Question

(Charitable Hospital)

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 Equipments	3,04,000
		Cash in Hand	4,000
	1800000		1800000

 

Dr	Receipts and Payments Account for the year ended 31.03.2019				Cr
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.

Answer 1

Dr	In the books of Vivekanand Charitable Hospital, Latur Income and Expenditure Account for the year ended 31st March, 2019						Cr
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