# 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

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