Practical Problem 04
Practical Problems | Q 4 | Page 116
Following is the Receipts and Payments Account of “Satara Sports Club” Satara Prepare Income and Expenditure Account for the year ending 31.03.2019.
Receipts and Payments Account for the year ending 31.03.2019. | |||||
Receipts | Amt ₹ | Amt ₹ | Payments | Amt ₹ | Amt ₹ |
To Balance b/d | By Salaries | 5,000 | |||
Cash in hand | 4,500 | By Rent (Including ₹ 2,000 for 2017 – 18) | 5,000 | ||
Cash at Bank | 12,000 | 16,500 | By Electricity Charges | 1,450 | |
To Subscription | By Fixed Deposit | 60,000 | |||
2017 – 18 | 4,000 | By Printing and Stationery | 750 | ||
2018 – 19 | 44,500 | By General Expenses (Including ₹ 500 paid for next year) | 5,500 | ||
2019 – 20 | 3,500 | 52,000 | By Sports Material Purchased | 40,000 | |
To Entrance fees | 8,000 | By Balance c/d | |||
To Donation for Building fund | 70,000 | Cash in Hand | 8,900 | ||
To Interest | 600 | Cash at Bank | 25,000 | 33,900 | |
To Sale of furniture (Book Value ₹ 8000) | 4,500 | ||||
1,51,600 | 1,51,600 | ||||
Adjustments:
1) Outstanding Subscription for Current Year is ₹ 4,500
2) Outstanding Rent for Current Year amounted to ₹ 1,000
3) Entrance Fees are to be treated as Revenue Income
4) Stock of Sports Material as on 01.04.2018 ₹ 6,000 and on 31.03.2019 ₹ 14,000
SOLUTION:
In the books of ‘ Satara Sports Club’ Satara
Income and Expenditure Account for the year ended on 31st March 2019 | |||||
Expenditure | Amt ₹ | Amt ₹ | Income | Amt ₹ | Amt ₹ |
To Salaries | 5,000 | By Subscription received for 2018 – 19 | 44,500 | ||
To rent | 5,000 | Add: Outstanding Subscription for Current Year | 4,500 | 49,000 | |
Add: Outstanding rent of Current Year | 1,000 | By Entrance Fees | 8,000 | ||
Less: rent received for the Year 2017 – 18 | 2,000 | 4,000 | By Interest | 600 | |
To Electricity Charges | 1,450 | ||||
To Printing and Stationery | 750 | ||||
To General Expense | 5,500 | ||||
Less: Amount Paid for Next Year | 500 | 5,000 | |||
To Sports Material Consumed | |||||
Opening Stock | 6,000 | ||||
Add: Sports Material Purchased in Current Year | 40,000 | ||||
46,000 | |||||
Less: Closing Stock of Sports Material | 14,000 | 32,000 | |||
To Loss due to Sale of Furniture (8,000 – 4,500) | 3,500 | ||||
To Surplus (Excess of income over expenditure) | 5,900 | ||||
57600 | 57600 | ||||
Working Notes :
(1) Entrance fees are to be treated as revenue income. Therefore the entire amount is recorded on the income side.
(2) Since the selling price of Furniture ₹ 4,500 is lower than its cost price of ₹ 8,000, there is Loss on sale of furniture.
It is calculated as follows :
Loss on sale of furniture = Book value (cost) – Selling price
= 8,000 – 4,500
= ₹ 3,500
It is debited to Income and Expenditure A/c.