# Practical Problem 04

#### 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.