closing Stock of Sports Material

14,000

32,000




To Loss due to Sale of Furniture (8,000 – 4,500)


3,500




To Surplus (Excess of income over expenditure)


5,900






57600



57600


Working Notes :


(1) Entrance fees are to be treated as revenue income. Therefore the entire amount is recorded on the income side.

(2) Since the selling price of Furniture  4,500 is lower than its cost price of  8,000, there is Loss on sale of furniture.

It is calculated as follows :

Loss on sale of furniture = Book value (cost) – Selling price

= 8,000 – 4,500

 3,500

It is debited to Income and Expenditure A/c.


Practical Problems | Q 5 | Page 117


“Bhartiya Kala Kendra”, Solapur gives you the following information, for the year ended on 31.03.2018 Prepare Income and Expenditure Account for the year ending 31.03.2018


Receipts and payments Account for the year ending 31.03.2018.


Receipts

Amount ₹

Payments

Amount ₹

To Balance b/d


By Stationery

600

Cash in Hand

200

By Furniture Purchased

7,000

Cash at Bank

12,500

By Investments in govt securities

14,000

To Locker Rent

400

By Expenses of Drama

3,000

To Entrance fees

2,900

By Postage

450

To Sale of old newspapers

250

By Magazine and newspaper

600

To Receipts from Drama

9,000

By Salaries

4,400

To Legacies

12,000

By Balance c/d


To Interest of Govt. Securities

400

Cash in Hand

700

To Miscellaneous Receipts

400

Cash at Bank

7,300


38050


38050

Additional Information :

1) Legacies are to be capitalized

2) Outstanding Salary  200

3) 50 % of Entrance Fees are to be Capitalised



Solution: 


In the books of Bhartiya Kala Kendra, Solapur

Income and Expenditure Account for the year ended 31st March


Expenditure

Amount (₹)

Amount (₹)

Income

Amount (₹)

Amount (₹)

To Stationery


600

By Locker rent


400

To Expenses of Drama


3,000

By Entrance Fees

2,900


To Postage


450

Less: 50 % Capitalised

1,450

1,450

To Magazine and Newspaper


600

By Sale of Old Newspapers


250

To Salaries

4,400


By receipts from Drama


9,000

Add: Outstanding Salaries

200

4,600

By Interest on Govt. Securities


400

To Surplus

(Excess of income over expenditure)


2,650

By Miscellaneous receipts


400



11900



11900


Practical Problems | Q 6 | Page 117


From the following particulars relating to “Radha-Krishna Charitable Hospital” Pune. Prepare Income and Expenditure Account for the year ending 31.03.2020 and Balance Sheet as on that date.


Receipts and payments Account for the year ending 31.03.2020.


Receipts

Amount ₹

Payments

Amount ₹


To Balance b/d


By Medicines Purchased

41,000


Cash

8,230

By General Expenses

1,050


To Subscriptions

52,000

By Salaries

23,500


To Donations (General)

17,500

By Stationery

2,000


To Interest in Investments

10,000

By Expenses on Charity Show

550


To Proceeds from Charity Show

8,530

By Surgery and Dispensary Exp

4,200




By Equipments

10,000




By Balance c/d





Cash in Hand

960




Cash at Bank

13,000

13,960


96,260


96,260



Additional Information :


Particulars

01.04.2019 ₹

31.03.2020 ₹

1. Subscription Due

310

350

2. Subscription Received in Advance

600

150

3. Stock of Medicine

8,000

11,000

4. Estimated Value of Equipment

15,000

?

5. Building

40,000

?

6. Capital Fund

1,70,940

?

7. 10 % Investment

1,00,000

?

Provide Depreciation on Equipments  1,900 and on Building  1,500


Solution: 


In the books of Radha-Krishna Charitable Hospital, Pune


Income and Expenditure Account for the year ended 31st March 2020


Expenditure

Amount

(₹)

Amount

(₹)

Income

Amount

(₹)

Amount

(₹)

To Medicines Consumed



By Subscriptions

52,000


Opening Stock

8,000


Add: Outstanding of Current Year

350


Add: Purchases

41,000


Add: received in Advance in Previous Year

600



49,000



52,950


Less: Closing Stock

11,000

38,000

Less: received in Current Year of the Previous Year

150


To General Expenses


1,050

Less: Subscription due of Previous Year

310

52,490

To Salaries


23,500

By Donations (General)


17,500

To Stationery


2,000

By Interest on Investments


10,000

To Expenses on charity show


550

By Proceeds from Charity Show


8,530

To Surgery and Dispensary Expense


4,200




To Depreciation






Equipments

1,900





Building

1,500

3,400




To Surplus

(Excess of income over expenditure)


15,820






88,520



88,520

Balance Sheet as on 31st March 2020


Liabilities

Amount

(₹)

Amount

(₹)

Assets

Amount

(₹)

Amount

(₹)

Capital Fund

1,70,940


Outstanding Subscription


350

Add : Surplus

15,820

1,86,760

Closing Stock of Medicines


11,000

Subscription received in Advance


150

Equipments opening Balance

15,000





Add: Purchases

10,000






25,000





Less: Depreciation

1,900

23,100




Buildings

40,000





Less: Depreciation

1,500

38,500




10% Investments


1,00,000




Cash in Hand


960




Cash at Bank


13,000



1,86,910



1,86,910

Working Notes :


(1) To find medicines consumed, here in the opening stock, purchases is added and the closing stock of medicine is subtracted.

(2) For equipment, in opening balance, add equipment purchased during the year and subtract depreciation to get the closing balance of equipment.

(3) Interest  10,000 is received on 10 % investments means there is no outstanding interest.


Practical Problems | Q 7 | Page 118


From the following transactions of Receipts and Payments Account of “Pavan - Putra Hanuma Vyayamshala” Parbhani, and the adjustments given, you are required to prepare Income and Expenditure Account and Balance Sheet as on 31st March 2019.


Receipts and Payments Account for the year ending 31.03.2019.


Receipts

Amount

Payments

Amount


To Balance b/d


By Salaries

6,000


Cash in Hand

5,000

By Entertainment Expenses

2,480


To Subscriptions


By Sundry Expenses

1,300


2018 - 19

18,000


By Electricity Charges

1,200

2019 - 20

410

18,410

By Rent

700

To Donations

6,000

By Investment

15,000


To Receipts from Entertainment

5,400

By Printing and Stationery

800


To Interest

400

By Postage

3,200


To Entrance fees

6,200

By Fixed Deposit

3,900




By Balance c/d





Cash in Hand

830




Cash at Bank

6000

6,830


41,410


41,410



Adjustments:


1) There are 500 members paying an annual Subscription of  50 each

2) Outstanding Salary was  1,200

3) The Assets on 01.04.2018 were as follows: Building  50,000, Furniture  15,000

4) Provide depreciation on Building and Furniture at 5% and 10% respectively.

5) 50% Entrance Fee is to be capitalized.

6) Interest on Investment at 5% p. a. has accrued for 6 months.

7) Capital Fund  70,000 on 01.04.2018


Solution: 


In the books of Pavan-putra Hanuman Vyayamshala, Parbhani 


Income and Expenditure Account for the year ended on 31st March, 2019


Expenditure

Amount

Amount

Income

Amount

Amount

To Salaries

6,000


By Subscription

18,000


Add*: Outstanding

1,200

7,200

Add: Outstanding Subscription for Current Year

7000

25000

To Entertainment Expenses


2,480

By Donations


6,000

To Sundry Expenses


1,300

By receipts from Entertainment


5,400

To Electricity Charges


1,200

By Interest


400

To Rent


700

By Outstanding Interest on Investments (6 Months)


375

To Printing and Stationery


800

By Entrance Fees

6,200


To Postage


3,200

Less : 50 % capitalised

3,100

3,100

To Depreciation






Building

2,500





Furniture

1,500

4,000




To Surplus 

(Excess of income over expenditure)


19,395






40,275



40,275


Balance Sheet as on 31st March, 2019


Liabilities

Amount ₹

Amount ₹

Assets

Amount ₹

Amount ₹

Capital Fund

70,000


Building

50,000


Add: Surplus

19,395


Less: Depreciation

2,500

47,500

Add: 50 % Entrance Fees

3,100

92,495

Furniture

15,000


Outstanding Salary


1,200

Less: Depreciation

1,500

13,500

Subscription received in Advance


410

Investments


15,000




Outstanding Interest on Investments


375




Fixed Deposit


3,900




Cash in Hand


830




Cash at Bank


6,000




Outstanding Subscription of Current Year


7,000



94,105



94,105


Working Notes :


(1) Interest on investment is receivable for 6 months


I = PNR/100 = 15000 × (5  ÷ 100) × (6  ÷ 12) =   375 (outstanding interest on investment)


(2) 50% of entrance fees (i.e. 6200  ÷ 2 =   3100) is to be capitalised means add it to the capital fund.


(3) Total subscription of current year = 500 members ×  50 =  25,000

But actual subscription received =  18,000

means difference (25,000 – 18,000) of  7,000 is outstanding subscription.


Practical Problems | Q 8 | Page 119


“Jeevan Jyoti Art Circle” a newly established concern has presented the following information.


Receipts and Payments Account for the year ending 31.03.2018.


Receipts

Amount

Amount

Payments

Amount

Amount

To Admission fees


22,000

By Furniture


12,000

To Subscriptions


40,000

By Stationery


4,000

To Donations


18,000

By Office Rent


2,600




By Newspapers & Periodicals


300




By Telephone Expenses


560




By Investments


23,000




By Balance c/d






Cash in Hand

7,540





Cash at Bank

30,000

37,540



80,000



80,000


Adjustments:


1) Subscription Outstanding for the year was  5,000

2) Depreciate Furniture @10 % p.a

3) Full amount of Admission Fees and 50*% Donations are to be capitalized.

You are required to prepare Income and Expenditure Account for the year ending 31.03.2018 and Balance Sheet as on that date.


Solution: 


In the books of Jeevan Jyoti Art Circle 

Income and Expenditure Account for the year ended 31st March 2018


Expenditure

Amount

Amount

Income

Amount

Amount

To Stationery


4,000

By Donations

18,000


To Office rent


2,600

Less: 50 % Capitalised

9,000

9,000

To Newspapers and Periodicals


300

By Subscription

40,000


To Telephone Expenses


560

Add: Outstanding of Current Year

5,000

45,000

To Depreciation Furniture


1,200




To Surplus (Excess of income over expenditure)


45,340






54000



54000


Balance Sheet as on 31st March, 2018


Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Fund

-


Furniture

12,000


Add: Surplus

45,340


Less: Depreciation

1,200

10,800

Add: Admission Fees (Capitalised)

22,000


Investments


23,000

Add : Donations (50 % Capitalised)

9,000

76,340

Cash in Hand


7,540




Cash at Bank


30,000




Outstanding Subscription


5,000



76,340



76,340

Working Notes:


The full amount of admission fees and 50% of donations are added to the surplus amount to get the capital funds. (Opening balance of the capital fund is not given.)


Practical Problems | Q 9 | Page 119


Given below is the Receipts and Payments Account of “Vithai Mahila Mandal” Pandharpur for the year ending 31.03.2018. 


Prepare an Income and Expenditure Account for the year ended 31.03.2018 and Balance Sheet as on that date.


Receipts and Payments Account for the year ending 31.03.2018.


Receipts

Amount

Amount

Payments

Amount

Amount

To Balance b/d



By Stationery


6000

Cash in Hand

3,000


By Repairs to Furniture


950

Cash at Bank

20,000

23,000

By Rent


8,300

To Entrance Fees


3,500

By Salaries


15,000

To Subscription


19,000

By Miscellaneous Expenses


450

To Miscellaneous Receipts


850

By Balance c/d






Cash in Hand

1,650





Cash at Bank

14,000

15,650



46,350



46,350

Adjustments :


1) Capital Fund on 01.04.2017 was  90,000

2) Outstanding Subscription  4,000

3) Entrance Fees are to be capitalized

4) Rent paid includes  800 paid for April 2018

5) They have the following Assets and Liabilities 01.04.2017

Furniture  9,000,

Building  70,000, 

Outstanding Expenses  12,000


Solution: 


In the books of Vithai Mahila Mandal, Pandharpur


Income and Expenditure Account for the year ended 31st March 2018


Expenditure

Amount

Amount

Income

Amount

Amount

To Stationery


6,000

By Subscription

19,000


To Repairs to Furniture


950

Add: Outstanding Subscription

4,000

23,000

To Rent

8,300


By Miscellaneous receipts


850

Less: Prepaid Rent

800

7,500

By Deficit (Excess of expenses over incomes)


6,050

To Salaries


15,000




To Miscellaneous Expense


450






29,900



29,900


Balance Sheet as on 31st March 2018


Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Fund

90,000


Furniture


9,000

Add: Entrance Fees (Capitalised)

3,500


Building


70,000

Less: Deficit

6,050

87,450

Outstanding Subscription


4,000

Outstanding Expenses


12,000

Cash in Hand


1,650




Cash at Bank


14,000




Prepaid rent


800



99,450



99,450


Working Notes :


(1) Outstanding subscription of  4,000 is first added to subscription received on the credit side of Income and Expenditure A/c and then it is shown on the Assets side of the Balance Sheet.


(2) The entire amount of the entrance fees  3,500 is added to the capital fund.


(3) Prepaid  800 is first deducted from rent paid on the debit side of Income & Expenditure A/c and then shown on the Assets side of the Balance Sheet.


(4) Outstanding expenses  12,000 is directly shown on the Liabilities side of the Balance Sheet.


Practical Problems | Q 10 | Page 120


From the following Receipts and Payments Account “K.B.P. Engineering College” Nashik for the year ending on 31.03.2019 and additional information, prepare Income and Expenditure Account for the year ending 31.03.2019 and Balance Sheet as on that date.


Receipts and payments Account for the year ending 31.03.2019.


Receipts

Amount ₹

Payments

Amount ₹

To Balance b/d


By Salaries to Teaching Staff

11,70,000

Cash in Hand

18,000

By Electricity Charges

55,000

Cash at Bank

1,00,400

By Books

61,000

To Interest

55,000

By Furniture

51,000

To Subscriptions

28,300

By Stationery

21,850

To Life Membership fees

25,000

By Fixed Deposit (31.03.2019)

8,50,000

To Donation

7,00,000

By Balance c/d


To Tuition Fees

12,30,000

Cash in Hand

16,650

To Term Fees

2,00,800

Cash at Bank

2,00,000

To Sundry Receipts

8,000



To Admission Fees (Revenue)

60,000




24,25,500


24,25,500


Additional Information :


Particulars

01.04.2018 ₹

31.03.2019 ₹

Books

6,00,000

6,00,000

Furniture

3,19,000

3,00,000

Building Fund

10,00,000

?

Fixed Deposit

9,10,000

?

Capital Fund

9,47,400

?


1) 50% of Donation are for Building Fund and the balance is to be treated Revenue Income.


2) Outstanding subscription  5,300


3) Life membership fees are to capitalised


Solution: 


In the books of K.B.P. Engineering College, Nashik


Income and Expenditure Account for the year ended on 31st March, 2019


Expenditure

Amount ₹

Amount ₹

Income

Amount ₹

Amount ₹

To Salaries to Teaching Staff


11,70,000

By Interest


55,000

To Electricity Charges


55,000

By Subscription

28,300


To Stationery


21,850

Add: Outstanding Subscription

5,300

33,600

To Depreciation



By Donations

7,00,000


Furniture

70,000


Less: 50 % for Building Fund

3,50,000

3,50,000

Books

61,000

1,31,000

By Tuition Fees


12,30,000

To Surplus

(Excess of income over expenditure)


5,59,550

By Term Fees


2,00,800




By Sundry receipts


8,000




By Admission Fees


60,000



19,37,400



19,37,400


Balance Sheet as on 31st March, 2019


Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Fund

9,47,400


Outstanding Subscription


5300

Add: Surplus

5,59,550


Books

6,00,000


Add: Life Membership Fees (Capitalised)

25,000

15,31,950

Add: Purchases

61,000


Building Fund

10,00,000



6,61,000


Add: 50% of Donations

3,50,000

13,50,000

Less: Depreciation

61,000

6,00,000




Furniture

3,19,000





Add: Purchase

51,000






3,70,000





Less: Depreciation

70,000

3,00,000




Fixed Deposits (Old)


8,50,000




Cash in Hand


16,650




Cash in Bank


2,00,000




Fixed Deposits (New)


9,10,000



28,81,950



28,81,950


Working Notes :


(1) Life membership fees are to be capitalised, means add entire amount in capital fund.


(2) 50% of Donations of  7,00,000 i.e.,  3,50,000 is to be added to the Building Fund, and the remaining amount of donation i.e.,  3,50,000 is credited to Income and Expenditure A/c.


(3) The depreciation on Fixed assets is calculated by using following formula:


Depreciation = Opening balance + Purchases – Closing value

 Depreciation on Books = 6,00,000 + 61,000 – 6,00,000

= 6,61,000 – 6,00,000

 61,000

 Depreciation on Furniture = 3,19,000 + 51,000 – 3,00,000

= 3,70,000 – 3,00,000

 70,000


(4) Fixed Deposit: 

Opening balance given

₹ 910000

Fixed deposit (31 – 03 – 2019) (Newly purchased)

₹ 850000

 Total fixed deposits

₹ 1760000


(5) Admission Fees  60,000 is recorded on the credit side of Income and Expenditure A/c because it is taken as revenue income.


Practical Problems | Q 11 | Page 121


From the following Balance Sheet and Receipts and Payments Account of “New English School”, Barshi, Prepare Income and Expenditure Account for the year ending 31.03.2020 and a Balance Sheet as on that date.


Balance Sheet as on 01.04.2019


Liabilities

Amount

Assets

Amount

Capital Fund

6,43,000

Cash in Hand

6,000



Cash at Bank

10,000



Building

4,50,000



Furniture

72,000



Library Books

45,000



Computer Laboratory

60,000


6,43,000


6,43,000


Receipts and Payments Account for the year ending 31.03.2020 


Receipts

Amount ₹

Amount ₹

Payments

Amount ₹

Amount

To Balance b/d



By Salary


90,000

Cash in Hand

6,000


By Library Books


14,000

Cash at Bank

10,000

16,000

By Office Rent


10,000

To Tuition Fees


90,000

By Printing and Stationery


22,000

To Term Fees


3,000

By Sundry Expenses


12,000

To Admission Fees


12,000

By Insurance


10,200

To Donation (Capital)


61,000

By Sport Expenses


8,000

To Interest Received


2,000

By Annual Gathering Exp


9,000

To Government Grant (Revenue)


1,20,000

By Furniture


50,000

To Sundry Receipts


11,000

By Repairs


15,000




By Balance c/d






Cash in Hand

4,800





Cash at Bank

70,000

74,800



315000



315000


Additional Information :

1) Outstanding Salary of  9,000

2) Outstanding Tuition Fees  15,000

3) Depreciate Library Books by  9,000 and Furniture by  10,000


Solution: 


In the books of New English School, Barshi


Income and Expenditure Account for the year ended 31st March, 2020


Expenditure

Amount

Amount

Income

Amount

Amount

To Salary

90,000


By Tuition Fees

90,000


Add: Outstanding Salary

9,000

99,000

Add: Outstanding tuition Fees

15,000

1,05,000

To Office rent


10,000

By Term Fees


3,000

To Printing and Stationery


22,000

By Admission Fees


12,000

To Sundry Expenses


12,000

By Interest Received


2,000

To Insurance


10,200

By Government Grant


1,20,000

To Sport Expenses


8,000

By Sundry Receipts


11,000

To Annual Gathering Expenses


9,000




To Repairs


15,000




To Depreciation






Library Books

9,000





Furniture

10,000

19,000




To Surplus

(Excess of income over expenditure)


48,800






2,53,000



2,53,000


Balance Sheet as on 31st March, 2020


Liabilities

Amount ₹

Amount ₹

Assets

Amount ₹

Amount ₹

Capital Fund

6,43,000


Building


4,50,000

Add: Surplus

48,800


Furniture

72,000


Add: Donation

61,000

7,52,800

Add: Purchases

50,000


Outstanding Salary


9,000


1,22,000





Less: Depreciation

10,000

1,12,000




Library Books

45,000





Add: Purchases

14,000






59,000





Less: Depreciation

9,000

50,000




Computer Laboratory


60,000




Cash in Hand


4,800




Cash at Bank


70,000




Outstanding Tuition Fees


15,000



7,61,800



7,61,800


Working Notes :


(1) Donation (Capital) is added in Capital fund.


(2) Government Grant  1,20,000 is recorded on the credit side of Income & Expenditure A/c because it is revenue income of the organisation.


(3) Outstanding tuition fees  15,000 and outstanding salary  9,000 are added to respective head of Account and then they are shown separately on the Assets side and Liabilities side of Balance Sheet respectively.


Practical Problems | Q 12 | Page 122


Following is the Receipts Payments Account of “Dhananjay Library, Mumbai” for the year ending 31.03.2020


Receipts and Payments Account for the year ending 31.03.2020.


Receipts

Amount

Payments

Amount

To Balance b/d

5,000

By Salaries

9,000

To Admission Fees

4,500

By Rent

7,500

To Subscriptions

20,000

By Investments

6,000

To Lecture Hall Hire Charges

4,200

By Stationery

1,350

To Miscellaneous Income

250

By Electricity Charges

850

To Interest on Investment

900

By Books

5,000



By Outstanding Expenses (2018 - 19)

500



By Balance c/d

4,650


34850


34850


You are required to prepare an Income and Expenditure Account for the year ended 31.03.2020 and Balance Sheet as on that day.


The following information is also made available to you.


1) On 31.03.2019, the Library had the following Assets also; Books at  50,000, Furniture  6,500, and Machinery of  30,000


2) Subscription received in advance amounted to  500


3) Outstanding Salaries  1300 and for Rent  950


4) 50% of the Admission Fees should be capitalized.


5) Furniture to be depreciated at 10% p.a.


6) Library Books were purchased on 1st April 2019 charge Depreciation at 10% p. a.


7) The Investments were purchased on 01.04.2019 and they carry interest at 20*% p.a


Solution: 


In the books of Dhananjay Library, Mumbai


Income and Expenditure Account for the year ended 31st March 2020


Expenditure

Amount ₹

Amount

Income

Amount

Amount

To Salaries

9,000


By Subscription

20,000


Add: Outstanding Salary

1,300

10,300

Less: Subscription Received in Advance

500

19,500

To Rent

7,500


By Admission Fees

4,500


Add: Outstanding Rent

950

8,450

Less: 50% Capitalised

2,250

2,250

To Stationery


1,350

By Lecture Hall Hire Charges


4,200

To Electricity Charges


850

By Miscellaneous Income


250

To Depreciation



By Interest on Investments

900


Furniture

650


Add: Outstanding Interest

300

1,200

Library Books

(5000 + 500)

5,500

6,150




To Surplus

(Excess of Income over expenditure)


300






27400



27400


Balance Sheet as on 31st March 2020


Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Fund

91,000


Machinery


30,000

Add : 50 % Admission

2,250


Books

50,000


Add: Surplus

300

93,550

Add: Purchases

5,000


Outstanding Salaries


1,300


55,000


Outstanding Rent


950

Less: Depreciation (5000 + 500)

5,500

49,500

Subscription Received in Advance


500

Furniture

6,500





Less: Depreciation

650

5,850




Investments

6,000





Add: Outstanding Interest

300

6,300




Cash in Hand


4,650



96300



96300

Working Notes :


(1) Opening Balance Sheet is prepared to find out opening capital fund :


Balance Sheet as on 31st March 2019


Liabilities

Amount

Assets

Amount

Outstanding Expenses

500

Books

50,000

Capital Fund

(Balancing figure)

91,000

Furniture

6,500



Machinery

30,000



Cash in Hand

(Opening balance of Receipt – Payment A/c)

5,000


91500


91500

(2) Outstanding expenses of the previous year, paid in the current year so no entry for outstanding expenses (2018 – 19)

(3)

Interest on Investment @ 20 % on ₹ 6,000

₹ 1200

Interest on Investment received

₹ 900

Outstanding interest on investment

₹ 300

 

(4) 

Depreciation on library books at 10 % p.a. on opening balance of ₹ 50,000 (for whole year)

₹ 5000

On purchases on 01 – 04 – 2019 (for whole year)

₹ 1500

Total Depreciation

₹ 5500

(5) Subscriptions received in advance  500 is deducted from subscription received on credit side of Income and Expenditure A/c and then subscription received in advance is shown separately on the Liabilities side of the Balance Sheet.


(6) Outstanding salaries and outstanding rent are added to the respective head of Account on the debit side of the Income & Expenditure Account and both the outstanding items are recorded on the Liabilities side of the Balance Sheet.


Practical Problems | Q 13 | Page 123


From the following information supplied to you, prepare Income and Expenditure Account for the year ending on 31.03,2020 and Balance Sheet as on that date for “Morya Sports Club” Thane.


Balance Sheet as on 01.04.2019.


Liabilities

Amount ₹

Assets

Amount ₹

Capital Fund

64,500

Machinery

69,000

Bank overdraft

38,000

Outstanding Subscriptions

8,000

Outstanding Salary

4,000

Prepaid Insurance Premium

2,000



Furniture

15,000



Cash in Hand

12,000



Outstanding Locker’s Rent

500


1,06,500


1,06,500

 

Receipts and Payments Account for the year ended 31.03.2020


Liabilities

Amount ₹

Payments

Amount

To Balance b/d

12,000

By Balance b/d (Bank Overdraft)

38,000

To Subscription

1,05,000

By Salary

17,500

To Entrance Fees (Capitalized)

9,300

By Insurance Premium

11,000

To Locker Rent

1,500

By Interest

1,400

To Donations (Capitalized)

800

By Refreshment Expenses

4,200



By Furniture

30,000



By Balance c/d




Cash in Hand

6,500



Cash at Bank

20,000


1,28,600