Practical Problem 07
Practical Problems | Q 7 | Page 118
From the following transactions of Receipts and Payments Account of “Pavan – Putra Hanuma Vyayamshala” Parbhani, and the adjustments given, you are required to prepare Income and Expenditure Account and Balance Sheet as on 31st March 2019.
Receipts and Payments Account for the year ending 31.03.2019. | |||
Receipts | Amt ₹ | Payments | Amt ₹ |
To Balance b/d | By Salaries | 6,000 | |
Cash in Hand | 5,000 | By Entertainment Expenses | 2,480 |
To Subscriptions | By Sundry Expenses | 1,300 | |
2018 – 19 18000 | By Electricity Charges | 1,200 | |
2019 – 20 410 | 18,410 | By Rent | 700 |
To Donations | 6,000 | By Investment | 15,000 |
To Receipts from Entertainment | 5,400 | By Printing and Stationery | 800 |
To Interest | 400 | By Postage | 3,200 |
To Entrance fees | 6,200 | By Fixed Deposit | 3,900 |
By Balance c/d | |||
Cash in Hand 830 | |||
Cash at Bank 6,000 | 6,830 | ||
41,410 | 41,410 | ||
Adjustments:
1) There are 500 members paying an annual Subscription of ₹50 each
2) Outstanding Salary was ₹1,200
3) The Assets on 01.04.2018 were as follows: Building ₹50,000, Furniture ₹ 15,000
4) Provide depreciation on Building and Furniture at 5% and 10% respectively.
5) 50% Entrance Fee is to be capitalized.
6) Interest on Investment at 5% p. a. has accrued for 6 months.
7) Capital Fund ₹70,000 on 01.04.2018
SOLUTION:
In the books of Pavan-putra Hanuman Vyayamshala, Parbhani
Income and Expenditure Account for the year ended on 31st March, 2019 | |||||
Expenditure | Amt ₹ | Amt ₹ | Income | Amt ₹ | Amt ₹ |
To Salaries | 6,000 | By Subscription | 18,000 | ||
Add: Outstanding | 1,200 | 7,200 | Add: Outstanding Subscription for Current Year | 7000 | 25000 |
To Entertainment Expenses | 2,480 | By Donations | 6,000 | ||
To Sundry Expenses | 1,300 | By receipts from Entertainment | 5,400 | ||
To Electricity Charges | 1,200 | By Interest | 400 | ||
To Rent | 700 | By Outstanding Interest on Investments (6 Months) | 375 | ||
To Printing and Stationery | 800 | By Entrance Fees | 6,200 | ||
To Postage | 3,200 | Less: 50 % capitalised | 3,100 | 3,100 | |
To Depreciation | |||||
Building | 2,500 | ||||
Furniture | 1,500 | 4,000 | |||
To Surplus (Excess of income over expenditure) | 19,395 | ||||
40,275 | 40,275 | ||||
Balance Sheet as on 31st March, 2019 | |||||
Liabilities | Amt ₹ | Amt ₹ | Assets | Amt ₹ | Amt ₹ |
Capital Fund | 70,000 | Building | 50,000 | ||
Add: Surplus | 19,395 | Less: Depreciation | 2,500 | 47,500 | |
Add: 50 % Entrance Fees | 3,100 | 92,495 | Furniture | 15,000 | |
Outstanding Salary | 1,200 | Less: Depreciation | 1,500 | 13,500 | |
Subscription received in Adv. | 410 | Investments | 15,000 | ||
O/s Interest on Investments | 375 | ||||
Fixed Deposit | 3,900 | ||||
Cash in Hand | 830 | ||||
Cash at Bank | 6,000 | ||||
O/s Subscription of C.Y | 7,000 | ||||
94,105 | 94,105 | ||||
Working Notes :
(1) Interest on investment is receivable for 6 months
I = PNR/100 = 15000 × (5 ÷ 100) × (6 ÷ 12) = ₹ 375 (outstanding interest on investment)
(2) 50% of entrance fees (i.e. 6200 ÷ 2 = ₹ 3100) is to be capitalised means add it to the capital fund.
(3) Total subscription of current year = 500 members × ₹ 50 = ₹ 25,000
But actual subscription received = ₹ 18,000
means difference (25,000 – 18,000) of ₹ 7,000 is outstanding subscription.