# 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

 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.