# 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

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.