Practical Problem 10
Practical Problems | Q 10 | Page 120
From the following Receipts and Payments Account “K.B.P. Engineering College” Nashik for the year ending on 31.03.2019 and additional information, prepare Income and Expenditure Account for the year ending 31.03.2019 and Balance Sheet as on that date.
Receipts and payments Account for the year ending 31.03.2019. | |||
Receipts | Amount ₹ | Payments | Amount ₹ |
To Balance b/d | By Salaries to Teaching Staff | 11,70,000 | |
Cash in Hand | 18,000 | By Electricity Charges | 55,000 |
Cash at Bank | 1,00,400 | By Books | 61,000 |
To Interest | 55,000 | By Furniture | 51,000 |
To Subscriptions | 28,300 | By Stationery | 21,850 |
To Life Membership fees | 25,000 | By Fixed Deposit (31.03.2019) | 8,50,000 |
To Donation | 7,00,000 | By Balance c/d | |
To Tuition Fees | 12,30,000 | Cash in Hand | 16,650 |
To Term Fees | 2,00,800 | Cash at Bank | 2,00,000 |
To Sundry Receipts | 8,000 | ||
To Admission Fees (Revenue) | 60,000 | ||
24,25,500 | 24,25,500 | ||
Additional Information:
Particulars | 01.04.2018 ₹ | 31.03.2019 ₹ |
Books | 6,00,000 | 6,00,000 |
Furniture | 3,19,000 | 3,00,000 |
Building Fund | 10,00,000 | ? |
Fixed Deposit | 9,10,000 | ? |
Capital Fund | 9,47,400 | ? |
1) 50% of Donation are for Building Fund and the balance is to be treated Revenue Income.
2) Outstanding subscription ₹ 5,300
3) Life membership fees are to capitalised
SOLUTION:
In the books of K.B.P. Engineering College, Nashik
Income and Expenditure Account for the year ended on 31st March, 2019 | |||||
Expenditure | Amt ₹ | Amt ₹ | Income | Amt ₹ | Amt ₹ |
To Salaries to Teaching Staff | 11,70,000 | By Interest | 55,000 | ||
To Electricity Charges | 55,000 | By Subscription | 28,300 | ||
To Stationery | 21,850 | Add: Outstanding Subscription | 5,300 | 33,600 | |
To Depreciation | By Donations | 7,00,000 | |||
Furniture | 70,000 | Less: 50 % for Building Fund | 3,50,000 | 3,50,000 | |
Books | 61,000 | 1,31,000 | By Tuition Fees | 12,30,000 | |
To Surplus (Excess of income over exp.) | 5,59,550 | By Term Fees | 2,00,800 | ||
By Sundry receipts | 8,000 | ||||
By Admission Fees | 60,000 | ||||
19,37,400 | 19,37,400 | ||||
Balance Sheet as on 31st March, 2019 | |||||
Liabilities | Amt ₹ | Amt ₹ | Assets | Amt ₹ | Amt ₹ |
Capital Fund | 9,47,400 | Outstanding Subscription | 5300 | ||
Add: Surplus | 5,59,550 | Books | 6,00,000 | ||
Add: Life Membership Fees (Capitalised) | 25,000 | 15,31,950 | Add: Purchases | 61,000 | |
Building Fund | 10,00,000 | 6,61,000 | |||
Add: 50% of Donations | 3,50,000 | 13,50,000 | Less: Depreciation | 61,000 | 6,00,000 |
Furniture | 3,19,000 | ||||
Add: Purchase | 51,000 | ||||
3,70,000 | |||||
Less: Depreciation | 70,000 | 3,00,000 | |||
Fixed Deposits (Old) | 8,50,000 | ||||
Cash in Hand | 16,650 | ||||
Cash in Bank | 2,00,000 | ||||
Fixed Deposits (New) | 9,10,000 | ||||
28,81,950 | 28,81,950 | ||||
Working Notes :
(1) Life membership fees are to be capitalised, means add entire amount in capital fund.
(2) 50% of Donations of ₹ 7,00,000 i.e., ₹ 3,50,000 is to be added to the Building Fund, and the remaining amount of donation i.e., ₹ 3,50,000 is credited to Income and Expenditure A/c.
(3) The depreciation on Fixed assets is calculated by using following formula:
Depreciation = Opening balance + Purchases – Closing value
∴ Depreciation on Books = 6,00,000 + 61,000 – 6,00,000
= 6,61,000 – 6,00,000
= ₹ 61,000
∴ Depreciation on Furniture = 3,19,000 + 51,000 – 3,00,000
= 3,70,000 – 3,00,000
= ₹ 70,000
(4) Fixed Deposit:
Opening balance given | ₹ 910000 |
Fixed deposit (31 – 03 – 2019) (Newly purchased) | ₹ 850000 |
∴ Total fixed deposits | ₹ 1760000 |
(5) Admission Fees ₹ 60,000 is recorded on the credit side of Income and Expenditure A/c because it is taken as revenue income.