Practical Problem 13
Practical Problems | Q 13 | Page 123
From the following information supplied to you, prepare Income and Expenditure Account for the year ending on 31.03,2020 and Balance Sheet as on that date for “Morya Sports Club” Thane.
Balance Sheet as on 01.04.2019. | |||
Liabilities | Amt ₹ | Assets | Amt ₹ |
Capital Fund | 64,500 | Machinery | 69,000 |
Bank overdraft | 38,000 | Outstanding Subscriptions | 8,000 |
Outstanding Salary | 4,000 | Prepaid Insurance Premium | 2,000 |
Furniture | 15,000 | ||
Cash in Hand | 12,000 | ||
Outstanding Locker’s Rent | 500 | ||
1,06,500 | 1,06,500 | ||
Receipts and Payments Account for the year ended 31.03.2020 | |||
Liabilities | Amt ₹ | Payments | Amt ₹ |
To Balance b/d | 12,000 | By Balance b/d (Bank Overdraft) | 38,000 |
To Subscription | 1,05,000 | By Salary | 17,500 |
To Entrance Fees (Capitalized) | 9,300 | By Insurance Premium | 11,000 |
To Locker Rent | 1,500 | By Interest | 1,400 |
To Donations (Capitalized) | 800 | By Refreshment Expenses | 4,200 |
By Furniture | 30,000 | ||
By Balance c/d | |||
Cash in Hand | 6,500 | ||
Cash at Bank | 20,000 | ||
1,28,600 | 1,28,600 | ||
Adjustments:
1) Subscription received includes ₹ 3,000 for 2018 – 19 and Outstanding Subscription for 2019 – 20 was ₹ 14,000.
2) On 31.03.2020, Prepaid Insurance Premium was ₹ 2,500.
3) Depreciate Furniture by ₹ 3,000.
4) Locker Rent Outstanding for 2019 – 20 is ₹ 400
SOLUTION:
Solution:
In the books of ‘Morya Sports Club’ Thane
Income and Expenditure Account for the year ended 31st March, 2020 | |||||
Expenditure | Amount ₹ | Amount₹ | Income | Amount₹ | Amount₹ |
To Salary | 17,500 | By Subscription | 1,05,000 | ||
Less: Outstanding salary of 2018 – 19 | 4,000 | 13,500 | Add: Outstanding Subscription for Current Year | 14,000 | |
To Insurance Premium | 11,000 | 1,19,000 | |||
Less: Prepared Insurance Premium | 2,500 | Less: Subscription Received of 2018 – 19 | 3,000 | 1,16,000 | |
8,500 | By Locker Rent | 1,500 | |||
Add: Prepaid Insurance premium of C.Y Paid in P.Y | 2,000 | 10,500 | Add: Outstanding Locker Rent | 400 | |
To Depreciation | 1,900 | ||||
Furniture | 3,000 | Less: O/s Locker Rent of P. Y | 500 | 1,400 | |
To Interest | 1,400 | ||||
To Refreshment Expenses | 4,200 | ||||
To Surplus (Excess of income over Expenditure) | 84,800 | ||||
1,17,400 | 1,17,400 | ||||
Balance Sheet as on 31st March, 2020 | |||||
Liabilities | Amount ₹ | Amount ₹ | Assets | Amount ₹ | Amount ₹ |
Capital Fund | 64,500 | Machinery | 69,000 | ||
Add: Surplus | 84,800 | Outstanding Subscription (2018 – 19) (8,000 – 3,000) | 5,000 | ||
Add: Entrance fees (Capt.) | 9,300 | O/s Subscription (2019–20) | 14,000 | ||
Add: Donations (Capitalised) | 800 | 1,59,400 | Prepaid Insurance Premium | 2,500 | |
Furniture | 15,000 | ||||
Add: Purchases | 30,000 | ||||
45,000 | |||||
Less: Depreciation | 3,000 | 42,000 | |||
O/s Locker Ren (2019 – 20) | 400 | ||||
Cash in Hand | 6,500 | ||||
Cash at Bank | 20,000 | ||||
1,59,400 | 1,59,400 | ||||
Working Notes :
(1) Outstanding subscription (2018–19) ₹ 8,000 given in b/s against that ₹ 3,000 received in 2019–20.
Means still receivable subscription = ₹ 5,000 (8,000 – 3,000).
(2) Prepaid insurance premium (2018 – 19) ₹ 2,000 is for the current year. Therefore, in current year’s insurance premium, ₹ 2,000 is to be added and then subtract current year’s prepaid insurance premium.
(3) Outstanding salary of (2018 – 19), ₹ 4,000 of the previous year is to be subtracted from the current year’s salary.
(4) The total amount of donations and entrance fees are to be capitalised so add the entire amount of both the items to the Capital fund.
(5) Outstanding locker’s rent (2018 – 19) ₹ 500 is given in Balance Sheet. It is to be subtracted from current year’s locker’s rent and then add current year’s outstanding locker rent.