Financial Statements of Non Profit Organizations – CA Foundation, CPT notes, PDF
This article is about Financial Statements of Non Profit Organizations for CA foundation CPT students. we also provide PDF file at the end.
Alternative names:
- Final Accounts of Non-Trading Concern;
- Receipt & Payment Account and Income & Expenditure Account
What we will study in this chapter:
- We will study how the final accounts of charitable organizations like trust, society, clubs etc. are prepared and accounting for and meaning of items which are specific to them.
- We will study what is included in the financial statements of such organisation.
- We will use the same fundamental accounting principles and procedures studied in 1st chapter, because these are applicable everywhere.
- We will also study the different ways in which questions are asked in the examination.
Such organisations are generally registered as Trust or Societies. If such an organisation is registered u/s 8 of the Companies Act, 2013, then it will have to prepare its Financial Statement as per Schedule III of the Companies Act, 2013 as covered in Chapter 25 Company Financial Statement.
INTRODUCTION
The charitable organizations like trust, clubs, schools, etc., which are non-trading/non-profit motive organizations prepares their financial statements (final accounts) in the following form:
(i) Income & Expenditure A/c (ii) Balance sheet.
Generally such organizations also prepares a Receipt & Payment A/c.
There are some accounts, which are specifically related to such organizations like donations, subscription, entrance fees, fund a/c etc. Also there are different ways in which question is asked in the examination.
Usual type of questions are:
(A) Prepare Final a/c from Receipt & Payment (R&P) a/c and Other Information given
(B) Prepare R&P a/c from I&E a/c and Other Information given
(C) Prepare Final a/c from Trial Balance (TB) and Other Information given
These are also final accounts although of different type of entities, hence whatever is given in Chapter on final accounts is equally and more or less fully applicable here as well. Hence students are advised to study this chapter only after studying Final Account portion.
21.1 EXPLAIN INCOME AND EXPENDITURE ACCOUNT (l&E A/C)
♦ Income & Expenditure Account – is just like a profit & loss account.
♦ All the Expenses for that year i.e., related to that year, will be debited to it.
♦ All the incomes related to that year will be credited to it,
♦ If the credit side is more, the balance is known as “Surplus” (Profit) &
♦ If the debit side is more the balance is known as “Deficit” (Loss) which is then
♦ Transferred (Surplus is credited/Loss is debited) to the capital account of the Association/Trust which is known by different names such as Trust Fund/General Fund/Capital Fund etc.
Important Points:
Income is what is earned during the year and Expense is what is incurred during the year. When an amount is paid or received, is not important, while preparing an Income & Expenditure a/c. The items which are shown in Income & Expenditure a/c in this year may have been paid/received in this year or previous year (ie brought forward as opening prepaid/pre-received) or next year (i.e, carried forward as closing payable/receivable) (i.e. apply mercantile system/accrual concept).
Generally such organization may not have trading of goods etc. It may have some new items like donation, subscription, entrance fees, and expenses on the object of trust etc.
It is not necessary that balance of I&E a/c will be fully transferred to Trust Fund a/c (though usually done by authors in their books). Many organizations keep on accumulating it, then balance of I&E a/c will appear in balance sheet just like P&L a/c balance appears in balance sheet of corporate entities.
Simple Format of Income and Expenditure A/c.
Bhagat Singh College Sports Club, Delhi
Dr. | Income and Expenditure A/c for the year ending on 31st March, 2011 | Cr. | |||
Expenditure | Rs. | Income | Rs. | ||
To Rent a/c | — | By Subscription a/c | — | ||
To Match Expenses a/c | — | By General Donations a/c | — | ||
To Postage Expenses a/c | — | By Entrance Fees a/c | — | ||
To Salary a/c | — | By Profit on sale of old sports material a/c | — | ||
To Repairs & Maintenance a/c | — | By Miscellaneous Receipts a/c | — | ||
To Sports Materials consumed | — | ||||
To Depreciation on Furniture | — | ||||
To Miscellaneous Expenses a/c | — | ||||
To Prize expenses a/c | — | ||||
To Surplus transferred to | — | ||||
Capital Fund a/c | — | ||||
Total | —– | Total | —– | ||
Illustration 21.1: From the following data, prepare an Income and Expenditure Account for the year ended 31st December, 2011 of the Mayura Hospitals.
Receipt and Payments Account (For the year ended 31st Dec., 2011)
Particulars (Receipts) | Rs. | Particulars (Payment) | Rs. | |
To Balance: | By Salaries (Rs.3600 for 2010) | 15,000 | ||
Cash | 400 | By Hospital Equipment | 8,500 | |
Bank | 2.600 | 3,000 | By Furniture purchased | 3,000 |
By Additions to Building | 25,000 | |||
To Subscriptions: | By Printing & Stationery | 1,800 | ||
For 2010 | 2,550 | By Diet Expenses | 7,800 | |
For 2011 | 12,250 | By Rent & Rates (Rs.150 for 2012) | 1,000 | |
For 2012 | 1.200 | 16,000 | By Electricity & Water Charges | 1,200 |
By Office Expenses | 1,000 | |||
To Govt. Grant: | By Investment . | 10,000 | ||
For Building 40,000 | By Balances: | |||
For Maintenance 10,000 | 50,000 | Cash 700 | ||
To Fees from Sundry patients | 2,400 | Bank 3,400 | 4,100 | |
To Donations (not to be capitalized) | 4,000 | |||
To Net Collection from benefit show | 3,000 | |||
78,400 | 78,400 |
Additional information:
(i) Subscription in arrears as on 31-12-2010 Rs.3,200
(ii) Investments in 8% Govt. Securities were made on 1st July, 2011
Solution:
Income and Expenditure A/c for the Year Ended 31.12.2011
Particulars (Expenditure) | Rs. | Particulars (Income) | Rs. |
To Salary | 11,400 | By Interest on Govt. Securities | |
To Printing & stationery | 1,800 | (10,000 × 896 × 6/12) | 400 |
To Diet expenses | 7,800 | By Donations | 4,000 |
To Rent & rates | 850 | By Fees from patient | 2,400 |
To Electricity & Water | 1,200 | By Govt, grant for Maintenance | 10,000 |
To Office expenses | 1,000 | By Net collection from benefit show | 3,000 |
To Surplus transferred to capital fund | 8,000 | By Subscription | 12,250 |
32,050 | 32,050 |
WORKING NOTES:
Subscription A/c
To Opening Outstanding | 3,200 | By Cash a/c (Collected) | 16,000 |
To Income & Expenditure A/c | 12,250 | By Closing Outstanding (3200-2550) | 650 |
(Income) (Balancing figure) | |||
To Closing Balance (Advance) | 1,200 | ||
16.650 | 16.650 |
Salary A/c
To Cash/Bank a/c (Paid) | 15,000 | By Balance outstanding b/d | 3,600 |
By Income & Expenditure A/c (Expense) | 11,400 | ||
15.000 | 15,000 |
Rent A/c
To Cash a/c (Paid) | 1,000 | By Income & Expenditure (Balance figure) | 850 |
By Closing Prepaid c/f | 150 | ||
1,000 | 1,000 |
Important Points:
- Govt. grant for Building will be credited to building fund a/c and will appear in Balance sheet.
- Addition to/Purchase of Furniture, Equipment, Building and Investment will be debited to respective asset a/c and will appear in Balance sheet.
21.2 EXPLAIN BALANCE SHEET
♦ Balance sheet is prepared as usual, the only difference is that some new type of items may also be there in this case. Like funds a/c.
♦ Balance sheet shows the financial position of the entity as at a particular point of time.
♦ It shows what and how much entity owns (i.e. its assets) and
♦ How much it owes to others (i.e. its liabilities),
♦ The balance is the owners equity i.e. Capital fund/trust fund.
♦ It is not an account, hence does not have debit and credit side.
♦ On one side assets like fixed assets (building, furniture, etc), current assets (like stock, debtors, receivables, cash bank balance, advances, pre-paid etc.) and investments if any are shown.
♦ On the other side in addition to owners capital Le trust fund and reserves, the outside liabilities like loans taken, creditors, expenses payable etc. are shown.
♦ The two sides total must be same.
Important Points:
Even though balance sheet does not have debit and credit side, student should remember that asset side represent debit and capital and liability side represent credit. It will help in correctly preparing final accounts.
Generally Mercantile/accrual system is followed, as it is the proper and complete system to measure the performance of entity and to show its financial position. In your syllabus every where this is considered. Under this system, incomes are recognized when these are earned irrespective of whether amount is received or not. Similarly expenses are recognized when these are incurred or accrued irrespective of whether amount is paid or not. As a result we have to make adjustment for expenses outstanding (payable), prepaid, income outstanding (receivable) and advance-received etc.
Simple Format of balance sheet.
Bhagat Singh College Sports Club, Delhi Balance Sheet as at 31st March, 2011
Liabilities | Rs. | Assets | Rs. | ||
Capital Fund: | Fixed Assets: | ||||
Opening Balance | — | Furniture | — | ||
Add: Surplus as per I&E a/c | — | Building | — | —- | |
Add: Entrance Fees | — | ||||
Add: Donation capitalized | — | ||||
Add: Donation in kind | — | —- | Investments: | ||
Prize Fund Investments | — | ||||
Prize Fund: | Building Fund Investments | — | |||
Opening Balance | — | General Investment | — | —- | |
Add: Donations | — | ||||
Add: Income on Investment | — | Current Assets: | |||
Stock of Sports Material | — | ||||
Less: Expenses incurred | — | —- | Subscription in arrears | — | |
Prepaid Expenses | — | ||||
Building Fund: | Cash Balance | — | |||
Opening Balance | — | Bank Balance | — | —- | |
Add: Donations | — | ||||
Add: Income on Investment | — | —- | |||
Current Liabilities: | |||||
Creditors for sports material | — | ||||
Subscription in advance | — | ||||
Outstanding Expenses | — | —- | |||
Total | —— | Total | —– |
Illustration 21.2: (Adopted from Nov. 1999) Mahaveer Sports Club gives the following information for the year ended March 31,2011. . . .
As on 31.3.2010 (Rs.) | As on 31.3.2011 (Rs.) | |
Outstanding Expenses | 2,800 | 4,100 |
Library Books | 10,000 | 20,000 |
Sports Goods | 8,000 | 10,000 |
Furniture and Fixtures | 10,000 | 10,000 |
Subscriptions Receivable | 5,000 | 12,000 |
Investment – Government Securities | 50,000 | 50,000 |
Accrued Interest | 600 . | 600 |
Cash Bank balance | 5,200 | 12,020 |
Provide Depreciation on:
Furniture and Fixtures @ 10% p.a. Sports Goods @ 20% p.a. Library Books @10% p.a.-
Surplus for the year after providing above depreciation is Rs. 20,220.
You are required to prepare Clubs Opening balance sheet as on 1.4.2010 and Closing balance sheet as on 31.3.2011.
Solution:
Balance sheet on date 31.3.2011
Liabilities | Rs. | Assets | Rs. | ||
Capital fund | 86,000 | Sports goods | 8,000 | ||
(+) Surplus | 20.220 | 1,06,220 | (+) Addition | 2,000 | |
Outstanding expenses | 4,100 | (-) Depreciation 20% | 1.800 | 8,200 | |
Library | 10,000 | ||||
(+) Addition | 10,000 | ||||
(-) Depreciation 10% | 1.500 | 18,500 | |||
Furniture | 10,000 | ||||
(-) Depreciation 10% | 1.000 | 9,000 | |||
Cash bank | 12,020 | ||||
Subscription Outstanding | 12,000 | ||||
Investment | 50,000 | ||||
Accrued interest | 600 | ||||
1,10,320 | 1,10,320 |
Depreciation on addition during the year is charged for half of the year (i.e. for 6 month)
Balance sheet on date 31.3.2010 (1.4.2010)
Liabilities | Rs. | Assets | Rs. |
Capital fund (Balancing figure) | 86,000 | Cash/bank | 5,200 |
Outstanding expenses | 2,800 | Library | 10,000 |
Sports goods | 8,000 | ||
Furniture | 10,000 | ||
Investment | 50,000 | ||
Accrued interest | 600 | ||
Subscription outstanding | 5,000 | ||
88,800 | 88,800 |
21.3 DESCRIBE RECEIPT AND PAYMENT ACCOUNT (R&P A/C)
♦ Receipt & Payment Account – is a summarized cash book.
♦ All receipts in that year may be loan, a capital receipt or an income will be Debited to Receipt & Payment a/c.
♦ Income received in this year may be related to this year or previous year or next year.
♦ Similarly all payments made in this year may be for capital expenditure, repayment of loan, revenue expenditure etc. should be credited to Receipt & Payment A/c.
♦ The revenue expenditure paid in this year, may relate to this year or previous year or next year.
♦ Balance of this a/c is the closing cash and bank balance and will appear in the balance sheet.
Important Points:
Such organization are not doing business (some small incidental activity may be there) hence significant part of its transactions take place on cash. Credit transactions and adjustments will be quite insignificant. Hence it is customary for such organization to present receipt and payment a/c as part of final a/c.
Simple Format of Receipt and Payment A/c.
Receipts and Payments Account of Bhagat Singh College Sports Club, Delhi
for the year ended on 31 st March, 2011
Dr. | Cr. | ||||
Receipts | Rs. | Payments | Rs. | ||
To Opening Balance b/f: Cash — | By Rent | — | |||
Bank — | —- | By Postage Expenses | — | ||
To Subscription | — | By Furniture (Purchased) | — | ||
To Entrance Fees | — | By Creditors for sports Material | — | ||
To General Donations | — | By Cost of prizes | |||
To Donations for Prize Fund | — | By Building Fund Investment | |||
To Donations for Building Fund | By Match Expenses | — | |||
To Sale of old Sports Materials | — | By Miscellaneous Expenses | — | ||
To Interest on | By Closing Balance c/f; Cash | ||||
Prize Fund Investment — | Bank | — | |||
Building Fund Investment — | |||||
General Investment — | —- | ||||
To Miscellaneous Receipts | —- | ||||
—– | —- | ||||
Differentiation between Fund account and money
Fund word is used for Cash i.e. money in finance but when we talk of Fund a/c in accounts remember for ever that it is not money, rather it’s a notional account which gives information about the nature and purpose of receipt and has credit balance and appears on liability side. Money or cash has debit balance and hence appears on asset side. Just remind yourself of double entry say for donation or grant received for building fund.
Cash/Bank A/c Dr. — : This is asset
To Building Fund A/c —- : This shows the nature and purpose of above receipt.
Illustration 21.3: (Adopted from Nov. 1998) The following informations were obtained from the books of Delhi Club as on 31.3.2011 at the end of the first year of the Club. You are required to prepare Receipts and Payments Account for the year ended 31.3.2011:
(i) Donations received for Building and Library Room Rs. 2,00,000.
(ii) Other revenue receipts:
Actual Receipts Rs. | |
Entrance Fees | 17,000 |
Subscription | 19,000 |
Locker Rents | 600 |
Sundry Income | 1,060 |
Refreshment Account | 16,000 |
(iii) Other actual payments:
Actual Payments Rs. | |
Land (cost Rs. 10,000) | 10,000 |
Furniture (cost Rs. 1,46,000) | 1,30,000 |
Salaries | 4,800 |
Maintenance of Playgrounds | 1,000 |
Rent | 8,000 |
Refreshment Account | 8,000 |
Donations to the extent of Rs. 25,000 were utilized for the purchase of Library Books, balance was still unutilized. In order to keep it safe, 9% Govt. Bonds of Rs. 1,60,000 were purchased on 31.3.2011. Remaining amount was put in the Bank on 31.3.2011 under the term deposit.
Solution:
Delhi Club
Receipt and Payments A/c for the year ended 31st March, 2011
Receipts | Rs. | Payments | Rs. |
To Building and library fund a/c | 2,00,000 | By Library book a/c 25,000 | |
To Entrance fees a/c | 17,000 | By Bond 9% Govt. a/c 1,60,000 | |
To Subscription a/c | 19,000 | By Fixed deposit a/c (Bal. fig) 15.000 | 2,00,000 |
To Locker rent a/c | 600 | By Land a/c | 10,000 |
To Sundry income a/c | 1,060 | By Furniture a/c | 1,30,000 |
To Refreshment a/c | 16,000 | By Salaries a/c | 4,800 |
To Closing balance (Overdraft balance) | 1,08,140 | By Maintenance of playgrounds a/c | 1,000 |
(balancing figure) | By Rent a/c | 8,000 | |
By Refreshment a/c | 8,000 | ||
3,61,800 | 3,61,800 |
21.4 WHAT IS ENTRANCE FEES AND HOW IS IT ACCOUNTED FOR?
♦ The Associations collect entrance fees/admission fees from the new members at the time of their admission.
♦ It is different from the membership fees/subscriptions, which are received every year and hence treated as revenue income and transferred to Income & Expenditure account. But the entrance fees is received only once from a member, hence it can be treated as follows:
(a) If the amount is just sufficient to recover the expenditure incurred while admitting any member then it will be treated as revenue income and transferred to Income & Expenditure account.
(b) Otherwise the entrance fees can be Capitalized & transferred to the Trust Fund Account. OR;
(c) Entrance fees may be treated as deferred Income and shown in the Balance Sheet under the head “Entrance Fees Account” & Part-part amount can be written off every year by transferring to Income & Expenditure A/c in proportion to the benefit extended to the members, estimated on some suitable basis.
Illustration 21.4 : 50 members joined the trust and paid entrance fees Rs.500 each. Pass journal entry and suggest treatment.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank a/c | Dr. | 25,000 | |
To Entrance fees A/c | 25,000 | |||
(Entrance fees received 50 × 500 = 25,000) | ||||
2. | Entrance fees A/c | Dr. | 25,000 | |
To Income & Expenditure A/c | 25,000 | |||
(Entrance fees received recognized as income) |
Illustration 21.5 : 50 members joined the trust and paid entrance fees Rs.500 each. Against this Trust provides certain benefit to the members for the life. Pass journal entry and suggest treatment.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank a/c | Dr. | 25,000 | |
To Entrance fees A/c | 25,000 | |||
(Entrance fees received 50 × 500 = 25,000) | ||||
2. | Entrance fees A/c | Dr. | 25,000 | |
To Trust Fund A/c | 25,000 | |||
(Entrance fees received capitalised) |
Illustration 21,6 : 50 members joined the trust and paid entrance fees Rs.500 each. Against this Trust provides certain benefit to the members for a period of five years. Pass journal entry and suggest treatment.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank a/c | Dr. | 25,000 | |
To Entrance fees A/c | 25,000 | |||
(Entrance fees received 50 × 500 = 25,000) | ||||
2. | Entrance fees A/c | Dr. | 5,000 | |
To Income & Expenditure A/c | 5,000 | |||
(Entrance fees received, 1/5th recognized as income.) Note: Balance Rs.20,000 of entrance fees will appear on liability side of balance sheet as deferred income and will be written off in next 4 years. |
21.5 EXPLAIN ACCOUNTING OF MEMBERSHIP FEES AND SUBSCRIPTION
♦ These are usually charged yearly from the members hence are treated as revenue income and credited to I&E a/c.
♦ The amount received should be duly adjusted for outstanding and advances, so as to get the figure of income for the year.
♦ When number of members and the rate of membership fees/subscription is given then income = number of member × rate per member.
♦ Outstanding subscription i.e. subscription receivable will be shown on the asset side of balance sheet.
♦ Advance subscription i.e. unearned subscription will be shown on the liability side of balance sheet.
Illustration 21.7 From the following particulars, calculate the amount of subscription to be credited to the income and expenditure account for the year ended 31st March, 2011:
31.3.2010 | 31.3.2011 | |
Outstanding subscriptions | 1,500 | 3,000 |
Subscriptions received in advance | 900 | 1,300 |
A sum of Rs. 25,500 was received as subscriptions during the year ended 31st March, 2011. Solution:
Dr. | Subscription A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening outstanding subscription b/f | 1,500 | By Opening advance subscription b/f | 900 | ||
To I&E a/c (balancing figure) (Income) | 26,600 | By Cash/Bank a/c (Received) | 25,500 | ||
To Closing advance subscription c/f | 1,300 | By Closing outstanding subscription c/f | 3,000 | ||
29,400 | 29,400 | ||||
Important Points:
When figure of subscription income is known, by preparing above account we can get subscription received as balancing figure. Such accounts can be prepared for any other income account.
Alternatively above figure can be ascertained by preparing a statement.
Rs. | ||
Subscription received during the year | 25,500 | |
Add: Opening advance | 900 | |
Closing outstanding | 3,000 | 3,900 |
29,400 | ||
Less: Closing advance | 1,500 | |
Opening outstanding | 1,300 | 2,800 |
Subscription income for the year | 26,600 |
Illustration 21.8 : (Adopted from Dec. 2000) Members of a club, are paying an annual subscription of? 500. On 31st March, 2010, subscriptions in arrears from 10 members and received in advance from 5 members. Subscriptions received during the year ended 31st March, 2011 from 446 members, including from 21 members for the year 2011-2012. Subscriptions in arrears as on 31st March, 2011 from 30 members.
Calculate the amount of subscriptions income for the year ended on 31st March, 2011 by preparing subscriptions a/c.
Solution:
Dr. | Subscription A/c | Cr. |
Particulars | Rs. | Particulars | Rs. |
To Opening outstanding b/f (10 × 500) | 5,000 | By Opening advance b/f (5 × 500) | 2,500 |
To I&E a/c (balancing figure) | 2,25,000 | By Cash/Bank a/c (446 × 500) | 2,23,000 |
(Income for the year) | {Received during the year) | ||
To Closing advance c/f (21 × 500) | 10,500 | By Closing outstanding c/f (30 × 500) | 15,000 |
2,40,500 | 2,40,500 |
Alternatively above figure can be ascertained by preparing a statement.
Rs. | ||
Subscription received during the year | 2,23,000 | |
Add: Opening advance | 2,500 | |
Closing outstanding | 15,000 | 17,500 |
2,40,500 | ||
Less: Closing advance | 10,500 | |
Opening outstanding | 5,000 | 15,500 |
Subscription income for the year | 2,25,000 |
21.6 WHAT DO YOU MEAN BY FUND FOR SPECIFIC PURPOSE?
♦ The Trust/Association generally creates funds for various purposes.
♦ The funds are created by crediting the donations and fees etc., received for the purpose of that fund or by transfer from Income & Expenditure Account.
♦ Until the funds are utilized for the specified purpose, the same may be invested in Government Securities/ Bank Deposits etc.
♦ Then the income earned on such investments will be credited to that fund account and not to Income and Expenditure Account.
♦ The purpose of above is to keep proper control and utilise the money for the purpose for which it is intended.
♦ Fund a/c will appear on the liability side of the balance sheet.
♦ Whereas investment of the same fund will appear on the asset side of the balance sheet.
21.7 CLASSIFY FUNDS FOR SPECIFIC PURPOSE
The funds can be broadly divided into two types:
- Funds for some Capital Expenditure.
- Funds for meeting some Revenue Expenditure.
21.8 EXPLAIN ACCOUNTING OF FUNDS FOR CAPITAL EXPENDITURE
♦ In case of Funds for the purpose of some capital expenditure, when any amount is spent for that purpose, the same will be Debited to a separate Assets Account/Capital Expenditure Account.
♦ When such funds are utilized it results into an asset for the organization.
♦ e,g. Building Fund. The donations etc., are credited to Building Fund A/c
♦ Whereas expenses incurred for Building Construction are debited to Building A/c and the same will appear on the asset side of the balance sheet.
♦ Hence, in such cases the credit balance in fund account will keep on accumulating.
♦ When that asset is complete, an equivalent amount can be transferred debiting building fund a/c and crediting capital fund a/c. Student should do it only if so required by the question.
Illustration 21.9 : A society receives donations of Rs.5,00,000 for the construction of building. It has invested Rs.2,00,000 out of it and spent Rs.2,75,000 for the construction of building which is in progress. Interest on investment received for the year Rs.2,000. Pass journal entry and show how the figures will appear in balance sheet.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | ||
1. | Cash/Bank A/c | Dr. | 5,00,000 | ||
To Building Fund A/c | 5,00,000 | ||||
(Donation received for building fund) | |||||
2. | Building Fund Investment A/c | Dr. | 2,00,000 | ||
To Cash/Bank A/c | 2,00,000 | ||||
(Building fund invested ) | |||||
Date | Particulars | Dr. Rs. | Cr. Rs. | ||
3. | Building (Under construction) A/c Dr. | 2,75,000 | |||
To Cash/Bank A/c | 2,75,000 | ||||
(Amount spent for Building construction) | |||||
4. | Cash/Bank A/c Dr. | 2,000 | |||
To Building Fund A/c | 2,000 | ||||
(Interest received on building fund investment) Note: Balance Rs.27,000 of building fund is in cash/bank form and will appear on asset side of balance sheet. Investment will be sold when required for construction of building. |
Balance Sheet as at 31st March, 2011 (Extract only)
Liabilities | Rs. | Assets | Rs. | |
Building Fund: | Fixed Assets Building (Work in progress) Investments: | 2,75,000 | ||
Opening Balance Add: Donations | 5,00,000 | Building Fund Investments | 2,00,000 | |
Add: Income on Investment | 2,000 | 5,02,000 | Current Assets: | |
Cash/Bank Balance | 27,000 | |||
Total | 5,02,000 | Total | 5,02,000 |
21.9 EXPLAIN ACCOUNTING OF FUNDS FOR REVENUE EXPENDITURE
♦ e.g. Price fund, Tournament Fund etc.
♦ The incomes, donations etc. received for a particular purpose are credited to that Fund a/c
♦ All expenditure incurred for that purpose are debited to that Fund a/c.
♦ The Balance if credit is shown in balance sheet and carried forward to next year,
♦ But if it is Debit (that means expenditure is more) then it will be transferred to Income & Expenditure a/c. (The Funds/Reserve Account should never show Debit balance).
♦ When such funds are utilized, it does not create any asset for the organization, e.g. Prices distributed or expenses incurred to organise tournament etc.
Illustration 21.10 : A society receives donations of Rs.3,00,000 for the distribution of prizes to rank holder students. It has invested Rs.2,50,000 out of it and spent Rs. 35,000 for the distribution of prizes. Interest on investment received for the year Rs. 3,000. Pass journal entry and show how the figures will appear in balance sheet.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank A/c | Dr. | 3,00,000 | |
To Prize Fund A/c | 3,00,000 | |||
(Donation received for prize fund) | ||||
2. | Prize Fund Investment A/c | Dr. | 2,50,000 | |
To Cash/Bank A/c | 2,50,000 | |||
(Prize fund invested) | ||||
3. | Prize fund A/c | Dr. | 35,000 | |
To Cash/Bank A/c | 35,000 | |||
(Amount spent for distribution of prizes) | ||||
4. | Cash/Bank A/c | Dr. | 3,000 | |
To Prize Fund A/c | 3,000 | |||
(Interest received on prize fund investment) Note: Balance Rs.l8,000 of prize fund is in cash/bank form and will appear on asset side of balance sheet. Investment will be sold when required for prizes distribution or alternatively only interest income can be used and investment kept intact. |
Balance Sheet as at 31st March, 2011 (Extract only)
Liabilities | Rs. | Assets | Rs. | |
Prize Fund: | Investments: | |||
Opening Balance | — | Prize Fund Investments | 2,50,000 | |
Add: Donations | 3,00,000 | |||
Add: Income on Investment | 3,000 | Current Assets: | ||
3,03,000 | Cash/Bank Balance | 18,000 | ||
Less: Expenses incurred | 35,000 | 2,68,000 | ||
Total | 2,68,000 | Total | 2,68,000 |
21.10 EXPLAIN ACCOUNTING FOR INVESTMENT
♦ When organization has surplus funds, it can invest in securities or bank deposits etc.
♦ This investment apart from keeping money safe and liquid also gives incomes in the form of interest/dividend.
♦ When investments are unrelated to any specific fund then its income is credited to I&E a/c.
♦ When funds for specific purpose are not immediately usable, then the same may be invested.
♦ As and when need of fund arises for that purpose, investments are sold and proceeds used for that purpose.
♦ Income and profit/loss on such investments will be credited to related fund a/c and not to I&E a/c.
21.11 COMMENT ON FUND BALANCE AND ITS RELATED INVESTMENT BALANCE
♦ If there is Investment account against a particular fund then the credit balance in fund account should not be less than the investment a/c.
♦ When expenses incurred are more than the income on that fund then such situation will arise.
♦ Hence in such cases the excess expenses incurred on that activity can be debited to Income and Expenditure a/c instead of that fund a/c.
♦ The balance of Fund a/c, can be more than its Investment a/c that means remaining fund may be in the form of cash bank balance.
Important Points:
The fund word is commonly used to refer money (i.e. cash/bank balances which are assets and has debit balance). But fund a/c is not money in itself, rather it is the second effect (credit) of the money received, hence fund a/c always shows credit balance and appears on the liability side.
Illustration 21.11 : A society receives donations of Rs.3,00,000 for the distribution of prizes to rank holder students. It has invested Rs.2,50,000 out of it and spent Rs.63,000 for the distribution of prizes. Interest on investment received for the year Rs.3,000. Pass journal entry and show how the figures will appear in balance sheet.
Solution:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank A/c | Dr. | 3,00,000 | |
To Prize Fund A/c | 3,00,000 | |||
(Donation received for prize fund) | ||||
2. | Prize Fund Investment A/c | Dr. | 2,50,000 | |
To Cash/Bank A/c | 2,50,000 | |||
(Prize fund invested) | ||||
3. | Prize fund A/c | Dr. | 63,000 | |
To Cash/Bank A/c | 63,000 | |||
(Amount spent for distribution of prizes) | ||||
4. | Cash/Bank A/c | Dr. | 3,000 | |
To Prize Fund A/c | 3,000 | |||
(Interest received on prize fund investment) | ||||
5. | Income and Expenditure A/c Dr. | 10,000 | ||
To Prize Fund A/c | 10,000 | |||
(Amount spent for distribution of prizes in excess of (fund balance – investment) transferred to I&E a/c so that fund balance will not be less than investment) |
Balance Sheet as at 31st March, 2011 (Extract only)
Liabilities | Rs. | Assets | Rs. | |
Prize Fund: Opening Balance | — | Investments: Prize Fund Investments | 2,50,000 | |
Add: Donations | 3,00,000 | |||
Add: Income on Investment | 3,000 | Current Assets: | ||
3,03,000 | Cash/Bank Balance | – | ||
Less: Expenses incurred 63,000 | ||||
Less: Transferred to I&E 10,000* | 53,000 | 2,50,000 | ||
Total | 2,50,000 | Total | 2,50,000 |
*(excess 10,000 spent is out of general income)
21.12 SUGGEST ACCOUNTING OF GRANTS/SUBSIDIES
♦ Grants/Subsidies are received from Govt. or other local authorities to be used for the specified purpose.
♦ Accounting of such Grants/Subsidies will depend upon the purpose for which it is received.
♦ Grants/Subsidies may be for (1) Capital expenditure (i.e. for acquiring fixed assets) or (2) Revenue expenditure (i.e. for maintenance etc.).
♦ In the 1st case it will be credited to separate a/c & shown in the Balance sheet on the liability side.
♦ It can be deferred and credited to l&E a/c in proportion of depreciation charged on that asset or alternatively grant can be credited to the asset a/c itself consequently reducing depreciation.
♦ If there is fund a/c for such capital expenditure then it can be credited to that fund a/c.
♦ In the 2nd case, it will be credited as income in Income & Expenditure a/c because corresponding expense is also debited in income and expenditure a/c.
♦ Thus above accounting is in accordance with the matching principle.
Illustration 21.12 : A society receives grant of Rs.5,00,000 for the construction of building. Pass journal entry.
Solution:
It is a grant for capital expenditure and can be treated as follows:
1st Alternative: it is capitalized in the relevant fund:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank A/c | Dr. | 5,00,000 | |
To Building Fund A/c | 5,00,000 | |||
(Grant received for building fund) |
2nd Alternative: it is capitalized as a separate item:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank A/c | Dr. | 5,00,000 | |
To Government Grant A/c | 5,00,000 | |||
(Grant received for building is treated as a capital receipt) |
3rd Alternative: it is credited to the asset acquired:
Date | Particulars | Dr. Rs. | Cr. |
1. | Cash/Bank A/c Dr. | 5,00,000 | |
To Building A/c | 5,00,001 | ||
(Grant received for building is treated as a capital receipt and credited to building to reduce its cost. Consequently depreciation will be calculated on reduced base.) |
4th Alternative: it is treated as a deferred income:
Date | Particulars | Dr. Rs. | Cr. Rs. | |
1. | Cash/Bank A/c | Dr. | 5,00,000 | |
To Government Grant A/c | 5,00,000 | |||
(Grant received for building is treated as a deferred income) | ||||
2. | Government Grant A/c | Dr. | 50,000 | |
To Income & Expenditure A/c | 50,000 | |||
(Grant is amortised in proportion to depreciation charged on building. Assuming building is being depreciated by SLM over 10 years, 1 / 10th of grant will be amortised) |
Illustration 21.13: A society receives Salary Grant from Government of Rs.1,00,000.50% of the Grant is used. Pass journal entry.
Solution:
It is a grant for revenue expenditure and hence credited to Income & Expenditure A/c:
Date | Particulars | Dr. (Rs.) | Cr. (Rs.) |
1. | Cash/Bank A/c Dr. | 1,00,000 | |
To Salary Grant A/c | 1,00,000 | ||
(Salary grant received) | |||
2. | Salary Grant A/c Dr. | 50,000 | |
To Income & Expenditure A/c | 50,000 | ||
(Grant is credited to Income & Expenditure a/c being of revenue nature) |
21.13 SUGGEST TREATMENT FOR DONATION
Explain the accounting treatment of donation received for specific purpose in the case of charitable society. (May, 2007)
♦ Donations are the voluntary contribution provided by the well wishers for general or specific purpose.
♦ If donations are received for a particular purpose then it will be credited to that particular fund a/c say donation received for construction of building credited to Building fund a/c.
♦ Otherwise general donations will be credited to Income & Expenditure a/c.
♦ If question requires capitalisation, but does not specify the fund to which it should be credited, then credit such donation to trust fund a/c.
♦ Donation may be in kind then stock or fixed asset whatever is received will be debited and the credit will be as explained in above points.
21.14 EXPLAIN TREATMENT OF SCHOLARSHIP
♦ Scholarship is the monetary benefit given to students under certain schemes by Govt, or other authorities etc.
♦ When received scholarship a/c will be credited and when paid to student scholarship a/c will be debited and hence in general it will not appear in financial statement.
♦ In case of schools/colleges, there may be credit balance in Scholarship a/c which represents Scholarship received from Govt. etc. hut yet to be distributed to the students. This should be shown as liability in the Balance sheet.
♦ Debit balance in scholarship a/c may represent paid to student and recoverable from the concerned authority. This should be shown as an asset in the Balance sheet.
♦ But if college has its own scholarship then that debit balance will go to I&E a/c.
Illustration 21.14 : A College receives Scholarship from government for backward class scholars of Rs.l,00,000. The same is distributed to the concerned students. Pass journal entry.
Solution:
Here College is just acting as a distribution agent:
Date | Particulars | Dr. (Rs.) | Cr. (Rs.) |
1. | Cash/Bank A/c Dr. | 1,00,000 | |
To Scholarship A/c | 1,00,000 | ||
(Scholarship received from govt.) | |||
2. | Scholarship A/c Dr. | 1,00,000 | |
To Cash/Bank A/c | 1,00,000 | ||
(Scholarship received from govt, is distributed to the concerned students) |
If before year end 1st step take place but not the 2nd then ^1,00,000 of scholarship will appear as liability in balance sheet. If before year end 2nd step take place but not the 1st thenX1,00,000 of scholarship will appear as asset in balance sheet.
Illustration: 21.15: A College gives Scholarship to merit rank holders amounting to Rs.l,00,000. Pass journal entry.
Solution:
Here College is distributing scholarship hence it is its expenditure:
Date | Particulars | Dr. (Rs.) | Cr. (Rs.) | |
1. | Scholarship A/c | Dr. | 1,00,000 | |
To Cash/Bank A/c | 1,00,000 | |||
(Scholarship is distributed to the merit students) | ||||
2. | Income & Expenditure A/c | Dr. | 1,00,000 | |
To Scholarship A/c | 1,00,000 | |||
(Scholarship expense transferred to Income & Expenditure a/c) |
21.15 HOW TO PRESENT INCOME AND EXPENDITURE OF SPECIAL ACTIVITIES/FUNCTIONS/ PROGRAM?
♦ Trust may organize various functions/activities like Charity show, sports functions etc.
♦ Income & Expenses on this account are generally netted & net balance is shown in the Income & Expenditure a/c.
♦ Basic objective of such functions is to raise funds for the organization and use such funds for the objects of the trust.
Illustration 21.16 : A society receives donations of Rs.50,000 for the charity show of music for raising the funds. It receives Rs.75,000 from the sale of tickets. It has spent Rs.63,000 for the program. Pass journal entry and show how the figures will appear in Income and Expenditure a/c.
Solution:
Date | Particulars | Dr. (Rs.) | Cr. (Rs.) | |
1. | Cash/Bank A/c | Dr. | 50,000 | |
To Charity Show-Income A/c | 50,000 | |||
(Donation received for Charity show) | ||||
2. | Cash/Bank A/c | Dr. | 75,000 | |
To Charity Show-Income A/c | 75,000 | |||
(Received from sale of tickets for Charity show) | ||||
3. | Charity Show-Expense A/c | Dr. | 63,000 | |
To Cash/Bank A/c | 63,000 | |||
(Amount spent for organising charity show) |
Income & Expenditure for the year ended 31st March, 2011 (Extract only)
Expenditure | Rs. | Income | Rs. |
Charity Show: | |||
Income earned 1,25,000 | |||
Expenditure incurred 63,000 | 62,000 | ||
Total | Total |
21.16 HOW MISSING DATA RELATED TO ANY A/C CAN BE ASCERTAINED?
♦ For ascertaining the missing information, if any, the accounts as follows can be prepared.
♦ Whatever information of that a/c is available should be 1st entered and on balancing the account, we will get the missing information.
♦ It can be done by add less also, but it is advisable to prepare accounts.
21.17 DRAFT AN INCOME ACCOUNT
Any and every income account can be as follows:
Income A/c
To Opening Outstanding B/f (Receivable) | xxx | By Opening Advance B/f | xxx |
To Income & Expenditure a/c (Income for the year) | xxx | By Cash/Bank a/c (Received during the year) | xxx |
To Closing Advance C/f | xxx | By Closing outstanding C/f (Receivable) | xxx |
Total | xxx | Total | xxx |
Illustration 21.17 : (Adopted from June 1998) From the following particulars, calculate the amount of subscription to be credited to the income and expenditure account for the year ended 31st March, 2011:
31.3.2010 | 31.3.2011 | |
Outstanding subscriptions | 1,500 | 1,200 |
Subscriptions received in advance | 900 | 540 |
A sum of Rs. 14,670 was received as subscriptions during the year ended 31st March, 2011.
Solution:
Dr. | Subscription A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening outstanding subscription | 1,500 | By Opening advance subscription | 900 | ||
To I&E a/c (Income) (balance figure) | 14,730 | By Cash/Bank a/c (received) | 14,670 | ||
To Closing advance subscription | 540 | By Closing outstanding subscription | 1,200 | ||
16,770 | 16,770 | ||||
21.18 DRAFT AN EXPENSE ACCOUNT
Any and every expenses account can be prepared as follows:
Expense A/c
Particular | Rs. | Particulars | Rs. |
To Opening Advance B/f (Prepaid) | xxx | By Opening Outstanding B/f (Payable) | xxx |
To Cash/Bank A/c (Paid during the year) | xxx | By Income & Exp. A/c (Expense for the year) | xxx |
To Closing outstanding C/f (payable) | xxx | By Closing Advance C/f (prepaid) | xxx |
Total | xxx | Total | xxx |
Illustration 21.18 : On the basis of the following information related to its many rented premises, calculate the amount that will appear against the item ‘Rent’ in the income and expenditure account for the year ended 31st March, 2011:
Rs. | |
Rent prepaid as on 1st April, 2010 | 12,000 |
Rent payable as on 1st April, 2010 | 25,600 |
Amount paid for rent during the year ended 31st March, 2011 | 1,40,000 |
Rent prepaid as on 31st March, 2011 | 23,200 |
Rent payable as on 31st March, 2011 | 24,000 |
Solution:
Dr. | Rent A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening prepaid b/f | 12,000 | By Opening payable b/f | 25,600 | ||
To Cash/Bank a/c (Paid) | 1,40,000 | By I&E a/c (balancing figure) (rent expense) | 1,27,200 | ||
To Closing payable c/f | 24,000 | By Closing prepaid c/f | 23,200 | ||
1,76,000 | 1,76,000 | ||||
21.19 DRAFT AN ACCOUNT OF CONSUMABLES LIKE STATIONERY, MEDICINES, SPORTS MATERIAL ETC.
Any and every such account can be prepared as follows:
Stationery Stock A/c
Particulars | Rs. | Particulars | Rs. |
To Opening stock balance b/f | xxx | By I&E a/c (stationery used/consumed) | xxx |
To Cash/R&P a/c (purchases) | xxx | ||
To Creditors a/c (purchases) | xxx | By Closing stock balance c/f | xxx |
xxx | xxx |
Important Points:
When opening Balance sheet is not given the same should be prepared to ascertain any missing information like opening balance of Trust fund etc.
Other a/cs. Like assets a/c, loan a/c, creditors a/c, goods a/c, etc. can also be prepared to ascertain missing data if any.
Illustration 21.19 : (Adopted from June 2003) On the basis of the following information, calculate the amount that will appear against the item ‘stationery consumed’ in the income and expenditure account for the year ended 31st March, 2011:
Rs. | |
Stock of stationery as on 1st April, 2010 | 12,000 |
Creditors for stationery as on 1st April, 2010 | 25,600 |
Amount paid for stationery during the year ended 31st March, 2011 | 1,40,000 |
Stock of stationery as on 31st March, 2011 | 23,200 |
Creditors for stationery as on 31st March, 2011 | 24,000 |
Solution:
Dr. | Stationery A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening stock b/f | 12,000 | By Opening Creditors b/f | 25,600 | ||
To Cash/Bank a/c | 1,40,000 | By I&E a/c (balancing figure) | 1,27,200 | ||
(Stationery consumed) | |||||
To Closing creditors c/f | 24,000 | By Closing stock c/f | 23,200 | ||
1,76,000 | 1,76,000 | ||||
Note: Alternatively you can prepare two accounts as explained below that will also show you amount of stationery purchased.
Creditors for Stationery A/c
Particulars | Rs. | Particulars | Rs. |
To Cash Bank a/c (Payment) | 1,40,000 | By Opening balance b/f | 25,600 |
To Closing balance c/f | 24,000 | By Stationery stock a/c (balancing figure) (Stationery purchased) | 1,38,400 |
1,64,000 | 1,64,000 |
Stationery Stock A/c
Particulars | Rs. | Particulars | Rs. |
To Opening balance b/f | 12,000 | By I&E a/c (balancing figure) (stationery’ used/consumed) | 1,27,200 |
To Creditors a/c (purchases) | 1,38,400 | By Closing balance c/f | 23,200 |
1,50,400 | 1,50,400 |
21.20 WHAT TYPE OF QUESTIONS ARE ASKED IN THE EXAM?
Generally there may be three types of questions:
(a) Receipt payment a/c and Opening Balance sheet or other information is given from which Income & Expenditure a/c & Balance sheet is required to be prepared, or
(b) Balance sheet & Income Expenditure a/c is given, from which Receipt & payment a/c is required to be prepared. or
(c) Trial balance and other information is given from which Income & expenditure a/c & Balance Sheet is to be prepared.
21.21 HOW TO PREPARE FINAL A/c WHEN RECEIPT & PAYMENT A/c IS GIVEN AND NOT TRIAL BALANCE?
♦ R&P a/c is nothing but summarized cash book which contains most of the transactions, and
♦ Whatever is not yet received/paid will be given as information.
♦ Opening balance sheet or opening balances will also be given.
In normal and usual cases, the opening balances are 1st taken to the respective a/c. All transactions are entered in cash book and other books of entry and then posted to ledger accounts. Balances of such a/cs are extracted and written in trial balance from which final accounts are prepared.
♦ Same process to be followed here, take opening balances in the a/c (assets have debit balance and liabilities have credit balance)
♦ Receipt side items represent debit to cash bank a/c, now make credit posting to the a/c according to the nature of receipt.
♦ Similarly payment side items have been credited to cash bank a/c and now make debit to the a/c according to nature of payment.
♦ For other information (which is nothing but transaction) make double entry and post to the respective a/c.
♦ By balancing various accounts you will get missing information which may be either balance of an account or a transaction.
♦ In case balancing figure is a transaction then complete its double entry.
♦ Now balance of all this accounts will result into trial balance and consequently final a/c.
♦ But if you do everything in writing, it will require lot of time and hence prepare only those accounts as working which has more debits and credits in it, and
♦ For others think and give treatment directly to I&E a/c and balance sheet depending upon whether this a/c is an expense, income, asset or liability.
♦ Thus instead of completing full account book and preparing the trial balance, we go short cut and directly prepare the final accounts.
Always keep double entry in mind and use the basic accounting procedure anywhere and everywhere. This is the key to your success.
Illustration: 21.20 : (Adopted from May 2002) When Opening balance sheet. Receipt & Payment a/c and some information is given.
Smith Library Society showed the following position on 31st March 2010:
Balance sheet as on 31st March, 2010
Liabilities | Rs. | Assets | Rs. |
Capital fund | 7,93,000 | Electrical Fittings | 1,50,000 |
Expenses payable | 7,000 | Furniture | 50,000 |
Books | 4,00,000 | ||
Investment in Securities | 1,50,000 | ||
Cash at bank | 25,000 | ||
Cash in hand | 25,000 | ||
8,00,000 | 8,00,000 |
The Receipt and Payment Account for the year ended on 31st March, 2011 is given below
Particulars (Receipt) | Rs. | Particulars (Payment) | Rs. |
To Balance b/f | By Electric charges | 7,200 | |
Cash at bank 25,000 | By Postage and stationery | 5,000 | |
Cash in hand 25,000 | 50,000 | By Telephone charges | 5,000 |
To Entrance Fees | 30,000 | By Books Purchased | 60,000 |
To Membership Subscription | 2,00,000 | By Outstanding Expenses paid | 7,000 |
To Sale proceeds of old papers | 1,500 | By Rent | 88,000 |
To Hire of lecture hall | 20,000 | By Investment in securities | 40,000 |
To Interest on securities | 8,000 | By Salaries | 66,000 |
By Bat c/f. Cash at bank | 20,000 | ||
Cash in hand | 11,300 | ||
3,09,500 | 3,09,500 |
You are required to prepare an Income and Expenditure Account for the year ended 31 st March, 2011 and a Balance Sheet as at 31st March, 2011 after making the following adjustments:
(a) Membership Subscription included Rs. 10,000 received in advance.
(b) Provide for outstanding rent Rs. 4,000 and salaries Rs. 3,000.
(c) Books to be depreciated @10% including additions. Electrical Fittings and Furniture’s are also to be depreciated at the same rate.
(d) 75% of Entrance Fees is to be capitalised.
(e) Interest on Securities is to be calculated @ 5% p.a. including purchases made on 1.10.2010 for Rs. 40,000.
Solution:
Income and Expenditure Account
Expenditure | Rs. | Income | Rs. |
To Electric charges a/c | 7,200 | By Subscription a/c | 1,90,000 |
To Postage and stamp a/c | 5,000 | By Hire of lecture hall a/c | 20,000 |
To Telephone Charges a/c | 5,000 | By Sale of old news a/c | 1,500 |
To Rent a/c | 92,000 | By Entrance fees a/c | 7,500 |
To Salary a/c | 69,000 | By Interest a/c | 8,500 |
To Depreciation a/c | 66,000 | By Deficit a/c | 16,700 |
2,44,200 | 2,44,200 |
Balance sheet on date 31.3.2011
Liabilities | Rs. | Assets | Rs. | ||
Capital fund | Electric fitting | 1,50,000 | |||
Balance | 7,93,000 | (-) Depreciation | 15,000 | 1,35,000 | |
(+) Entrance fees | 22,500 | Furniture | 50,000 | ||
(-) Deficit | 16,700 | 7,98,800 | (-) Depreciation | 5,000 | 45,000 |
Advance Subscription | 10,000 | Books | 4,00,000 | ||
Expense outstanding | 7,000 | (+) Addition | 60,000 | ||
(-) Depreciation | 46,000 | 4,14,000 | |||
Investment | 1,50,000 | ||||
(+) Addition | 40,000 | 1,90,000 | |||
Interest outstanding | 500 | ||||
Bank | 20,000 | ||||
Cash | 11,300 | ||||
8,15,800 | 8,15,800 |
Working notes:
Expenses outstanding A/c
Particulars | Rs. | Particulars | Rs. |
To Cash | 7,000 | By Opening balance b/f | 7,000 |
To Balance c/f. | 7,000 | By Rent | 4,000 |
By Salary | 3,000 | ||
14,000 | 14,000 |
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To I&E a/c (Income) | 1,90,000 | By Cash a/c (Received) | 2,00,000 |
To Closing advance subscription a/c | 10,000 | ||
2,00,000 | 2,00,000 |
Rent A/c
Particulars | Rs. | Particulars | Rs. |
To Cash a/c (paid) | 88,000 | By I&E a/c (Expense) | 92,000 |
To Closing outstanding rent a/c | 4,000 | ||
92,000 | 92,000 |
Salary A/c
Particulars | Rs. | Particulars | Rs. |
To Cash a/c (paid) | 66,000 | By I&E a/c (Expense) | 69,000 |
To Closing outstanding salary a/c | 3,000 | ||
69,000 | 69,000 |
Entrance fees A/c
Particulars | Rs. | Particulars | Rs. |
To Capital fund a/c (capitalized) | 22,500 | By Cash a/c | 30,000 |
To I&E a/c (income) | 7,500 | ||
30,000 | 30,000 |
Interest A/c
Particulars | Rs. | Particulars | Rs. |
To I&E a/ c (Income) | 8,500 | By Cash (received) | 8,000 |
By Interest outstanding a/c | 500 | ||
8,500 | 8,500 |
Calculation of interest on investment:
Interest for full year on opening balance | 1,50,000 × 5% | = 7,500 |
Interest for half year on addition | 40,000 × 596 × 6/12 | = 1.000 |
Total Interest for the year | 8,500 | |
Received during the year | 8.000 | |
Interest outstanding at the end of the year | 500 |
21.22 HOW TO PREPARE RECEIPT & PAYMENT A/C FROM INCOME & EXPENDITURE AND BALANCE SHEET?
♦ It is a reverse order question wherein final a/c is given and cash book (R&P a/c) is required to be prepared.
♦ The only change is that now in the working accounts prepared you will write figures of incomes and expenses and on balancing you will get receipt and payment.
♦ Expenditure side items represent debit to I&E a/c, now make credit posting to the concerned expenditure a/c.
♦ Similarly Income side items have been credited to I&E a/c and now make debit posting to the concerned Income a/c.
♦ Payment/receipt on a/c of fixed assets or loans etc. if any, can be similarly ascertained by preparing a/cs.
Illustration 21.21 : Income & Expenditure A/c and Opening & Closing Balance sheet is given.
Chail Cricket Club gives you the following information:
Income & Expenditure Account for the year ended Slat Dec., 2011
Expenditure | Rs. | Income | Rs. | |
To Remuneration to Coach a/c | 18,000 | By Donation & Subscription a/c | 1,02,000 | |
To Salaries & Wages a/c | 24,000 | |||
To Rent a/c | 12,000 | By Bar Room: | ||
To Repairs a/c | 11,000 | Receipts | 24,000 | 4,000 |
To Miscellaneous Expenses a/c | 7,000 | Less: Expenses | 20,000 | |
To Honorarium to Secretary a/c | 18,000 | By Bank Interest a/c | 2,000 | |
To Depreciation on Equipment a/c | 5,000 | By Hire Club Hall a/c | 12,000 | |
To Surplus a/c | 25,000 | |||
1,20,000 | 1,20,000 |
Balance Sheet
2010 | 2011 | 2010 | 2011 | ||
Rs. | LIABILITIES | Rs. | Rs. | ASSETS | Rs. |
Capital Fund as on 31-12-10 | 48,000 | 25,000 | Equipment | 20,000 | |
Entrance Fees | 10,000 | ||||
Surplus | 25.000 | 6,000 | Subscription Outstanding | 8,000 | |
48,000 | 83,000 | 5,000 | Cash-in-hand | 4,000 | |
4,000 | Subscription in advance | 3,000 | |||
Outstanding Liabilities: | |||||
1,500 | Miscellaneous Exp. | 1,000 | 2,500 | Cash at Bank | 10,000 |
2,000 | Salary & Wages | 3,000 | |||
3,000 | Honorarium to Secretary | 2,000 | 20,000 | Fixed Deposits | 50,000 |
58,500 | 92,000 | 58,500 | 92,000 |
Prepare the Receipt and Payment Account of the Club for the year ended 31st Dec. 2011. Solution:
Important Points:
Expenses in which there is no opening or closing adjustment will be equal to payment and will appear as it is in Receipt & Payment a/c.
Similarly Income in which there is no opening or closing adjustment will be equal to receipt and will appear as it is in Receipt & Payment a/c.
For others figure of receipt or payment will be ascertained by preparing concerned account.
Receipt and Payment A/c
Particulars (Receipt) | Amount | Particulars (Payment) | Amount | ||
To Opening Balance | By Remuneration to Coach a/c | 18,000 | |||
Cash a/c | 5,000 | By Rent a/c | 12,000 | ||
Bank a/c | 2.500 | 7,500 | By Repairs a/c | 11,000 | |
To Bar Receipt a/c | 24,000 | By Bar Expense a/c | 20,000 | ||
To Bank Interest a/c | 2,000 | By Fixed Deposit a/c | 30,000 | ||
To Hire Club Hall a/c | 12,000 | By Salary & Wages a/c | 23,000 | ||
To Entrance Fees a/c | 10,000 | By Misc. Expense a/c | 7,500 | ||
To Donation & Subscription a/c | 99,000 | By Honorarium to Secretary a/c | 19,000 | ||
By Closing Bal. Cash a/c | 4,000 | ||||
Bank a/c | 10.000 | 14,000 | |||
1.54.500 | 1.54.500 |
Working notes
Salary and Wages A/c
To Cash A/c (Bal. figure) | 23,000 | By Opening Outstanding b/d | 2,000 |
To Closing Outstanding c/d | 3,000 | By Income & Expenditure a/c | 24,000 |
26,000 | 26,000 |
Miscellaneous Expense A/c
To Cash A/c (Bal. figure) | 7,500 | By Opening Outstanding b/d | 1,500 |
To Closing Outstanding c/d | 1,000 | By Income & Expenditure a/ c | 7,000 |
8.500 | 8.500 |
Honorarium to Secretary A/c
To Cash (Bal. figure) | 19,000 | By Opening Outstanding b/d | 3,000 |
To Closing Outstanding c/d | 2,000 | By Income & Expenditure a/c | 18,000 |
21.000 | 21.000 |
Equipment A/c
To Opening Balance | 25,000 | By Depreciation a/c | 5,000 |
By Balance c/d | 20,000 | ||
25.000 | 25.000 |
Fixed Deposit A/c
To Opening Balance | 20,000 | By Balance c/d | 50,000 |
To Cash (Bal. figure) Deposit made | 30,000 | ||
50.000 | 50.000 |
Subscription A/c
To Opening Outstanding | 6,000 | By Opening Advance | 4,000 |
To Income & Expenditure a/c | 1,02,000 | By Cash (Bal. Figure) | 99,000 |
To Closing Advance c/d | 3,000 | By Closing Outstanding c/d | 8,000 |
1.11.000 | 1.11.000 |
21.23 COMMENT ON FINANCIAL STATEMENTS OF EDUCATION INSTITUTIONS
Ans. Whatever is discussed earlier is equally applicable to Education Institutes as these are also not for profit organization. Some distinct features may be as follows:
♦ It can have item like scholarship.
♦ Sometimes it can have separate term fees a/c etc.
♦ Govt, grant for teacher’s salary, maintenance, etc. will be credited to I&E, etc.
♦ It may have income like tuition fees, exam fees, etc.
♦ It may run canteen, stationery shop, etc. for students.
Illustration 21.22: From the following balances and particulars of Republic College prepare Income & Expenditure Account for the year ended March 1999 and a Balance Sheet as on the date:
Seminars & Conference Receipts | 4,80,000 | |
Consultancy Receipts | 1,28,000 | |
Security Deposit-Students | 1,50,000 | |
Capital fund | 16,06,000 | |
Research Fund | 8,00,000 | |
Building Fund | 25,00,000 | |
Provident Fund | 5,10,000 | |
Tuition Fees received | 8,00,000 | |
Government Grants | 5,00,000 | |
Donations | 50,000 | |
Interest & Dividends on Investments | 1,85,000 | |
Hostel Room Rent | 1,75,000 | |
Mess Receipts (Net) | 2,00,000 | |
College Stores-Sales | 7,50,000 | |
Outstanding Expenses | 2,25,000 | |
Stock of Stores and Supplies | 3,00,000 | |
Purchases-stores and Supplies | 8,00,000 | |
Salaries-Teaching | 8,50,000 | |
Research | 1,20,000 | |
Scholarships | 80,000 | |
Students Welfare Exp. | 38,000 | |
Repairs & Maintenance | 1,12,000 | |
Games & Sports Exp. | 50,000 | |
Misc. Exp. | 65,000 | |
Research Fund Investments | 8,00,000 | |
Other Investments | 18,50,000 | |
Provident Fund Investments | 5,10,000 | |
Seminar & Conference Exp. | 4,50,000 | |
Consultancy Exp. | 28,000 | |
Land | 1,00,000 | |
Building | 16,00,000 | |
Plant & Machinery | 8,50,000 | |
Furniture & fitting | 6,00,000 | |
Motor Vehicle | 1,80,000 | |
Provision for Depreciation | ||
Building | 4,80,000 | |
Plant & Equipment | 5,10,000 | |
Furniture & Fittings | 3,36,000 | |
Cash at Bank | 6,42,000 | |
Library | 3,60,000 | |
Total | 1,03,85,000 | 1,03,85,000 |
Adjustments:
(1) Materials & supplies consumed for:
Teaching 50,000, Research 1,50,000 Students Welfare 75,000 Games or Sports 25,000
(2) Tuition fee receivable from Government for Backward Class Scholars 80,000
(3) Stores selling prices are fixed to give a net profit of 10% on selling price.
(4) Depreciation is provided on straight-line basis at the following rates:
(i) Buildings 5% (ii) Plant & Equipment 10% (iii) Furniture & Fixtures 10% (iv) Motor Vehicles 20%.
Solution:
Income and Expenditure A/c for the Year Ended 31.03.99
Particulars | Amount Rs. | Particulars | Amount Rs. | ||
To Teaching Salaries | 8,50,000 | By Seminar & Conference Receipt | 4,80,000 | ||
+ Material | 50.000 | 9,00,000 | (-) Seminar & Conference exp. | 4.50.000 | 30,000 |
To Research Salaries | 1,20,000 | By Consultancy receipt | 1,28,000 | ||
+ Material | 1.50.000 | 2,70,000 | (-) Consultancy expense | 28.000 | 1,00,000 |
To Scholarship | 80,000 | By Tuition fees received | 8,00,000 | ||
(-) Scholarship receivable | 80.000 | Nil | By Government grant | 5 00,000 | |
To Student welfare expense | 38,000 | By Interest & dividend on investment | 1,85,000 | ||
+ Material | 75.000 | 1,13,000 | By Hostel room rent | 1,75,000 | |
To Repairs & Maintenance | 1,12,000 | By Mess receipt (Net) | 2,00,000 | ||
To Games & Sports expense | 50,000 | By Profit on college stores | 75,000 | ||
+ Material | 25.000 | 75,000 | By Donation | 50,000 | |
To Miscellaneous expense | 65,000 | ||||
To Dep. (80000+85000+36000+60000) | 2,61,000 | ||||
To Surplus | 3.19.000 | ||||
21.15.000 | 21.15.000 |
Balance Sheet as on 31.03.99
Capital fund | 16,06,000 | Bank A/c | 6,42,000 | ||
+ Surplus | 3.19.000 | 19,25,000 | Research fund investment | 8,00,000 | |
Provident fund investment | 5,10,000 | ||||
Security deposit: Students | 1,50,000 | Other Investment | 18,50,000 | ||
Research fund | 8,00,000 | Land | 1,00,000 | ||
Building fund | 25,00,000 | Building | 16,00,000 | ||
Provident fund | 5,10,000 | (-) Provision for dep. | 5.60.000 | 10,40,000 | |
Outstanding expense | 2,25,000 | (4,80,000+80,000) | |||
Plant & Machinery | 8,50,000 | ||||
(-) Provision for dep. | 5.95.000 | 2,55,000 | |||
(5,10,000+ 85,000) | |||||
Motor vehicles | 1,80,000 | ||||
(-) Depreciation | 36.000 | 1,44,000 | |||
Furniture & fitting | 6,00,000 | ||||
(-) Provision for dep. | 3.96.000 | 2,04,000 | |||
(3,36,600 +60,000) | |||||
Library | 3,60,000 | ||||
Scholarship receivable | 80,000 | ||||
Closing stock | 1.25.000 | ||||
61.10.000 | 61.10.000 |
College Stores A/c
To Opening stock b/d | 3,00,000 | By Sales A/c | 7,50,000 |
To Purchases | 8,00,000 | By Material Consumed | 3,00,000 |
To Profit (10% on 750000) | 75,000 | By Closing Stock (Balancing figure) | 1,25,000 |
11.75.000 | 11.75.000 |
Important Point:
Scholarship is not income for college when it is received from government, because it is payable to students & thus it is a liability. If credit balance in scholarship then it is shown in balance sheet on liability side. If debit balance of scholarship then it is not expense but it is receivable from government, if it is a Government scholarship. But this debit balance will be an expense if it is scholarship given by college itself.
21.24 WHAT IS FUND BASED ACCOUNTING? EXPLAIN BRIEFLY
What is “Fund Based Accounting” under non-profit organizations? (Nov 2008)
♦ Fund based accounting is not to be confused with the fund a/cs, seen earlier, though it is used in the same context.
♦ Fund based accounting refers to a system which are followed by not for profit organization to keep their specific purpose funds separately so that it is not put to some other use.
♦ Here independent double entry books of account are maintained for each type of funds with their separate cash and bank a/c.
♦ Thus each fund is treated as a separate entity for accounting, keeping its separate assets, liabilities and bank a/cs etc.
♦ Transfer from one fund to another fund may require transfer of money also and entries will be passed in the books of account of both the funds.
♦ For management’s use separate final a/c of each fund will be prepared but for outsiders and statutory purposes a combined final accounts will be prepared comprised of all funds which are of that organization.
Illustration 21.23 : Institute of World Management furnishes you the following information in respect of its development fund for the year 2010-11:
Rs. | |
Govt. grants received for construction of Buildings | 30,00,000 |
Private grants for acquisition of Land | 15,00,000 |
Transfer from unrestricted fund for purchase of Furniture | 5,00,000 |
Income from fixed deposits (Fixed deposits for one year Rs. 20,00,000) | 1,50,000 |
Cost of Land acquired | 5,25,000 |
Advance payment made for acquisition of further Land | 3,00,000 |
Furniture purchased | 55,000 |
Payments made to contractors for construction of Buildings | 7,75,000 |
Pass necessary Journal entries, Prepare a statement of changes in balances of development fund for the year 2010-11 and a balance sheet for development fund as on 31st March, 2011.
Solution:
Journal entries in the books of Development Fund of M/s Institute of World Management
Date | Particulars | Dr. Rs. | Cr. Rs. | ||
1. | Cash/Bank A/c | Dr. | 30,00,000 | ||
To Govt. Grant for building A/c | 30,00,000 | ||||
(Govt. grant received for construction of building) | |||||
2. | Cash/Bank A/c | Dr. | 15,00,000 | ||
To Private Grant for land A/c | 15,00,000 | ||||
(Private grant received for acquisition of land) | |||||
3. | Cash/Bank A/c | Dr. | 5,00,000 | ||
To Transfer from other funds A/c | 5,00,000 | ||||
(Transfer from unrestricted fund for purchase of furniture) | |||||
4. | Fixed Deposit A/c | Dr. | 20,00,000 | ||
To Cash/Bank A/c | 20,00,000 | ||||
(Amount of development fund not needed immediately kept in fixed deposit) | |||||
5. | Cash/Bank A/c | Dr. | 1,50,000 | ||
To Interest on Fixed deposit A/c | 1,50,000 | ||||
(Interest on Fixed deposit received) | |||||
6. | Land A/c | Dr. | 5,25,000 | ||
To Cash/Bank A/c | 5,25,000 | ||||
(Amount of development fund used to buy land) | |||||
7. | Advance for Land A/c | Dr. | 3,00,000 | ||
To Cash/Bank A/c . | 3,00,000 | ||||
(Amount advanced to buy land) | |||||
8. | Furniture A/c | Dr. | 55,000 | ||
To Cash/Bank A/c | 55,000 | ||||
(Furniture purchased) | |||||
9. | Building under construction A/c | Dr. | 7,75,000 | ||
To Cash/Bank A/c | 7,75,000 | ||||
(Amount advanced to Contractor for construction of building) | |||||
10. | All above incomes like donation, grant, interest etc. will be credited to Development fund a/c. | ||||
11. | Development Fund A/c | Dr. | 5,80,000 | ||
To Land A/c | 5,25,000 | ||||
To Furniture A/c | 55,000 | ||||
(Asset ready for use transfer to General Fund) | |||||
For item 3 above following entry will be passed in the books of Unrestricted/General Fund.
Transfer to Development Fund A/c Dr. | 5,00,000 | ||
To Cash/Bank A/c | 5,00,000 | ||
(Amount transferred to development fund for purchase of furniture) |
For item 11 above following entry will be passed in the books of Unrestricted/General Fund.
Land A/c Dr. | 5,25,000 | ||
Furniture A/c Dr. | 55,000 | ||
To Transfer from Development Fund A/c | 5,80,000 | ||
(Assets transferred from development fund recognised) General Fund will also account assets transferred to it and will charge depreciation wherever applicable. The asset will appear in General Balance sheet and not in the development fund balance sheet | |||
Statement of changes in development fund/Development Fund A/c.
Rs. | ||
Opening Balance | Nil | |
Add; Govt. grant for building construction | 30,00,000 | |
Private Grant/Donation for Land | 15,00,000 | |
Transfer from other fund for furniture | 5,00,000 | |
Interest income | 1,50,000 | 51,50,000 |
51,50,000 | ||
Less: Assets transferred : Land | 5,25,000 | |
Furniture | 55,000 | 5,80,000 |
Closing Balance | 45,70,000 |
Cash/Bank A/c
Receipts | Rs. | Payments | Rs. |
To Opening Balance b/f | Nil | By Fixed Deposit A/c | 20,00,000 |
To Govt. Grant | 30,00,000 | By Land A/c | 5,25,000 |
To Pvt. Grant/Donations | 15,00,000 | By Advance for Land A/c | 3,00,000 |
To Transfer from other fund | 5,00,000 | By Furniture A/c | 55,000 |
To Interest on Fixed Deposit | 1,50,000 | By Building under construction A/c | 7,75,000 |
By Closing Balance c/f | 14,95,000 | ||
51,50,000 | 51,50,000 |
Balance sheet of Development Fund as on 31.3.2011
Liabilities | Rs. | Assets | Rs. | |
Development fund A/c | 45,70,000 | Building under construction | 7,75,000 | |
Advance for Land | 3,00,000 | |||
Fixed Deposit | 20,00,000 | |||
Cash/Bank Balance | 14.95.000 | 34,95,000 | ||
45,70,000 | 45,70,000 |
EXAM PROBLEMS WITH SOLUTIONS FOR SELF-STUDY
Problem No. 1: (Dec. 1999)
From the following, find out the amount of subscriptions to be included in the income and expenditure account for the year ended 31st March, 1999.
Subscriptions were received during the year 1998-99 as follows:
Rs. | |
For the year 1997-98 | 2,000 |
For the year 1998-1999 | 30,000 |
For the year 1999-2000 | 3,000 |
Subscriptions outstanding as on 31st March, 1998 were Rs. 3,500 out of which Rs. 500 were considered to be irrecoverable. On the same date, subscription received in advance for 1998-99 were Rs. 2,000. Subscriptions still outstanding as on 31st March, 1999 amounted to Rs. 6,000.
Solution:
Dr. | Subscription a/c | Cr. | ||||
Particulars | Rs. | Particulars | Rs. | |||
To Op. outstanding subscription a/c | 3,500 | By Op. advance subscription a/c | 2,000 | |||
To I&E a/c (income bal. figure) | 37,000 | By I&E (irrecoverable amount) | 500 | |||
To Closing advance subscription a/c | 3,000 | By Cash/Bank a/c for | ||||
1997-98 | 2,000 | |||||
1998-99 | 30,000 | |||||
1999-2000 | 3.000 | 35,000 | ||||
By Closing o/s subscription a/c | 6,000 | |||||
43,500 | 43,500 | |||||
Problem No. 2: (Dec. 2000)
There are 450 members of a club, each paying an annual subscription of Rs. 500. On 31st March, 2000, subscriptions in arrears totalled Rs. 5,000. Subscriptions received during the year ended 31st March, 2001 amounted to Rs. 2,23,000 including Rs. 4,500 for the year 1999-2000 and Rs. 7,500 for the year 2001-2002.
Calculate the amount of subscriptions in arrears as on 31st March, 2001 by preparing subscriptions a/c.
Solution:
Dr. | Subscription a/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Op. outstanding subscription a/c | 5,000 | By Op. advance subscription a/c | Nil | ||
To I&E a/c (450 × 500) | 2,25,000 | By Cash/Bank a/c | 2,23,000 | ||
To Closing advance subscription a/c | 7,500 | By Closing outstanding subscription a/c | 14,500 | ||
(balance figure) | |||||
2,37,500 | 2,37,500 | ||||
Problem No. 3: (Nov. 2009)
Om Shanthi Club has 500 Members with Annual Fee of Rs. 1,000 per Member. At the end of the accounting year, the Accountant noticed that 40 Members have not paid Annual Fee, and 70 Members had paid fee in advance. Help the Accountant to compute Cash Receipts of Annual Fee for the year.
Solution:
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To balance b/d (Receivable) | Nil | By balance b/d | Nil |
To Income and Expenditure A/c | 5,00,000 | – (Received in Advance) | |
– Subscription Income for the year (500 × Rs. 1,000) | By Cash/Bank A/c – Subscriptions Received during | 5,30,000 | |
To Balance c/d (Received in Advance) | 70,000 | the year (balancing figure) | |
(70 × Rs. 1,000) | By balance c/d (Receivable) (40 × Rs. 1,000) | 40,000 | |
5,70,000 | 5,70,000 |
Problem No. 4: (Nov. 2012)
During the year ended 31st March, 2012, Sachin Cricket Club received subscriptions as follows :
Rs. | |
For year ending 31st March, 2011 | 12,000 |
For year ending 31st March, 2012 | 6,15,000 |
For year ending 31st March, 2013 | 18,000 |
Total | 6,45,000 |
There are 500 members and annual subscription is Rs. 1,500 per member.
On 31st March, 2012, a sum of Rs. 15,000 was still in arrears for subscriptions for the year ended 31st March, 2011. Ascertain the amount of subscriptions that will appear on the credit side of Income and Expenditure Account for the year ended 31st March, 2012. Also show how the items would appear in the Balance Sheet as on 31st March, 2011 and the Balance Sheet as on 31st March, 2012.
Solution:
Dr. | Subscription A/c year ended 31.03.2012 | Cr. |
Particulars | Rs. | Particulars | Rs. | |
To Opening outstanding (12000+15000) | 27,000 | By Opening advance subscription b/f | Nil | |
To I&E a/c (500 × 1,500) (Income) | 7,50,000 | By Cash/Bank a/c (Received) | ||
For the year ended 31.03.2012 | For year ended 31.3.11 | 12,000 | ||
To Closing advance subscription c/f | 18,000 | For year ended 31.3.12 | 6,15,000 | |
For year ended 31.3.13 | 18.000 | 6,45,000 | ||
By Closing outstanding (bal. fig.) | ||||
For year ended 31.3.11 | 15,000 | |||
For year ended 31.3.12 | 1,35,000 | 1,50,000 | ||
7,95,000 | 7,95,000 |
Income & Expenditure Account (An extract) of Sachin Cricket Club For the year ended 31st March, 2012
Rs. | Rs. | ||
By Subscription | 7,50,000 | ||
(500 members × Rs. 1,500 per member) |
Balance Sheet of Sachin Cricket Club as on 31st March 2011 (An extract)
Liabilities | Rs. | Assets | Rs. |
Subscription Receivable (15,000 + 12,000) | 27,000 |
Balance Sheet of Sachin Cricket Club as on 31st March 2012 (An extract)
Liabilities | Rs. | Assets | Rs. |
Advance Subscription | 18,000 | Outstanding Subscription | |
of 2010-11 15,000 | |||
of 2011-12 17.50.000 – 6.15.0001 1.35.000 | 1,50,000 |
Problem No. 5: (May 2014)
From the following extract of Receipts and Payments Account and the additional information, you are required to calculate the Income from Subscription for the year ending 31st March 2014, and show them in the Income & Expenditure Account, and the Balance Sheet of a Club.
An extract of Receipts and Payments Account for the year ended 31st March 2014
Receipts | Rs. | Payments | Rs. |
To Subscription | |||
2012-13 4,000 | |||
2013-14 20,000 | |||
2014-15 5,000 | 29,000 |
Information:
(i) Subscription outstanding on 31.03.2013 | Rs. 5,000 |
(ii) Subscription outstanding on 31.03.2014 | Rs. 4,000 |
(iii) Subscription received in advance on 31.03.2013 for 2013-14 | Rs. 5,000 |
Solution:
- Subscription A/c (to compute Subscription Income for the year)
Particulars | Rs. | Particulars | Rs. |
To Opening outstanding Balance b/d | 5,000 | By Opening advance Balance b/d | 5,000 |
To Income & Expenditure A/c (bal. figure) | 28,000 | By Bank A/c [Subscription received] | 29,000 |
[Subscriptions Income for the year] To Closing advance Balance c/d | 5,000 | By Closing outstanding Balance c/d | 4,000 |
Total | 38,000 | Total | 38,000 |
- Income and Expenditure Account for year ended 31.03.2014 (Extract)
Expenditure | Rs. | Income | Rs. |
By Subscription Income (WN 1) | 28,000 |
- Balance Sheet as on 31.03.2014 (Extract)
Liabilities | Rs. | Assets | Rs. |
Subscription received in advance | 5,000 | Subscription receivable | 4,000 |
PREPARATION OF INCOME AND EXPENDITURE A/C AND BALANCE SHEET FROM RECEIPT AND PAYMENT A/C AND OTHER BALANCES AND
INFORMATION
Problem No. 6: (May 2010)
On the basis of the following information, prepare Income and Expenditure Account for the year ended 31st March, 2010:
Receipts and Payments Account for the year ended 31st March, 2010
Receipts | Rs. | Payments | Rs. |
To Cash in hand (opening) | 1,300 | By Salaries | 2,58,000 |
To Cash at Bank (opening) | 3,850 | By Rent | 71,500 |
To Subscriptions | 4,94,700 | By Printing & Stationery | 3,870 |
To Interest on 8% Govt. Bonds | 4,000 | By Conveyance | 10,600 |
To Bank Interest | 160 | By Scooter purchased | 50,000 |
By 8% Govt. Bonds | 1,00,000 | ||
By Cash in hand (closing) | 840 | ||
By Cash at Bank (closing) | 9,200 | ||
5,04,010 | 5,04,010 |
(i) Salaries paid includes Rs. 6,000 paid in advance for April, 2010. Monthly salaries paid were Rs. 21,000.
(ii) Outstanding rent on 31st March, 2009 and 31st March, 2010 amounted to Rs. 5,500 and Rs. 6,000 respectively.
(iii) Stock of printing and stationery material on 31st March, 2009 was Rs. 340; it was Rs. 365 on 31st March, 2010.
(iv) Scooter was purchased on 1st October, 2009. Depreciation @ 20% per annum is to be provided on it.
(v) Investments were made on 1st April, 2009.
(vi) Subscriptions due but not received on 31st March, 2009 and 31st March, 2010 totalled Rs. 14,000 and Rs. 12,800 respectively. On 31st March, 2010 subscriptions amounting to Rs. 700 had been received in advance for April, 2010.
Solution:
Income and Expenditure Account for the year ended 31st March, 2010
Expenditure | Rs. | Income | Rs. |
To Salaries | 2,52,000 | By Subscription | 4,92,800 |
To Rent | 72,000 | By Interest on 8% Government bonds | 8,000 |
To Printing and Stationery | 3,845 | By Bank Interest | 160 |
To Conveyance | 10,600 | ||
To Depreciation on Scooter | 5,000 | ||
To Surplus | 1,57,515 | . | |
5,00,960 | 5,00,960 | ||
Working Notes:
Rs. | |||
(i) Salaries paid | 2,58,000 | ||
Less: Salary paid in advance for April, 2010 | 6,000 | ||
Salaries for the year (21,000 × 12) | 2,52,000 | ||
(ii) | Rent paid | 71,500 | |
Add: Outstanding rent as on 31.3.2010 | 6,000 | ||
77,500 | |||
Less: Outstanding rent as on 31.3.2009 | 5,500 | ||
Rent for the year 2009-2010 | 72,000 | ||
(iii) | Printing and stationery | 3,870 | |
Add: Stock as on 31.3.2009 | 340 | ||
4,210 | |||
Less: Stock as on 31.3.2009 | 365 | ||
Printing and stationery consumed during the year 2009-2010 | 3,845 | ||
(iv) | Depreciation on scooter = Rs. 50,000 × × = Rs. 5,000
| ||
(v) | Interest on Government bonds received | 4,000 | |
Add: Interest due but not received as on 31.3.2010 (bal. fig.) | 4,000 | ||
Interest income for the year 2009-2010 | 8,000 | ||
(vi) | Subscription received | 4,94,700 | |
Add: Accrued subscription as on 31.3.2010 Less: Accrued subscription as on 31.3.2009 Unearned subscription for April, 2010 Income for the year 2009-2010 | 14,000 | 12,800 | |
700 | (14,700) | ||
4,92,800 |
Problem No. 7: (June 2000)
On 31st March, 1999 Writers Club a cultural association had the following assets and liabilities:
Liabilities | Rs. | Assets | Rs. |
Trust fund | 5,00,000 | Cash | 3,000 |
Accumulated surplus in | Canara Bank: | ||
income & expenditure a/c | 1,05,000 | Savings a/c | 7,000 |
Membership fee received in | Fixed deposits | 2,00,000 | |
advance for 1999-2000 | 10,000 | Investments in: | |
Outstanding expenses | 10,000 | Government securities | 3,00,000 |
Fixed assets | 95,000 | ||
Membership fee receivable | 15,000 | ||
Prepaid expenses | 5,000 | ||
6,25,000 | 6,25,000 |
The following is the receipt and payment account for the year ended 31st March, 2000:
Receipts | Rs. | Payment | Rs. | |
Opening balance: | Administrative expenses | 1,25,000 | ||
Cash | 3,000 | Programme expenses including cost | 2,75,000 | |
Savings with Canara Bank | 7,000 | 10,000 | of printing souvenir | |
Membership fee received | Fixed deposits with Canara Bank | 1,25,000 | ||
Up to 31/3/1999 | 14,000 | Fixed assets purchased | 80,000 | |
For 1999-2000 | 1,50,000 | Investments in ICICI Bond | 3,00,000 | |
For 2000-2001 | 16,000 | 1,80,000 | Closing balance: | |
Sale of tickets – Programme | 25,000 | Cash 2,700 | ||
Advertisements in programme souvenir | 5,00,000 | Savings with Canara Bank 5,000 | 7,700 | |
Fixed deposits with Canara Bank | 75,000 | |||
Interest on bank a/c: | ||||
Savings 700 | ||||
Fixed deposit 22,000 | 22,700 | |||
Amount received on maturity of government security inclusive of interest Rs. 8,000 (cost Rs. 80,000) | 1,00,000 | |||
9,12,700 | 9,12,700 |
The club informs you that:
Membership fee for 1999-2000 due is Rs. 25,000; it includes Rs. 1,000 due from the member who has not yet paid also for 1998-99; provision for irrecoverable membership is to be made in respect of this member.
Income receivable on 31-3-2000 on ICICI bond is Rs. 30,000 and on government securities is Rs. 24,000.
Prepaid expenses on 31-3-2000 amount to Rs. 7,000.
Outstanding expenses on 31-3-2000 amount to Rs. 8,000.
Depreciation provision is to be Rs. 12,500.
Programme is an annual feature.
The club asks you to prepare: (a) Income and expenditure account for the year ended 31st March, 2000.
(b) Balance sheet as at 31st March, 2000.
Solution:
Income & Expenditure A/c
Expenditure | Rs. | Income | Rs. |
To Bad Debts A/c | 2000 | By Membership Fees A/c | 1,85,000 |
To Depreciation A/c | 12500 | By Bank Interest A/c | 22,700 |
To Expenses A/c | 1,21,000 | By Programme | |
To Surplus c/f | 3,96,200 | Income 5,25,000 | |
(-) Expenses 2,75,000 | 2,50,000 | ||
By Profit on sale | |||
of Govt. security A/c | 12,000 | ||
By Interest on Investment A/c | 62,000 | ||
5,31,700 | 5,31,700 |
Balance Sheet As On 31.03.2000
Liabilities | Rs. | Asset | Rs. | ||
Trust Fund | 5,00,000 | Fixed Asset | 1,62,500 | ||
Income & Expenditure | 1,05,000 | Fixed Deposits | 2,50,000 | ||
(+) Surplus | 3,96,200 | 5,01,200 | Interest Outstanding | 54,000 | |
Advance Membership Fees | 16,000 | Investments | |||
Expense Outstanding | 8,000 | ICICI Bond | 3,00,000 | ||
Govt. Securities | 2,20,000 | 5,20,000 | |||
Prepaid Expenses | 7,000 | ||||
Cash | 2,700 | ||||
Bank | 5,000 | 7,700 | |||
Outstanding | |||||
‘ | Membership Fees | 26,000 | |||
{-) Provision | 2,000 | 24,000 | |||
10,25,200 | 10,25,200 |
Working Notes
By preparing this accounts we get missing information which may be a transaction (complete the double entry of same) or a balance of that account. Complete accounting for whatever information is available in the question. Then by balancing the account you will get missing information as a balancing information.
Membership Fees A/c [subscription]
Particulars | Rs. | Particulars | Rs. |
To Opening Outstanding | 15,000 | By Opening Advance Balance | 10,000 |
To Income & Expenditure A/c | 1,85,000 | By Cash/Bank A/c | 1,80,000 |
To Closing Advance Balance | 16,000 | By Closing Outstanding Balance | 26,000 |
2,16,000 | 2,16,000 |
Expenses A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Prepaid Balance | 5,000 | By Opening Outstanding | 10,000 |
To Cash A/c | 1,25,000 | By Income & Expenditure A/c | 1,21,000 |
To Closing Outstanding | 8,000 | By Closing Prepaid Balance | 7,000 |
1,38,000 | 1,38,000 |
Fixed Deposits A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 2,00,000 | By cash A/c | 75,000 |
To Cash A/c | 1,25,000 | By Balance (c/f) | 2,50,000 |
3,25,000 | 3,25,000 |
Government Securities A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance To Interest on Investment a/c To Profit on Govt. security | 3,00,000 8,000 12,000 | By Cash A/c (maturity proceed) By Balance c/f | 1,00,000 2,20,000 |
3,20,000 | 3,20,000 |
Fixed Asset A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance To Cash A/c | 95,000 80,000 | By Depreciation A/c By Closing Balance | 12,500 1,62,500 |
1,75,000 | 1,75,000 |
Interest On Investment A/c
Particulars | Rs. | Particulars | Rs. |
To Income & Expenditure A/c | 62,000 | By Govt. Security A/c By Closing Outstanding | 8,000 54,000 |
62,000 | 62,000 |
Problem No. 8: (Dec. 2003)
The following is the receipts and payments account of Jyoti Charitable Hospital for the year ended 31st March, 2003:
Receipts | Rs. | Payments | Rs. |
To Balance b/d | 1,40,000 | By Payment for medicines | 6,00,000 |
To Subscriptions | 10,00,000 | By Honorarium to doctor | 2,00,000 |
To Donations | 2,90,000 | By Salaries | 5,50,000 |
To Interest on investments | By Sundry expenses | 10,000 | |
@ 1% per annum for the year | 1,40,000 | By Equipment’s purchased | 3,00,000 |
To Charity show collections | 2,00,000 | By Charity show expenses | 20,000 |
By Balance c/d | 90,000 | ||
17,70,000 | 17,70,000 |
Additional information:
On 1.4.2002 (Rs.) | On 31.3.2003 (Rs.) | |
Subscriptions due | 10,000 | 20,000 |
Subscriptions received in advance | 20,000 | 10,000 |
Stock of medicines | 2,00,000 | 3,00,000 |
Creditors for medicines | 1,60,000 | 2,40,000 |
Equipment’s | 4,20,000 | 6,00,000 |
Buildings | 8,00,000 | 7,60,000 |
You are required to prepare income turd expenditure account for the year ended 31st March, 2003 and balance sheet as at that date.
Solution:
Income & Expenditure A/c [ P&L A/c ]
Expenditure | Rs. | Income | Rs. | |
To Honorarium to Doctors a/c | 2,00,000 | By Donation A/c | 2,90,000 | |
To Salary A/c | 5,50,000 | By Interest A/c | 1,40,000 | |
To Sundry Expenses A/c | 10,000 | By Charity Show | ||
To Medicine A/c | 5,80,000 | Income | 2,00,000 | |
To Depreciation on Equipment A/c | 1,20,000 | (-)Expenses | 20.000 | 1,80,000 |
To Depreciation on Building A/c | 40,000 | By Subscription A/c | 10,20,000 | |
To Surplus A/c | 1,30,000 | |||
16,30,000 | 16,30,000 |
Balance Sheet As On 31.03.2003
Liability | Rs. | Asset | Rs. | |
Trust Fund | 33,90,000 | Investment | 20,00,000 | |
(+) Surplus | 1.30.000 | 35,20,000 | Subscription Outstanding | 20,000 |
Advance Subscription | 10,000 | Medicine Stock | 3,00,000 | |
Creditors for medicine | 2,40,000 | Building | 7,60,000 | |
Equipment | 6,00,000 | |||
Cash/Bank | 90,000 | |||
37,70,000 | 37,70,000 |
Working Notes:-
Important Points:
By preparing this accounts we get missing information which may be a transaction (complete the double entry of same) or a balance of that account. Complete accounting for whatever information is available in the question. Then by balancing the account you will get missing information as a balancing information.
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Outstanding | 10,000 | By Opening Advance | 20,000 |
To Income & Expenditure A/c | 10,20,000 | By Cash/Bank A/c (Received) | 10,00,000 |
To Closing Balance (advance) | 10,000 | By Closing outstanding balance | 20,000 |
10,40,000 | 10,40,000 |
Medicine A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance (Op. Stock) | 2,00,000 | By Income & Expenditure A/c | 5,80,000 |
To Creditors A/c (Purchase) | 6,80,000 | (consumed) | |
By Closing Stock A/c | 3,00,000 | ||
8,80,000 | 8,80,000 |
Creditors For Medicine A/c
Particulars | Rs. | Particulars | Rs. |
To Cash/Bank A/c (Payment) | 6,00,000 | By Opening Balance | 1,60,000 |
To Closing balance c/f | 2,40,000 | By Purchase A/c (balancing figure) | 6,80,000 |
8,40,000 | 8,40,000 |
Equipment A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 4,20,000 | By Depreciation A/c (balancing fig.) | 1,20,000 |
To Cash/Bank A/c (Purchase) | 3,00,000 | By Closing Balance | 6,00,000 |
7,20,000 | 7,20,000 |
Building A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 8,00,000 | By Depreciation A/c (balancing fig.) | 40,000 |
By Closing Balance | 7,60,000 | ||
8,00,000 | 8,00,000 |
Balance Sheet As On 31.03.2002
Liability | Rs. | Asset | Rs. |
Advance Subscription | 20,000 | Cash/Bank | 1,40,000 |
Creditors for Medicine | 1,60,000 | Investment*** | 20,00,000 |
Trust Fund (Balancing figure) | 33,90,000 | Subscription Outstanding | 10,000 |
Stock of Medicine | 2,00,000 | ||
Equipment | 4,20,000 | ||
Building | 8,00,000 | ||
35,70,000 | 35,70,000 |
*** Investment is calculated from interest. Investment = 1,40,000/7 × 100 = 20,00,000.
Problem No. 9: (Nov. 1999)
Mahaveer Sports Club gives the following Receipts and Payments Account for the year ended March 31, 1998.
Receipt | (Rs.) | Payment | (Rs.) |
To Opening Cash and Bank balance | 5,200 | By Salaries | 15,000 |
To Subscriptions | 34,800 | By Rent and Taxes | 5,400 |
To Donations | 10,000 | By Electric Charges | 6,000 |
To Interest on Investments | 1,200 | By Sports Goods | 2,000 |
To Sundry Receipts | 300 | By Library Books | 10,000 |
By Newspapers and Periodicals | 1,080 | ||
By Closing Cash and Bank Balances | 12,020 | ||
51,500 | 51,500 |
As On 31.3.97 (Rs.) | As On 313.98 (Rs.) | |
Outstanding Expenses: | ||
Salaries | 1,000 | 2,000 |
Newspapers and Periodicals | 400 | 500 |
Rent and Taxes | 600 | 600 |
Electricity Charges | 800 | 1,000 |
Library Books | 10,000 | |
Sports Goods | 8,000 | |
Furniture and Fixtures | 10,000 | |
Subscriptions Receivable | 5,000 | 12,000 |
Investment – Government Securities | 50,000 | |
Accrued Interest | 600 | 600 |
Provide Depreciation on:
Furniture and Fixtures @ 10% p.a. Sports Goods @ 20% p.a. Library Books @ 10% p.a.
You are required to prepare Clubs opening balance sheet as on 1.4.97, income and expenditure account for the year ended on 31.3.98 and balance sheet as on that date.
Solution:
Income and Expenditure Account
Expenditure | Rs. | Income | Rs. |
To Salary | 16,000 | By Donation | 10,000 |
To Newspapers | 1,180 | By Sundry receipts | 300 |
To Rent and taxes | 5,400 | By Subscription | 41,800 |
To Electric charges | 6,200 | By Interest | 1,200 |
To Depreciation | 4,300 | ||
To Surplus | 20,220 | ||
53,300 | 53,300 |
Balance sheet on date 31.3.1998
Liabilities | Rs. | Assets | Rs. | ||
Capital fund | 86,000 | Sports goods | 8,000 | ||
(+) Surplus | 20,220 | 1,06,220 | (+) Addition | 2,000 | |
(-) Depreciation | 1,800 | 8,200 | |||
Outstanding expenses | 4,100 | Library | 10,000 | ||
(2000+500+600+1000) | |||||
(+) Addition | 10,000 | ||||
(-) Depredation | 1,500 | 18,500 | |||
Furniture | 10,000 | ||||
(-) Depredation | 1,000 | 9,000 | |||
Cash bank | 12,020 | ||||
Subscription Outstanding | 12,000 | ||||
Investment | 50,000 | ||||
Accrued interest | 600 | ||||
1,10,320 | 1,10,320 |
Balance sheet on date 31.3.1997 (1.4.1997)
• Liabilities | Rs. | Assets | Rs. |
Capital fund | 86,000 | Cash/bank | 5,200 |
Outstanding expenses | Library | 10,000 | |
(1000+4000+600+800) | 2,800 | Sports goods | 8,000 |
Furniture | 10,000 | ||
Investment | 50,000 | ||
Accrued interest | 600 | ||
Subscription outstanding | 5,000 | ||
88,800 | 88,800 |
Working notes:
Salary a/c
Particular | Rs. | Particular | Rs. |
To Cash a/c | 15,000 | By Opening outstanding balance | 1,000 |
To Closing outstanding balance | 2,000 | By Income & Expenditure a/c | 16,000 |
17,000 | 17,000 |
Newspaper a/c
Particular | Rs. | Particular | Rs. |
To Cash a/c | 1,080 | By Opening outstanding | 400 |
To Closing stock | 500 | By Income & Expenditure a/c | 1,180 |
1,580 | 1,580 |
Rent and Tax a/c
Particular | Rs. | Particular | Rs. |
To Cash a/c | 5,400 | By Opening outstanding balance | 600 |
To Closing outstanding balance | 600 | By Income & Expenditure a/c | 5,400 |
6,000 | 6,000 |
Electric charges a/c
Particular | Rs. | Particular | Rs. |
To Cash a/c | 6,000 | By Opening outstanding balance | 800 |
To Closing outstanding balance | 1,000 | By Income & Expenditure a/c | 6,200 |
7,000 | 7,000 |
Subscription a/c
Particular | Rs. | Particular | Rs. |
To Opening outstanding balance | 5,000 | By Cash a/c | 34,800 |
To Income & Expenditure a/c | 41,800 | By Closing outstanding balance | 12,000 |
46,800 | 46,800 |
Interest a/c
Particular | Rs. | Particular | Rs. |
To Opening outstanding | 600 | By Cash a/c | 1,200 |
To Income & Expenditure a/c | 1,200 | By Closing outstanding balance | 600 |
1,800 | 1,800 |
Problem No. 10: (May 2008)
Following is the Receipts and Payments Account of Mayur Club for the year ended 31st March, 2008:
Receipts | Rs. | Payments | Rs. |
To Opening balance (1.4.2007) | By Sports materials | 3,04,500 | |
Cash on hand | 39,100 | By Salaries | 3,15,000 |
Cash at bank | 50,000 | By Equipment purchased on 1.10.2007 | 60,000 |
To Subscriptions | By Bank fixed deposit on 31.3.2008 | 1,50,000 | |
For the year 2006-07 | 18,000 | By Rent | 1,48,500 |
For the year 2007-08 | 9,63,000 | By Ground maintenance | 22,120 |
For the year 2008-09 | 4,500 | By Insurance | 38,400 |
To Interest on bank | 45,000 | By Stationery | 3,450 |
Fixed deposits @10% | By Sundry expenses | 5,880 | |
By Closing balance as on 31.3.2008 | |||
Cash on hand | 31,750 | ||
Cash at bank | 40,000 | ||
15,75,000 | 15,75,000 |
Following additional information is provided to you:
(i) The Club has 220 members. The annual subscription is Rs. 4,500 per member.
(ii) Depreciation to be provided on Furniture at 10% p.a. and on Sports equipment at 15% p.a.
(iii) On 31st March, 2008, stock of sports material in hand (after members use during the year) is valued at Rs. 78,000 and stock of stationery at Rs. 3,150. Rent for 1 month is outstanding. Unexpired insurance amounts to Rs. 9,600.
(iv) On 31st March, 2007 the Club had the following Assets:
Furniture | Rs. 2,70,000 |
Sports equipment | Rs. 1,80,000 |
Bank fixed deposit | Rs. 4,50,000 |
Stock of stationery | Rs. 1,500 |
Stock of sports material | Rs. 73,500 |
Unexpired insurance | Rs. 8,400 |
Subscription in arrear | Rs. 22,500 |
Note .’There was no liability on 31.3.2007 You are required to prepare:
(i) Income and Expenditure Account; and
(ii) Balance Sheet as at 31st March, 2008.
Solution:
Income & Expenditure A/c
Expenditure | Rs. | Income | Rs. |
To Salary A/c | 3,15,000 | By Interest A/c | 45,000 |
To Ground Maintenances A/c | 22,120 | By Subscription A/c | 9,90,000 |
To Sundry Expenses A/c | 5,880 | ||
To Rent A/c | 1,62,000 | ||
To Stationery A/c | 1,800 | ||
To Sports Materials A/c | 3,00,000 | ||
To Insurance A/c | 37,200 | ||
To Depreciation A/c | 58,500 | ||
To Surplus | 1,32,500 | ||
10,35,000 | 10,35,000 |
Balance Sheet as on 31.03.2008
Liability | Rs. | Asset | Rs. |
Trust Fund 10,95,000 | Cash | 31,750 | |
(+)Surplus 1,32,500 | 12,27,500 | Bank | 40,000 |
Advance Subscription | 4,500 | Sports Material Stock | 78,000 |
Rent Outstanding | 13,500 | Stationery Stock | 3,150 |
Prepaid Insurance | 9,600 | ||
Furniture 2,70,000 | |||
(-)Depreciation 27.000 | 2,43,000 | ||
Equipment 2,40,000 | |||
(-) Depreciation 31,500 | 2,08,500 | ||
Fixed Deposits | 6,00,000 | ||
Subscription Outstanding | 31,500 | ||
12,45,500 | 12,45,500 |
Working Notes:-
Balance Sheet as on 31.03.2007
. Liability | Rs. | Asset | Rs. |
Trust Fund (Balancing figure) | 10,95,000 | Subscription Outstanding | 22,500 |
Cash | 39,100 | ||
Bank | 50,000 | ||
Furniture | 2,70,000 | ||
Equipment | 1,80,000 | ||
Fixed Deposits | 4,50,000 | ||
Stock (1,500+73,500) | 75,000 | ||
Prepaid Insurance | 8,400 | ||
10,95,000 | 10,95,000 |
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Outstanding | 22,500 | By Cash/Bank A/c | 9,85,500 |
To Income & Expenditure A/c | 9,90,000 | By Closing Outstanding | 31,500 |
To Closing Advance c/f | 4,500 | ||
10,17,000 | 10,17,000 |
Equipment A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 1,80,000 | By Closing Balance | 2,40,000 |
To Cash/Bank A/c (purchase) | 60,000 | ||
2,40,000 | 2,40,000 |
Fixed Deposits A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 4,50,000 | By Closing Balance | 6,00,000 |
To Cash A/c | 1,50,000 | ||
6,00,000 | 6,00,000 |
Rent A/c
Particulars | Rs. | Particulars | Rs. |
To Cash A/c | 1,48,500 | By Income & Expenditure A/c | 1,62,000 |
To Closing Outstanding Bal. | 13,500 | ||
1,62,000 | 1,62,000 |
Insurance A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Advance Balance | 8,400 | By Income & Expenditure | 37,200 |
To Cash A/c | 38,400 | By Closing Prepaid Balance | 9,600 |
46,800 | 46,800 |
Sports Materials A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 73,500 | By Income & Expenditure | 3,00,000 |
To Cash A/c (purchase) | 3,04,500 | By Closing Stock | 78,000 |
3,78,000 | 3,78,000 |
Stationery A/c
Particulars | Rs. | Particulars | Rs. |
To Opening Balance | 1,500 | By Income & Expenditure | 1,800 |
To Cash A/c (purchase) | 3,450 | By Closing Balance | 3,150 |
4,950 | 4,950 |
Workings:- Calculation of rent outstanding.
Rent for 1 month is outstanding, which implies that the rent paid is for 11 months. Rent outstanding = = 13,500
Problem No. 11: (May 2011) (May 2010)
The following is the Receipt and Payment Account of Park View Club in respect of the year ended 31 st March, 2011:
Receipts | Rs. | Payments | Rs. | |
To Balance b/d | 1,02,500 | By Salaries | 2,08,000 | |
To subscriptions: | By Stationery | 40,000 | ||
2009-10 | 4,500 | By Rent | 60,000 | |
2010-11 | 2,11,000 | By Telephone Exp. | 10,000 | |
2011-12 | 7.500 | 2,23,000 | By Investment | 1,25,000 |
To Profit on sports meet | 1,55,000 | By Sundry Expenses | 92,500 | |
To Income from investments | 1,00,000 | By Balance c/d | 45,000 | |
5,80,500 | 5,80,500 |
Additional information:
(i) There are 450 members each paying an annual subscription of Rs. 500. On 1st April, 2010, outstanding subscription was Rs. 5,000.
(ii) There was an outstanding telephone bill for Rs. 3,500 on 31st March, 2011.
(iii) Outstanding sundry expenses as on 31st March, 2010 totalled Rs. 7,000.
(iv) Stock of stationery:
On 31st March, 2010 Rs. 5,000
On 31st March, 2011 Rs. 9,000
(v) On 31st March, 2010 building stood in the books at Rs. 10,00,000 and it was subject to depreciation @5% per annum.
(vi) Investment on 31st March, 2010 stood at Rs. 20,00,000.
(vii) On 31st March, 2011, income accrued on the investments purchased during the year amounted to Rs. 3,750.
Prepare an Income and Expenditure Account for the year ended 31st March, 2011 and the Balance Sheet as at that date.
Solution:
Park View Club
Income and Expenditure Account
for the year ended on 31st March 2011
Expenditure | Amount (Rs.) | Income | Amount (Rs.) | ||
To Salaries | 2,08,000 | By Subscriptions (W.N. 2) | 2,25,000 | ||
To Stationery consumed (W.N.3) | 36,000 | By Profit on sports meet | 1,55,000 | ||
To Rent | 60,000 | By Income on investment | 1,00,000 | ||
To Telephone expenses | 10,000 | Add. Income accrued | 3,750 | 1,03,750 | |
Add: Closing Outstanding | 3.500 | 13,500 | |||
To Sundry expenses | 92,500 | ||||
Less. Opening Outstanding | (7,000) | 85,500 | |||
To Depreciation of building | 50,000 | ||||
To Surplus (Carried to Capital fund) | 30,750 | ||||
4,83,750 | 4,83,750 |
Balance Sheet as at 31st March 2011
Liability | Amount (Rs.) | Assets | Amount (Rs.) | ||
Capital fund (W.N.1) | 31,05,500 | Outstanding subscriptions | 14,500 | ||
Add: Surplus | 30,750 | 31,36,250 | Investment | ||
Subscriptions received in advance | 7,500 | (20,00,000+1,25,000) | 21,25,000 | ||
Outstanding telephone bills | 3,500 | Add: Interest accrued | 3.750 | 21,28,750 | |
Building | 10,00,000 | ||||
Less-. Depreciation | 150.0001 | 9,50,000 | |||
Stock of stationery | 9,000 | ||||
Cash balance | 45,000 | ||||
31,47,250 | 31,47,250 |
Working Notes:
(1) Calculation of Opening Capital Fund
Balance Sheet as at 31st March 2010
Liability | Amount (Rs.) | Assets | Amount (Rs.) |
Outstanding sundry expenses | 7,000 | Building | 10,00,000 |
Capital fund (Balancing figure) | 31,05,500 | Investments | 20,00,000 |
Stock of stationery | 5,000 | ||
Cash balance | 1,02,500 | ||
Outstanding subscriptions | 5,000 | ||
31,12,500 | 31,12,500 |
(2) Calculation of subscriptions accrued during the year
Subscription A/c
Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
To Opening Outstanding Subscriptions | 5,000 | By Cash A/c | 2,23,000 |
To Income & Expenditure A/c (450 @ 500) | 2,25,000 | (4,500 + 2,11,000 + 7,500) | |
By Closing Outstanding subscriptions | 14,500 | ||
To Subscriptions received in advance c/f | 7,500 | (Balancing figure) | |
2,37,500 | 2,37,500 |
(3) Calculation of stationery consumed during the year
Rs. | |
Opening Stock of stationery | 5,000 |
Add. Purchased | 40,000 |
Total | 45,000 |
Less: Closing Stock of stationery | (9,000) |
Stationery consumed | 36,000 |
Problem No. 12: (Nov 2004)
The Accountant of Diana Club furnishes you the following Receipts and Payments account for the year ending 30th September, 2003:
Receipts | Amount Rs. | Payments | Amount Rs. |
Opening Balance: | Honoraria to Secretary | 9,600 | |
Cash and Bank | 16,760 | Misc. expenses | 3,060 |
Subscriptions | 21,420 | Rates and taxes | 2,520 |
Sale of old newspaper | 4,800 | Groundman’s wages | 1,680 |
Entertainment fees | 8,540 | Printing and Stationery | 940 |
Bank Interest | 460 | Telephone expenses | 4,780 |
Bar Receipts | 14,900 | Payment for Bar purchases | 11,540 |
Repairs | 640 | ||
New Car (Less sale proceeds of Old Car | 25,200 | ||
* | Rs. 6,000) | ||
Closing Balance: | |||
Cash and Bank: | 6,920 | ||
66,880 | 66,880 |
Additional Information:
01.10.2002 Rs. | 30.09.2003 Rs. | |
(i) Subscription due (not received) | 2,400 | 1,960 |
(ii) Cheques issued, but not presented for payment of printing | 180 | 60 |
(iii) Club premises at cost | 58,000 | – |
(iv) Depreciation on dub premises provided so far | 37,600 | – |
(v) Car at cost | 24,380 | – |
(vi) Depreciation on car | 20,580 | – |
(vii) Value of Bar stock | 1,420 | 1,740 |
(viii) Amount unpaid for bar purchases | 1,180 | 860 |
(ix) Depreciation is to be provided @5% p.a. on the written down value of the club premises and @15% p.a. on car for the whole year.
You are required to prepare an Income and Expenditure account of Diana Club for the year ending 30th September, 2003 and Balance Sheet as on that date.
Solution:
Income and Expenditure Account of Diana Club
for the year ended 30th September, 2003
Expenditure | Amount (Rs.) | Income | Amount (Rs.) | |
To Honoraria to secretary | 9,600 | By Subscriptions (W.N.3) | 20,980 | |
To Misc. expenses | 3,060 | By Sale of old newspapers | 4,800 | |
To Rates and taxes | 2,520 | By Entertainment fees | 8,540 | |
To Groundman’s wages | 1,680 | By Bank interest | 460 | |
To Printing and stationery | 940 | By Bar receipts | 14,900 | |
To Telephone expenses | 4,780 | By Profit on sale of car (W.N.5) | 2,200 | |
To Bar Consumption | ||||
Opening bar stock | 1,420 | |||
Add. Purchases (W.N. 2) | 11,220 | |||
12,640 | ||||
Less: Closing bar stock | 1,740 | 10,900 | ||
To Repairs | 640 | |||
To Depreciation | ||||
Club premises (W.N.4) | 1,020 | |||
Car (W.N.6) | 4.680 | 5,700 | ||
To Surplus | 12,060 | |||
(transferred to Capital fund) | ||||
51,880 | 51,880 |
Balance Sheet of Diana Club as on 30th September, 2003
Liabilities | Amount (Rs.) | Assets | Amount (Rs.) | |
Capital fund (W.N. 1) | 43,600 | Club Premises | 19,380 | |
Add: Surplus | 12,060 | 55,660 | Car | 26,520 |
Bar stock | 1,740 | |||
Bar Creditor | 860 | Outstanding subscription | 1,960 | |
Cash and bank | 6,920 | |||
56,520 | 56,520 |
Working Notes:
- Balance Sheet of Diana Club as on 1st October, 2002
Liabilities | Amount (Rs.) | Assets | Amount (Rs.) | |
Bar Creditor | 1,180 | Club premises | 58,000 | |
Capital fund on 1.10.2010 | 43,600 | Less: Depreciation | 37,600 | 20,400 |
(balancing figure) | Car | 24,380 | ||
Less: Depreciation | 20,580 | 3,800 | ||
Bar stock | 1,420 | |||
Outstanding subscription | 2,400 | |||
Cash at bank | 16,760 | |||
44,780 | 44,780 |
- Calculation of bar purchases for the year:
Bar Creditor A/c
To Cash/Bank a/c (Paid during the year) | 11,540 | By Opening Outstanding b/f (Payable) | 1,180 |
To Closing outstanding C/f (payable) | 860 | By Income & Exp. A/c (Purchase: Bal. fig.) | 11,220 |
Total | 12,400 | Total | 12,400 |
- Calculation of subscriptions accrued during the year:
Dr. | Subscription A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening outstanding subscription | 2,400 | By Cash/Bank a/c (received) | 21,420 | ||
To I&E a/c (Income) (bal. fig.) | 20,980 | By Closing outstanding subscription | 1,960 | ||
23,380 | 23,380 | ||||
- Depreciation on club premises and written down value on 30th September, 2003:
Rs. | |
Written down value on 1.10.2002 (58,000-37,600) | 20,400 |
Less: Depreciation for the year 2002-2003 @ 5% p.a. | 1,020 |
19,380 |
- Calculation of profit on sale of car:
Rs. | ||
Sale proceeds of old car | 6,000 | |
Less: Written down value of old car: | ||
Cost of car on 1.10,2002 | 24,380 | |
Less: Depreciation upto 1.10.2002 | 20,580 | 3,800 |
2,200 |
- 6. Depreciation on car and written down values on 30 September, 2003:
Rs. | |
Cost of new car purchased (25,200+6,000) | 31,200 |
Less: Depreciation for the year @15% p.a. | 4,680 |
Written down value on 30.9,2003 | 26,520 |
Note: The opening and closing balance of cash and bank shown in the Receipts and Payments Account (given in the question), include the bank balance as per cash book. Therefore, no adjustment has been made in the above solution on account of cheques issued, but not presented for payment of printing. This is a reconciliation item pending to be recorded by bank.
PREPARATION OF RECEIPT AND PAYMENT A/ C, INCOME & EXPENDITURE A/C AND BALANCE SHEET FROM INFORMATION
Problem No. 13: (Nov 2001)
Summary of Receipts and payments of Bombay Medical Aid Society for the year ended 31.12.2000 are as follows: Opening Cash balance in hand Rs.8,000, Subscription Rs. 50,000, Donation Rs. 15,000, Interest on Investments @ 9% p.a. Rs.9,000, Payments for medicine supply Rs.30,000, Honorarium to Doctors Rs.10,000, Salaries Rs. 28,000, Sundry Expenses Rs. 1,000, Equipment purchase Rs. 15,000, Charity show expenses Rs. 1,500, Charity show collections Rs. 12,500.
Additional information:
1.1.2000 | 31.12.2000 | |
Subscription due | 1,500 | 2,200 |
Subscription received in advance | 1,200 | 700 |
Stock of medicine | 10,000 | 15,000 |
Amount due for medicine supply | 9,000 | 13,000 |
Value of equipment | 21,000 | 30,000 |
Value of building | 50,000 | 48,000 |
You are required to prepare Receipts and Payments Account and Income and Expenditure Account for the year ended 31.12.2000 and Balance Sheet as on 31.12.2000.
Solution:
Income and Expenditure A/c
Particular (Expenditure) | Rs. | Particular (Income) | Rs. | ||
To Hon. to Doctors | 10,000 | By Donation | 15,000 | ||
To Salaries | 28,000 | By Interest on investment | 9,000 | ||
To Expenses | 1,000 | By Charity show Income | 12,500 | ||
To Medicine consumed | 29,000 | (-) Expenses | 1.500 | 11,000 | |
To Depreciation (6000 + 2000) | 8,000 | By Subscription | 51,200 | ||
To Surplus | 10,200 | ||||
86,200 | 86,200 |
Balance sheet on date 31.12.2000
Liabilities | Rs. | Assets | Rs. | |
General fund | 1,80,300 | Equipment’s | 30,000 | |
(+) Surplus | 10.200 | 1,90,500 | Building | 48,000 |
Advance subscription | 700 | Investment | 1,00,000 | |
Creditors for machines | 13,000 | Stock | 15,000 | |
Subscription Outstanding | 2,200 | |||
Cash | 9,000 | |||
2,04,200 | 2,04,200 |
Receipt and Payment A/c
Receipt | Rs. | Payment | Rs. |
To Opening balance | 8,000 | By Creditors | 30,000 |
To Subscription | 50,000 | By Honoranium to Doctors | 10,000 |
To Donation | 15,000 | By Salaries | 28,000 |
To Interest on investment | 9,000 | By Sundry expense | 1,000 |
To Charity show collection | 12,500 | By Equipment | 15,000 |
By Charity show expenses | 1,500 | ||
By closing Balance | 9,000 | ||
94,500 | 94,500 |
Working note:
Balance sheet on date 1.1.2000
Liabilities | Rs. | Assets | Rs. |
General fund (Bal. Fig.) | 1,80,300 | Cash | 8,000 |
Advance subscription | 1,200 | Investments | 1,00,000 |
Creditors for medicines | 9,000 | Subs. Outstanding | 1,500 |
Stock | 10,000 | ||
Equipment | 21,000 | ||
Building | 50,000 | ||
1,90,500 | 1,90,500 |
Subscription A/c
Particular | Rs. | Particular | Rs. |
To Opening outstanding a/c | 1,500 | By Opening advance subscription a/c | 1,200 |
To I&E a/c | 51,200 | By Cash a/c | 50,000 |
To Closing advance subscription a/c | 700 | By Closing outstanding subscription a/c | 2,200 |
53,400 | 53,400 |
Medicine Expenditure A/c
To Opening Stock a / c | 10,000 | By I&E a/c | 29,000 |
To Purchases a/c | 34,000 | By Closing stock a/c | 15,000 |
44,000 | 44,000 |
Creditors for M.S. A/c
To Cash a/c | 30,000 | By Opening Outstanding a/c | 9,000 |
To Closing outstanding a/c | 13,000 | By Purchase (bal. fig.) a/c | 34,000 |
43,000 | 43,000 |
Equipment A/c
To Opening balance | 21,000 | By Depreciation (bal. fig) a/c | 6,000 |
To Cash a/c | 15,000 | By Closing balance | 30,000 |
36,000 | 36,000 |
Building A/c
To Opening balance | 50,000 | By Closing balance | 48,000 |
By Depreciation (bal. fig) a/c | 2,000 | ||
50,000 | 50,000 |
Amount of Investment = Interest + Rate = 9,000 -s- 9/100 = 1,00,000
Problem No. 14: (Nov, 1998)
The following information’s were obtained from the books of Delhi Club as on 31.3.1998 at the end of the first year of the Club. You are required to prepare Receipts and Payments Account, Income and Expenditure Account for the year ended 31.3.1998 and a Balance Sheet as at 31.3.1998 on mercantile basis:
(i) Donations received for Building and Library Room Rs. 2,00,000.
(ii) Other revenue income and actual receipts:
Revenue Income Rs. | Actual Receipts Rs. | |
Entrance Fees | 17,000 | 17,000 |
Subscription | 20,000 | 19,000 |
Locker Rents | 600 | 600 |
Sundry Income | 1,600 | 1,060 |
Refreshment Account | – | 16,000 |
(iii) Other revenue expenditure and actual payments:
Revenue Expenditure Rs. | Actual Payments Rs. | |
Land (cost Rs. 10,000) | – | 10,000 |
Furniture (cost Rs. 1,46,000) | – | 1,30,000 |
Salaries | 5,000 | 4,800 |
Maintenance of Play grounds | 2,000 | 1,000 |
Rent | 8,000 | 8,000 |
Refreshment Account | – | 8,000 |
Donations to the extent of Rs. 25,000 were utilized for the purchase of Library Books, balance was still unutilized. In order to keep it safe, 9% Govt. Bonds of Rs. 1,60,000 were purchased on 31.3.1998. Remaining amount was put in the Bank on 31.3.1998 under the term deposit. Depreciation at 10% p.a. was to be provided for the year on Furniture and Library Books.
Solution:
Delhi Club
Income and Expenditure Account
for the year ended 31st March 1998
Expenditure | Rs. | Income | Rs. | |
To Salary a/c (4,800+200) | 5,000 | By Entrance fees | 17,000 | |
To Maintenance a/c (1,000+1,000) | 2,000 | By Subscription (19,000 + 1,000) | 20,000 | |
To Rent a/c | 8,000 | By Locker rents | 600 | |
To Depreciation a/c (14,600+2,500) | 17,100 | By Sundry income (1,060 + 540) | 1,600 | |
To Surplus a/c | 15,100 | By Refreshment | 16,000 | |
(-) Expenses | 8.000 | 8,000 | ||
47,200 | 47,200 |
Balance sheet on date 31.3.1998
Liabilities | Rs. | Assets | Rs. | |
Capital fund: | Land, | 10,000 | ||
(Surplus) | 15,100 | Furniture | 1,46,000 | |
Building and liability fund | 2,00,000 | (-) Depreciation | 14.600 | 1,31,400 |
Creditors for furniture | 16,000 | Library books | 25,000 | |
Salary outstanding | 200 | (-) Depreciation | 2.500 | 22,500 |
Maintenance outstanding | 1,000 | Subs. Outstanding | 1,000 | |
Bank overdraft | 1,08,140 | Sundry Income outstanding | 540 | |
Investment of building fund | ||||
Govt. bond | 1,60,000 | |||
F.D. | 15.000 | 1,75,000 | ||
3,40,440 | 3,40,440 |
Receipt and Payments A/c for the year 31st March 1998
Receipts | Rs. | Payments | Rs. |
To Building and liability fund a/c | 2,00,000 | By Library book a/c | 25,000 |
To Entrance fees a/c | 17,000 | By Bond 9% govt. a/c | 1,60,000 |
To Subscription a/c | 19,000 | By Fixed deposit a/c | 15,000 |
To Locker rent a/c | 600 | By Land a/c | 10,000 |
To Sundry income a/c | 1,060 | By Furniture a/c | 1,30,000 |
To Refreshment a/c | 16,000 | By Salaries a/c | 4,800 |
To Bank outstanding a/c | 1,08,140 | By Maintenance of play grounds a/c | 1,000 |
By Rent a/c | 8,000 | ||
By Refreshment a/c | 8,000 | ||
3,61,800 | 3,61,800 |
Problem No. 15: [May 2003]
The Receipts and Payments Account of Trustwell Club prepared on 31st March, 2008 is as follows:
Receipts and Payments A/c
Dr. | Cr. | |||||
Receipts | Rs. | Payments | Rs. | |||
To Balance b/d | 450 | By Expenses (Including payment for | 6,300 | |||
To Annual Income from Subscription | 4,590 | Sports Material Rs. 2,700) | ||||
Add: Outstanding of last year | By Loss on Sale of Furniture | 180 | ||||
received this year | 180 | (Cost price Rs. 450) | 90,450 | |||
4,770 | By Balance c/d | |||||
Less: Prepaid of last Year | 90 | 4,680 | ||||
To Other fees | 1,800 | |||||
To Donation for Building | 90,000 | |||||
96,930 | 96,930 | |||||
Additional Information:
Trustwell Club had balances as on 1.4.2007:-
Furniture Rs. 1,800; Investment at 5% Rs. 27,000; Sports Materials Rs. 6,660;
Balance as on 31.3.2008: Subscription Receivable Rs. 270; Subscription received in advance Rs. 90; Stock of Sports Material Rs. 1,800.
Do you agree with above Receipts and Payments Account? If not, prepare correct Receipt and Payments Account and Income and Expenditure Account for the year ended 31st March, 2008 and Balance Sheet as on that date. Solution:
Dr. | In the books of Trustwell Club Corrected Receipts & Payment A/c for the year ended 31st March, 2008 |
Cr. | |||
Receipts | Rs. | Payments | Rs. | ||
To Balance b/d | 450 | By Expenses (Rs. 6,300 – Rs. 2,700) | 3,600 | ||
To Subscription (note 2) | 4,500 | By Sports Material | 2,700 | ||
To Other Fees | 1,800 | By Balance c/d (balancing figure) | 90,720 | ||
To Donation for Building | 90,000 | ||||
To Sale of Furniture (Rs. 450 – Rs. 180) | 270 | ||||
97,020 | 97,020 | ||||
Dr. | Income & Expenditure A/c for the year ended 31st March, 2008 | Cr. | |||
Expenditures | Rs. | Incomes | Rs. | ||
To Sundry Expenses | 3,600 | By Subscription | 4,590 | ||
To Sports Material used (note 3) | 7,560 | By Other Fees | 1,800 | ||
To Loss on Sale of Furniture | 180 | By Interest on Investment | 1,350 | ||
(5% on Rs. 27,000) | |||||
By Excess of Expenditure over income | 3,600 | ||||
11,340 | 11,340 | ||||
Balance sheet of Trustwell Club as on 31st March, 2008
Liabilities | Rs. | Assets | Rs. | ||
Capital Fund: | Furniture | 1,800 | |||
Opening Balance (note 1) | 6,000 | Less: Sold | 450 | 1,350 | |
Less: Excess of Expenditure | 596 Investment | 27,000 | |||
Over Income | 3.600 | 32,400 | Interest Accrued on Investments | 1,350 | |
Building Fund | 90,000 | Sports Material | 1,800 | ||
Subscription Received in Advance | 90 | Subscription Receivable | 270 | ||
Cash in Hand & Bank | 90,720 | ||||
1,22,490 | 1,22,490 |
Working Notes:
1.
Balance Sheet of Trustwell Club as on 1st April, 2007
Liabilities | Rs. | Assets | Rs. |
Subscription (received in advance) Capital | 90 | Furniture | 1,800 |
Fund (Balancing figure) | 36,000 | Investment | 27,000 |
Sports Material | 6,660 | ||
Subscription Receivable | 180 | ||
Cash in Hand & Bank | 450 | ||
36,090 | 36,090 |
2. Dr. | Subscription A/c | Cr. | |||
Particulars | Rs. | Particulars | Rs. | ||
To Opening outstanding subscription | 180 | By Opening advance subscription | 90 | ||
To I&E a/c (Income) | 4,590 | By Cash/Bank a/c (received) (bal. fig.) | 4,500 | ||
To Closing advance subscription | 90 | By Closing outstanding subscription | 270 | ||
4,860 | 4,860 | ||||
3.
Sports Material Stock A/c
Particulars | Rs. | Particulars | Rs. |
To Balance b/d | 6,660 | By Materials used (Balancing figure) | 7,560 |
To Purchases A/c | 2,700 | By Balance c/d | 1,800 |
9,360 | 9,360 |
Corrected Receipt Payment A/c, Income Expenditure A/c & Opening Closing Balance sheet
Problem No.16: (Nov. 2011)
Bear Bar Club was registered in a city and the accountant prepared the following Receipts and Payments Account for the year ended March 31, 2011 and showed a deficit of Rs. 14,520.
Receipts | Rs. | Payments | Rs. |
Subscriptions | 62,130 | Premises | 30,000 |
Fair receipts | 7,200 | Honorarium to Secretary | 12,000 |
Variety show receipts (net) | 12,810 | Rent | 2,400 |
Interest | 690 | Rate & Taxes | 3,780 |
Bar Collection | 22,350 | Printing & Stationery | 1,410 |
Excess Cash spent | 1,000 | Sundry Expenses | 5,350 |
Deficit | 14,520 | Wages | 2,520 |
Fair Expenses | 7,170 | ||
Bar purchases payments | 17,310 | ||
Repair | 960 | ||
New car (less proceeds of old car Rs. 9,000) | 37,800 | ||
1,20,700 | 1,20,700 |
The following additional information are:
01-04-2010 | 31-03-2011 | |
Cash in hand | 450 | – |
Bank balances as per pass book | 24,690 | 10,440 |
Cheque issued not presented for sundry expenses | 270 | 90 |
Subscriptions due | 3,600 | 2,940 |
Premises at cost | 87,000 | 1,17,000 |
Accumulated depreciation on premises | 56,400 | – |
Car at cost | 36,570 | 46,800 |
Accumulated depreciation on car | 30,870 | – |
Bar stock | 2,130 | 2,610 |
Creditors for the bar purchases | 1,770 | 1,290 |
Cash excess spent represent honorarium, to secretary not withdrawn due to cash deficit. His annual honorarium is Rs. 12,000.
Depreciation on premises and car is to be provided at 5% and 20% on written down valued method.
You are required to prepare the correct Receipts and Payments Account, Income and Expenditure Account and Balance Sheet on March 31, 2011.
Solution :
Receipt & Payment Account for the year ended 31.03.2011
Particulars (Receipts) | Rs. | Particulars (Payments) | Rs. |
To Balance b/d. Cash | 450 | By Honorarium to Secretary | 11,000 |
Bank | 24,420 | A/c | |
To Subscription A/c | 62,130 | By Premises A/c | 30,000 |
To Fair receipt A/c | 7,200 | By Rent A/c | 2,400 |
To Variety Show Receipt A/c | 12,810 | By Rates & Taxes A/c | 3,780 |
To Interest A/c | 690 | By Printing & Stationery A/c | 1,410 |
To Bar collection A/c | 22,350 | By Sundry Expenses A/c | 5,350 |
To Car A/c (Sale) | 9,000 | By Wages A/c | 2,520 |
By Fair Expense A/c | 7,170 | ||
By Bar Purchase (Creditors on bar) A/c | 17,310 | ||
By Repairs A/c | 960 | ||
By New Car A/c | 46,800 | ||
By Balance c/d. Bank | 10,350 | ||
Cash (Bal. fig.) | Nil | ||
1,39,050 | 1,39,050 |
Income and Expenditure Account for the year ended 31.03.2011
Expenditure | Rs. | Income | Rs. | ||
To Honorarium to Secretary 11,000 | By Subscription A/c | 61,470 | |||
+ Outstanding | 1,000 | 12,000 | By Fair receipts | 7,200 | |
To Rent A/c | 2,400 | (-) Fair expenses | 7.170 | 30 | |
To Rates & Taxes A/c | 3,780 | By Variety show receipt | 12,810 | ||
To Printing & Stationery A/c | 1,410 | By Interest | 690 | ||
To Sundry Expenses A/c | 5,350 | By Profit on sale of Bar A/c | 6,000 | ||
To Wages A/c | 2,520 | By Profit on sale of Car | 3300 | ||
To Repairs A/c | 960 | ||||
To Dep. on premises (1500+1530) | 3,030 | ||||
To Depreciation on Car | 9,360 | ||||
To Surplus of Income over | 43,490 | ||||
expenditure (balancing figure) | |||||
84,300 | 84,300 |
Balance sheet as on 31.03.2011
Liabilities | Amount | Assets | Amount | ||
Bank Balance | 10,350 | ||||
Capital Fund | 65,130 | Premises | 1,17,000 | ||
+ Surplus | 43,490 | 1,08,620 | (-) Depreciation Reserve | 59,430 | 57,570 |
1,000 | Subscription due | 2,940 | |||
Honorarium payable | 1,290 | Car | 46,800 | ||
Creditor for Bar | (-) Depreciation Reserve | 9,360 | 37,440 | ||
Bar Stock | 2,610 | ||||
1,10,910 | 1,10,910 |
Working Notes
Opening balance sheet (as on 01.04.2011)
Particulars | Rs. | Particulars | Rs. | |
Capital Fund (Balancing figure) | 65,130 | Cash | 450 | |
Bank | 24,420 | |||
Creditors for Bar | 1,770 | Car | 36,570 | |
(-) Depreciation Reserve | 30,870 | 5,700 | ||
Premises | 87,000 | |||
(-) Depreciation Reserve | 56,400 | 30,600 | ||
Subscription receivable | 3,600 | |||
Bar stock | 2,130 | |||
66,900 | 66,900 |
Bar A/c
To Opening stock | 2,130 | By Cash A/c (Bar Sale) | 22,350 | ||||
To Creditor (purchase) | 16,830 | By Closing Stock | 2,610 | ||||
To Gross profit (Bal. fig.) | 6,000 | ||||||
24,960 | 24,960 | ||||||
Creditor for bar A/c | |||||||
To Cash A/c | 17,310 | By Balance b/d | 1,770 | ||||
To Balance c/d | 1,290 | By Purchase (Bal. fig.) | 16,830 | ||||
18,600 | 18,600 | ||||||
Old car A/c | |||||||
To Opening Balance | 36,570 | By Cash A/c (Sale) | 9,000 | ||||
To Income & Expenditure A/c | By Depreciation reserve A/c | 30,870 | |||||
(Profit on Sale of Car) (Bal. fig.) | 3,300 | ||||||
39,870 | 39,870 | ||||||
Depreciation reserve on car | |||||||
To Car A/c (trans. as the car is sold) | 30,870 | By Balance b/d | 30,870 | ||||
30,870 | 30,870 | ||||||
New car A/c | |||||||
To Cash A/c (purchased) | 46,800 | By Balance c/d | 46,800 | ||||
46,800 | 46,800 | ||||||
Premises A/c | |||||||
To Opening Balance | 87,000 | By Closing Balance | 1,17,000 | ||||
To Cash A/c (additions) | 30,000 | ||||||
1,17,000 | 1,17,000 | ||||||
Depreciation reserve on premises | |||||||
To Balance c/d | 59,430 | By Balance b/d | 56,400 | ||||
By Depreciation a/c (5% on 30,600 WDV + | 3,030 | ||||||
5% on 30,000) | |||||||
59,430 | 59,430 | ||||||
Subscription A/c
To Op. bal. (Subscription due) | 3,600 | By Cash A/c | 62,130 |
To Income & Exp. A/c (Bal. fig. income) | 61,470 | By Subscription due/receivable c/f | 2,940 |
65,070 | 65,070 |
Reconciliation statement (as on 01.04.2010)
Particulars | Debit Rs. | Credit Rs. |
Balance as per pass book (Deposit) | 24,690 | |
Cheque issued but not presented for Sundry expenses | 270 | |
Balance as per cash book | 24,420 | |
24,690 | 24,690 |
Reconciliation statement (as on 31.03.2011)
Particulars | Debit Rs. | Credit Rs. |
Balance as per pass book (Deposit) | 10,440 | |
Cheque issued but not yet presented | 90 | |
Balance as per cash book | 10,350 | |
10,440 | 10,440 |
Note: (1) Since there is no opening/closing balance of Debtors therefore we will consider that the amount of bar collection is bar cash sale.
(2) In question balance as per pass book was given, hence by preparing BRS, balance as per cash book is ascertained and shown in the balance sheet.
(3) Depreciation on addition to premises is taken for full year alternatively it can be taken for half year.
PREPARATION OF RECEIPT AND PAYMENT A/C FROM INCOME AND EXPENDITURE A/C AND OTHER BALANCES AND INFORMATION
Receipt Payment A/c & Opening & Closing Balance sheet
Problem No. 17: (Dec. 1997)
The following is the income and expenditure account of a club for the year ended 31st March, 1997:
Expenditure: | Rs. | |
To Provision used: | ||
Opening stock | 10,000 | |
Add: Purchases | 1,40,000 | |
1,50,000 | ||
Less: Closing stock | 5,000 | 1,45,000 |
To Salaries | 18,000 | |
To General expenses | 5,000 | |
To Depreciation on equipment’s | 1,000 | |
To Surplus, i.e. excess of income over expenditure | 28,000 | |
1,97,000 | ||
Income: | ||
By Subscriptions | 34,000 | |
By Sale of provisions | 1,63,000 | |
1,97,000 |
The following balance sheets are also given to you:
Liabilities | On 31.3.1996 | On 31.3.1997 |
Creditors for provisions | 8,000 | 10,000 |
Capital fund | 47,000 | 75,000 |
55,000 | 85,000 | |
Equipment’s (cost less depreciation) | 10,000 | 25,000 |
Stock of provisions | 10,000 | 5,000 |
Subscriptions receivable | 5,000 | 10,000 |
Cash at bank and in hand | 30,000 | 45,000 |
55,000 | 85,000 |
Prepare the receipts and payments account of the club for the year ended 31st March, 1997.
Solution :
Receipt & Payment A/c
Receipts | Rs. | Payments | Rs. |
To Opening balance | 30,000 | By Salary a/c | 18,000 |
To Sale of Provisions a/c | 1,63,000 | By General expenses a/c | 5,000 |
To Subscription a/c | 29,000 | By Creditors a/c | 1,38,000 |
By Equipment a/c | 16,000 | ||
By Closing balance a/c | 45,000 | ||
2,22,000 | 2,22,000 | ||
Working Notes: | |||
Creditors A/c | |||
Particulars | Rs. | Particulars | Rs. |
To Cash/Bank a/c | 1,38,000 | By Opening balance | 8,000 |
To Closing balance | 10,000 | By Purchase a/c | 1,40,000 |
1,48,000 | 1,48,000 | ||
Equipment A/c | |||
Particulars | Rs. | Particulars | Rs. |
To Opening balance | 10,000 | By Depreciation a/c | 1,000 |
To Cash/bank a/c | 16,000 | By Closing balance | 25,000 |
26,000 | 26,000 |
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To Opening outstanding a/c | 5,000 | By Cash /Bank a/c | 29,000 |
To Income & Expenditure a/c | 34,000 | By Closing outstanding a/c | 10,000 |
39,000 | 39,000 |
Receipt Payment A/c & Opening & Closing Balance sheet Problem No. 18: (Dec. 1996)
From the following particulars relating to Deena Nath Charitable Hospital, prepare (i) receipts and payments account for the year ended on 31st March, 1996; and (ii) balance sheet as on 31st March, 1996:
Income and Expenditure Account For the year ended 31st March, 1996
Expenditure | Rs. | Income | Rs. | |
To Medicines used | 29,980 | By Subscriptions | 56,000 | |
To Honorarium to doctors | 12,000 | By Donations | 9,500 | |
To Salaries | 27,500 | By Interest on investment @11% | 11,000 | |
To Printing and stationery | 1,100 | By Income from film show: | ||
To Electricity | 475 | Proceeds | 11,450 | |
To Rent | 6,000 | Less: Expenses | 780 | 10,670 |
To Depreciation on Furniture | 2,100 | |||
To Depreciation on equipment | 3,250 | |||
To Surplus i.e. excess of income over expenditure | 4,765 | |||
87,170 | 87,170 |
Additional Information:
On 1.4.1995 | On 31.3.1996 | ||
(i) | Subscription due | 120 | 160 |
(ii) | Subscriptions received in advance | 64 | 100 |
(iii) | Electricity bills unpaid | 92 | 115 |
(iv) | Stock of medicines | 7,820 | 9,750 |
(v) | Estimated value of equipment’s | 11,600 | 13,900 |
(vi) | Furniture and fixtures | 21,000 | 18,900 |
(vii) | Land | – | 10,000 |
(viii) | Interest accrued on investments in 11% debentures costing Rs. 1,02,500 (face value: Rs. 1,00,000) | 3,750 | 3,750 |
(ix) | Cash in hand | 340 | 160 |
(x) | Cash at bank | 9,000 | 7 |
Solution :
Receipt & Payment A/c
Receipt | Rs. | Payment | Rs. | ||
To Openiner balance | By Honorarium to doctors a/c | 12,000 | |||
Cash | 340 | By Salary a/c | 27,500 | ||
Bank | 9,000 | 9,340 | By Printing & Stationery a/c | 1,100 | |
To Donation a/c | 9,500 | By Rent a/c | 6,000 | ||
To Charity show a/c | 11,450 | By Charity show a/c | 780 | ||
To Interest a/c | 11,000 | By Land a/c | 10,000 | ||
To Subscription a/c | 55,996 | By Equipment a/c | 5,550 | ||
By Electricity a/c | 452 | ||||
By Medicine a/c | 31,910 | ||||
By Closing balance | |||||
Cash | 160 | ||||
Bank (balancing figure) | 1.834 | 1,994 | |||
97,286 | 97,286 |
Balance Sheet as on 31.3.96
Liabilities | Rs. | Assets | Rs. | |
Trust Fund | 1,55,974 | Subscription outstanding | 160 | |
Surplus | 4.765 | 1,60,739 | Stock of Medicine | 9,750 |
Advance subscription | 100 | Equipment | 13,900 | |
Electricity outstanding | 115 | Furniture | 18,900 | |
Land | 10,000 | |||
Interest (receivable) | 3,750 | |||
Investment | 1,02,500 | |||
Cash | 160 | |||
. | Bank | 1,834 | ||
1,60,954 | 1,60,954 |
Working Notes:
Balance Sheet as on 31.3.95
Liabilities | Rs. | Assets | Rs. |
Advance subscription | 64 | Subscription outstanding | 120 |
Electricity outstanding | 92 | Stock of Medicine | 7,820 |
Trust Fund (Balancing figure) | 1,55,974 | Equipment | 11,600 |
Furniture | 21,000 | ||
Interest (receivable) | 3,750 | ||
Investment | 1,02,500 | ||
Cash | 340 | ||
Bank | 9,000 | ||
1,56,130 | 1,56,130 |
Medicine A/c
Particulars | Rs. | Particulars | Rs. |
To Opening stock a/c | 7,820 | By Income & Expenditure | 29,980 |
To Cash /Bank a/c | 31,910 | By Closing stock | 9,750 |
39,730 | 39,730 |
Electricity A/c
Particulars | Rs. | Particulars | Rs. |
To Cash/Bank a/c | 452 | By Opening outstanding | 92 |
To Closing outstanding a/c | 115 | By Income & Expenditure | 475 |
567 | 567 |
Furniture A/c
Particulars | Rs. | Particulars | Rs. |
To Opening balance | 21,000 | By Depreciation a/c | 2,100 |
By Closing balance | 18,900 | ||
21,000 | 21,000 |
Equipment A/c
Particulars | Rs. | Particulars | Rs. |
To Opening balance | 11,600 | By Depreciation a/c | 3,250 |
To Cash/Bank a/c | 5,550 | By Closing balance | 13,900 |
17,150 | 17,150 |
Interest A/c
Particulars | Rs. | Particulars | Rs. |
To Opening outstanding | 3,750 | By Cash/Bank a/c | 11,000 |
To Income & Expenditure | 11,000 | By Closing outstanding | 3,750 |
14,750 | 14,750 |
Subscription A/c
Particulars | Rs. | Particulars | Rs. |
To Opening outstanding | 120 | By Opening advance | 64 |
To Income & Expenditure | 56,000 | By Cash/Bank a/c ‘ | 55,996 |
To Closing advance | 100 | By Closing outstanding | 160 |
56,220 | 56,220 |
Receipt & Payment A/c & Opening & Closing Balance sheet
Problem No. 19: (May 2006)
Following is the Income and Expenditure Account of Victoria Club for the year ending 31st March, 2008
Expenditures | Rs. | Incomes | Rs. | ||
To Salaries & Wages | 19,000 | By Subscription | 30,000 | ||
To Misc. Expenses (including Insurance) | 2,000 | By Entrance Fee Received | 1,000 | ||
To Audit Fees | 1,000 | By Annual Sports Income | |||
To Chief Executives Honorarium | 4,000 | receipts | 6,000 | ||
To Printing & Stationery | 1,800 | Less: Expenses | 3,000 | 3,000 | |
To Annual Day Celebration Exp. | 6,000 | ||||
Less: Donation | 4,000 | 2,000 | |||
To Interest on Bank Loan | 600 | ||||
To Depreciation on Sports Equipment | 1,200 | ||||
To Excess of Income over Expenditure | 2,400 | ||||
34,000 | 34,000 |
Additional Information:
31.3.07 (Rs.) | 31.3.08 (Rs.) | |
(1) Subscription Outstanding | 2,400 | 3,000 |
(2) Subscription received in advance | 1,800 | 1,080 |
(3) Salaries Outstanding | 1,600 | 1,800 |
(4) Sports equipment (after deducting depreciation) | 10,400 | 10,800 |
(5) Prepaid Insurance | — | 240 |
(6) Cash in hand | 7 | 6,400 |
(7) The Club owned a sports ground of Rs. 40,000
(8) The Club took a loan of Rs. 8,000 from a bank during the year 2006-2007, which was not paid in 2007- 08.
(9) Audit fee of 2007-08 was outstanding, but Audit fees of Rs. 800 for 2006-07 was paid in 2007-08
Prepare Receipts and Payments Account for the year ending 31st March, 2008 and a Balance Sheet as on that date.
Solution :
In the books of Victoria Club
Dr. | Receipts and Payments Account for the year ended on 31st March, 2008 | Cr. | |||
Receipts | Rs. | Payments | Rs. | ||
To Balance b/d (Balancing figure) | 5,560 | By Salaries and Wages (note 4) | 18,800 | ||
To Subscription (note 3) | 28,680 | By Audit Fee | 800 | ||
To Donation | 4,000 | By Sports Equipments (note 2) | 1,600 | ||
To Entrance fee | 1,000 | By Misc. Expenses | 2,000 | ||
To Receipt for Annual Sport | 6,000 | Add: Prepaid Insurance | 240 | 2,240 | |
By Chief Executive’s Honorarium | 4,000 | ||||
By Printing & Stationery | 1,800 | ||||
By Expenses on Annual Sports | 3,000 | ||||
By Annual Day Celebration Expenses | 6,000 | ||||
By Interest on Bank Loan | 600 | ||||
By Balance c/d | 6,400 | ||||
45,240 | 45,240 |
Balance Sheet of Victoria Club
As on 31st March, 2008
Liabilities | Rs. | Assets | Rs. | ||
Capital Fund: | Cash | 6,400 | |||
Opening Balance (note 1) | 46,160 | Subscription Outstanding | 3,000 | ||
Add: Excess of Income | Sports Equipment | 10,400 | |||
Over Expenditure | 2.400 | 48,560 | Add: Additions | 1.600 | |
Salaries Outstanding | 1,800 | 12,000 | |||
Audit Fee Outstanding | 1,000 | Less: Depreciation | 1.200 | 10,800 | |
Bank Loan | 8,000 | Sports Ground | 40,000 | ||
Subscription received in advance | 1,080 | Prepaid Insurance | 240 | ||
60,440 | 60,440 |
Working Notes:
1.
Balance Sheet of Victoria Club
as on 31st March, 2007
Liabilities | Rs. | Assets | Rs. | |
Capital Fund (Balancing figure) | 46,160 | Cash | 5,560 | |
Bank Loan | 8,000 | Sports Ground | 40,000 | |
Subscription received in advance Salaries | 1,800 | Sport Equipment after Depreciation | 10,400 | |
Outstanding | 1,600 | Subscription Outstanding | 2,400 | |
Audit fee Outstanding | 800 | |||
58,360 | 58,360 | |||
2. | ||||
Dr. Sports Equipment Account | Cr. | |||
Particulars | Rs. | Particulars | Rs. | |
To Balance b/d To Bank A/c (Balancing Figure) | 10,400 1,600 | By Depreciation A/c By Balance c/d | 1,200 10,800 | |
12,000 | 12,000 | |||
3. Dr. | Subscription A/c. | Cr. | ||
Particulars | Rs. | Particulars | Rs. | |
To Opening outstanding subscription | 2,400 | By Opening advance subscription | 1,800 | |
To I&E a/c (Income) | 30,000 | By Cash/Bank a/c (received: bal. fig.) | 28,680 | |
To Closing advance subscription | 1,080 33,480 | By Closing outstanding subscription | 3,000 33,480 | |
4. Dr. | Salary & Wages Account | Cr. | ||
Particulars | Rs. | Particulars | Rs. | |
To Cash/Bank a/c (Paid : Bal. fig.) | 18,800 | By Opening Outstanding b/f (Payable) | 1,600 | |
To Closing outstanding C/f (payable) | 1,800 | By Income & Exp. A/c (Expense) | 19,000 | |
20,600 | 20,600 | |||
Receipt Payment A/c & Opening & Closing Balance sheet
Problem No.20: (May 2012)
From the following Income & Expenditure A/c of Premium Sports Club for the year ended 31st March, 2012, you are required to prepare Receipts & Payment A/c for the year ended 31st March, 2012 and Balance Sheet as on that date:
Expenditure | Amount (Rs.) | Income | Amount (Rs.) |
To Salaries | 1,18,800 | By Subscriptions | 4,20,000 |
To Rent | 2,16,000 | By Entrance Fee | 1,20,000 |
To Printing & Stationery | 28,000 | By Profit on sale of Sports | |
To Postage & Telephone | 41,600 | Material | 5,500 |
To Membership Fee | 3,200 | By Interest on 8% | |
To Electricity Charges | 38,500 | Government Bonds | 12,000 |
To Garden Upkeep | 19,300 | By Sale of Old Newspaper | 11,600 |
To Sports Material Utilized | 62,800 | ||
To Repairs & Maintenance | 18,700 | ||
To Depreciation | 13,000 | ||
To Miscellaneous Expenses | 5,700 | ||
To Surplus carried to Capital | |||
Fund | 3,500 | ||
Total | 5,69,100 | Total | 5,69,100 |
(a) The following additional information is provided to you:
Balances As On | Balances As On | |
01.04,2011 | 01.04.2012 | |
Fixed Assets | 2,40,000 | P |
Bank Balance | 8,300 | |
Stock of Sports Material | 43,450 | 35,670 |
Outstanding Subscription | 1.0,200 | 5,700 |
Subscription received in advance | 2,400 | 49,000 |
8% Government Bonds | 1,50,000 | 1,50,000 |
Outstanding Salaries | 16,000 | 14,300 |
Outstanding Rent | 21,000 | 15,000 |
Advance for Stationery | 1,350 | 1,550 |
Outstanding Repairs & Maintenance | 1,200 | Nil |
Creditors for purchase of Sports Material | 3,400 | 4,200 |
(b) Some of Fixed Assets were purchased on 01.10.2011 and depreciation is to be charged @ 5%p.a.
(c) Sports Material worth Rs. 72,000 was purchased on credit during the year.
(d) The Club became member of State Table Tennis Association on 01.01.2012 when it paid fee up to 31.12.2012.
(e) 50% of Entrance Fee is to be capitalized.
(f) Interest on 8% Government Bonds was received for two quarters only.
(g) A Fixed Deposit of Rs. 80,000 was made on 31st March, 2012.
Solution :
Receipt & Payment A/c for the year ended 31st March, 2012
Particulars | Amount | Particulars | Amount |
To Opening Balance b/f | 8,300 | By Postage & Telephone | 41,600 |
To Interest on Bonds | 6,000 | By Electricity Charge | 38,500 |
To Sale of old News Paper | 11,600 | By Garden upkeep | 19,300 |
To Sports Material (sale) | 22,480 | By Miscellaneous Expenses | 5,700 |
To Subscription ‘ | 4,27,000 | By Fixed Deposit | 80,000 |
To Entrance Fees | 2,40,000 | By Salary | 1,20,500 |
By Rent | 2,22,000 | ||
By Printing | 28,200 | ||
By Membership Fees Paid | 12,800 | ||
By Repairs | 19,900 | ||
By Fixed Asset Purchase | 40,000 | ||
By Creditors | 71,200 | ||
By Closing Balance c/f | 15,680 | ||
7,15,380 | 7,15,380 |
Balance Sheet as on 31st March, 2012
Liabilities | Rs. | Assets | Rs. | |
Capital Fund: Balance | 4,09,300 | Fixed Assets | 2,67,000 | |
+ Surplus | 3,500 | Stock of Sports Materials | 35,670 | |
+ Entrance Fees | 1,20,000 | 5,32,800 | 8% Government Bonds | 1,50,000 |
Interest Receivable | 6,000 | |||
Advance Subscription | 4,900 | Fixed Deposit | 80,000 | |
O/s Salaries | 14,300 | O/s Subscription | 5,700 | |
O/s Rent | 15,000 | Advance for stationery | 1,550 | |
Creditors | 4,200 | Prepaid Fees | 9,600 | |
Cash Bank balance | 15,680 | |||
5,71,200 | 5,71,200 |
Working Notes:
(1)
Salary A/c
Particulars | Amount | Particulars | Amount |
To Bank (Balancing figure) | 1,20,500 | By Opening Outstanding Salaries | 16,000 |
To Closing Outstanding Salaries | 14,300 | By I & E (salary for the year) | 1,18,800 |
1,34,800 | 1,34,800 |
(2)
Rent A/c
Particulars | Amount | Particulars | Amount |
To Bank (Balancing figure) | 2,22,000 | By Opening Outstanding Rent | 21,000 |
To Closing Outstanding Rent | 15,000 | By I & E A/c | 2,16,000 |
2,37,000 | 2,37,000 |
(3)
Printing & Stationery A/c
Particulars | Amount | Particulars | Amount |
To Opening advance b/f | 1,350 | By I & E A/c | 28,000 |
To Bank (Balancing figure) | 28,200 | By Closing advance c/f | 1,550 |
29,550 | 29,550 |
(4)
Membership Fee A/c
Particulars | Amount | Particulars | Amount |
To Bank (Balancing figure) Paid for | 12,800 | By I & E A/c (3 month 1.1 to 31.3) | 3,200 |
12 month = 3,200/3 × 12 | By Closing prepaid 3,200/3 × 9 | 9,600 | |
12,800 | 12,800 |
(5)
Sports Material A/c
Particulars | Amount | Particulars | Amount |
To Opening Balance (stock) | 43,450 | By Bank (Balancing figure) (Sale) | 22,480 |
To I & E (Profit on Sale) | 5,500 | By I & E (Consumed) | 62,800 |
To Creditors (Purchase) | 72,000 | By Closing Balance (stock) | 35,670 |
1,20,950 | 1,20,950 |
Creditors for Sports Material A/c
Particulars | Amount | Particulars | Amount |
To Bank (Balancing figure) Paid | 71,200 | By Opening balance b/f | 3,400 |
To Closing balance c/f | 4,200 | By Sports Material A/c (Purchase) | 72,000 |
75,400 | 75,400 |
(6)
Repairs & Maintenance A/c
Particulars | Amount | Particulars | Amount |
To Bank (Balancing figure) Paid | 19,900 | By Opening O/s | 1,200 |
By I & E | 18,700 | ||
19,900 | 19,900 |
(7)
Fixed Assets A/c
Particulars | Amount | Particulars | Amount |
To Opening Balance b/f | 2,40,000 | By Depreciation (12,000 + 1,000) | 13,000 |
To Bank (1,000/5 × 100/6 × 12) | 40,000 | By Closing Balance c/f | 2,67,000 |
2,80,000 | 2,80,000 |
(8)
Total depreciation as per Income & Expenditure a/c | 13,000 |
Less: Depreciation on opening fixed asset 2,40,000 × 5% | 12,000 |
Balance is 6 month depreciation @ 5% on addition to Fixed asset | 1,000 |
Hence Addition to fixed asset = 1,000/6 × 12 = 2,000/5 × 100 = 40,000 |
(9)
Opening Balance Sheet as on 1.4.2011
Particulars | Amount | Particulars | Amount |
Capital Fund (Balancing figure) | 4,09,300 | Fixed Assets | 2,40,000 |
Creditors for purchase of Sports Material | 3,400 | Bank Balance | 8,300 |
Advance Subscription | 2,400 | Sports material | 43,450 |
Outstanding Salaries | 16,000 | Outstanding Subscription | 10,200 |
Outstanding Rent | 21,000 | 8% Government Bonds | 1,50,000 |
Outstanding Repairs & Maintenance | 1,200 | Advance for Stationery | 1,350 |
4,53,300 | 4,53,300 |
(10)
Subscription A/c
Particulars | Amount | Particulars | Amount |
To Opening Outstanding Subs. | 10,200 | By Opening advance Subscription | 2,400 |
To I & E A/c (Income) | 4,20,000 | By Bank A/c (Balancing figure) | 4,27,000 |
To Closing advance c/f | 4,900 | By Closing outstanding c/f | 5,700 |
4,35,100 | 4,35,100 |
(11)
Entrance Fees A/c
Particulars | Amount | Particulars | Amount |
To I & E A/c (50% only) | 1,20,000 | By Receipt & Payment | |
To Capital fund (50% capitalised) | 1,20,000 | (Balancing figure) | 2,40,000 |
2,40,000 | 2,40,000 |
Problem No.21: (May 2013)
The Receipts and Payments Account, the Income and Expenditure Account and additional information of a sports club for the year ended 31st March, 2013 were as follows:
Receipts & Payment Account For the year ending on 31st March, 2013
Receipts | Rs. | Payments | Rs. |
To Balance b/d | 42,000 | By Secretary Salary | 10,000 |
To Entrance Fees 2011-12 | 10,000 | By Printing & Stationery | 26,000 |
To Entrance Fees 2012-13 | 1,00,000 | By Advertising | 16,000 |
To Subscription 2011-12 | 6,000 | By Fire Insurance | 12,000 |
To Subscription 2012-13 | 1,50,000 | By 1296 Investments | |
To Subscription 2013-14 | 4,000 | (Purchased on 01-10-2012) | 2,00,000 |
To Rent Received | 24,000 | By Furniture | 20,000 |
To Interest Received | 6,000 | By Balance c/d | 58,000 |
Total | 3,42,000 | Total | 3,42,000 |
Income & Expenditure Account For the year ending on 31st March, 2013
Expenditure | Rs. | Income | Rs. |
To Secretary Salary | 15,000 | By Entrance Fees | 1,05,000 |
To Printing & Stationery | 22,000 | By Subscription | 1,56,000 |
To Advertising | 16,000 | By Rent | 28,000 |
To Audit Fees | 5,000 | By Interest on Investments | 12,000 |
To Fire Insurance | 10,000 | ||
To Depreciation: | |||
Sports Equipments | 90,000 | ||
Furniture | 5,000 | ||
To Surplus | 1,38,000 | ||
Total | 3,01,000 | Total | 3,01,000 |
Additional Information:
The assets and liabilities as on 31st March, 2012 include club Grounds & Pavilion Rs. 4,40,000, Sports Equipments Rs. 2,50,000, Furniture & Fixtures Rs. 40,000, Subscription in Arrear Rs. 8,000, Subscription received in advance Rs. 2,000 and Creditors for Printing & Stationery Rs. 5,000.
You are required to prepare the Balance Sheet of the Club as on 31st March, 2013.
Solution :
Balance Sheet of Sports Club As at 31st March 2013
Liabilities | Rs. | Assets | Rs. | ||
Capital Fund: | Fixed Assets: | ||||
Opening Balance (W.N.) | 7,83,000 | Club, Grounds & Pavilion | 4,40,000 | ||
Add. Surplus | 1,38,000 | 9,21,000 | Furniture & Fixtures | 40,000 | |
Current Liabilities: | Add: Additions | 20,000 | |||
Outstanding Salary (15,000-10,000) | 5,000 | 60,000 | |||
Outstanding Audit Fees | 5,000 | Less : Depreciation | 15,000 | 55,000 | |
Creditors for Printing & Stationery | |||||
[22,000-(26,000- 5,000)} | 1,000 | Sports Equipments | 2,50,000 | ||
Subscription received in advance | 4,000 | Less: Depreciation | 190,000 | 1,60,000 | |
Investments: | |||||
Investment (at cost) | 2,00,000 | ||||
Current Assets: | |||||
Accrued Interest [Rs. 12,000 – Rs. 6,000] | 6,000 | ||||
Accrued rent (28,000 – 24,000) | 4,000 | ||||
Subscription receivable | |||||
For 2011-12 (8,000-6,000) | 2,000 | ||||
For 2012-13 {(1,56,000-(1,50,000 + 2,000)} | |||||
4,000 | 6,000 | ||||
Entrance Fees Receivables (1,05,000- | |||||
1,00,000) | 5,000 | ||||
Prepaid Insurance (12,000-10,000) | 2,000 | ||||
Cash and bank | 58,000 | ||||
9,36,000 | 9,36,000 |
Alternatively accounts can be prepared to ascertain the missing figures.
Working Note:
Calculation of Capital Fund as on 1st April, 2012
Balance Sheet of Sports Club
As at 31st March 2012
Liabilities | Rs. | Assets | Rs. |
Capital Fund (balancing figure) | 7,83,000 | Fixed Assets : | |
Current Liabilities: | Club, Grounds & Pavilion | 4,40,000 | |
Subscription received in advance | 2,000 | Furniture & Fixtures | 40,000 |
Creditors for Printing and Stationery | 5,000 | Sports Equipments | 2,50,000 |
Current Assets: | |||
Entrance Fees receivables | 10,000 | ||
Subscription receivables | 8,000 | ||
Cash and Bank | 42,000 | ||
7,90,000 | 7,90,000 |
*This article contains all topics about Financial Statements of Non Profit Organizations .
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