Practical Problem 14
Practical Problems | Q 14 | Page 124
Following information has been provided by “Vivekanand Charitable Hospital” Latur. You are required to prepare Income and Expenditure Account for the year ending on 31.03.2019 and Balance Sheet as on that date.
Balance Sheet as on 01.04.2018. | |||
Liabilities | Amount ₹ | Assets | Amount ₹ |
Capital Fund | 11,00,000 | Building | 10,50,000 |
Bank Loan | 6,50,000 | Ambulance | 4,00,000 |
Outstanding Bill for Drugs | 50,000 | Stock of Drugs | 42,000 |
Hospital Equipment | 3,04,000 | ||
Cash in Hand | 4,000 | ||
1800000 | 1800000 | ||
Receipts and Payments Account for the year ended 31.03.2019 | |||
Receipts | Amount ₹ | Payments | Amount ₹ |
To Balance b/d | 4,000 | By Purchase of Drugs (Includes 40,000 for 2017 – 18) | 2,00,000 |
To Subscription | 2,22,000 | By Salary to Staff | 85,000 |
To Life Membership Fees | 30,000 | By Honorarium to Doctors | 4,00,000 |
To Hospital Receipts (Revenue) | 5,10,400 | By Repairs and Maintenance | 18,000 |
By Furniture | 45,000 | ||
By General Expenses | 16,000 | ||
By Balance c/d | 2,400 | ||
7,66,400 | 7,66,400 | ||
Adjustments:
1) On 31.03.2019 Stock of Drugs was valued at ₹ 22,000.
2) Depreciation on Building at 5*% p.a. and on Ambulance ₹ 30,000.
3) Life Membership Fees are to be capitalized.
SOLUTION:
In the books of Vivekanand Charitable Hospital, Latur
Income and Expenditure Account for the year ended 31st March, 2019 | |||||
Expenditure | Amount ₹ | Amount ₹ | Income | Amount ₹ | Amount₹ |
To Salary to Staff | 85,000 | By Subscription | 2,22,000 | ||
To Honorarium to Doctors | 4,00,000 | By Hospital Receipts | 5,10,400 | ||
To Repairs and Maintenance | 18,000 | By Deficit (Excess of expenditure over income) | 49,100 | ||
To General Expenses | 16,000 | ||||
To Depreciation | |||||
Building | 52,500 | ||||
Ambulance | 30,000 | 82,500 | |||
To Drugs Consumed | |||||
Opening Stock | 42,000 | ||||
Add: Purchases (2,00,000 – 40,000) | 1,60,000 | ||||
2,02,000 | |||||
Less: Closing stock | 22,000 | 1,80,000 | |||
7,81,500 | 7,81,500 | ||||
Balance Sheet as on 31st March, 2019 | |||||
Liabilities | Amount ₹ | Amount₹ | Assets | Amount ₹ | Amount ₹ |
Capital Fund | 11,00,000 | Building | 10,50,000 | ||
Add: Life Membership Fees (Capitalised) | 30,000 | Less: Depreciation | 52,500 | 9,97,500 | |
11,30,000 | Ambulance | 4,00,000 | |||
Less: Deficit | 49,100 | 10,80,900 | Less: Depreciation | 30,000 | 3,70,000 |
Outstanding Bill for Drugs (50,000 – 40,000) | 10,000 | Hospital Equipment | 3,04,000 | ||
Bank Loan | 6,50,000 | Closing stock of Drugs | 22,000 | ||
Furniture | 45,000 | ||||
Cash in Hand | 2,400 | ||||
17,40,900 | 17,40,900 | ||||
Working Notes :
(1) Purchase of drugs ₹ 2,00,000 includes ₹ 40,000 of 2017–18 and in the Balance Sheet of 2017–18, the outstanding bill of drugs is ₹ 50,000 given. So, ₹ 10,000 is still outstanding
(2) Consumption of drugs:
Opening stock (2017 – 18) | 42,000 |
Add: Purchase of drugs | 1,60,000 |
2,02,000 | |
Less: Closing stock of drugs | 22,000 |
Consumption of drugs | 1,80,000 |