Question

Following is the Receipts and Payments Account of Indian Youth Club for the year ended 31st March, 2021.

'Receipts and Payments Account of Indian Youth Club for the year ended 31st March, 2021
Receipts		Amount (₹)	Payments		Amount (₹)
To Balance b/d:			By Salaries		3,60,000
Cash	25,000	3,10,000	By Printing & Stationery		19,000
Bank	2,85,000		By Printer		40,000
To Subscriptions (including ₹ 40,000 for year ending 31.3.2022)		4,00,000	By Investments		80,000
To Interest on Investments		1,000	By Balance cd:
			Cash	12,000	2,12,000
			Bank	2,00,000
		7,11,000			7,11,000

Additional Information:

1. Investments were made on 1st October 2020 @ 5% p.a.
2. Salaries for March 2021 ₹ 5,000 are unpaid.
3. ₹ 3,000 are payable for stationery.

Prepare Income and Expenditure Account of the Club for the year ended 31st March, 2021.

Answer 1

Dr.	In the Books of Indian Youth Club Income and Expenditure Account for the year ended 31st March 2021				Cr.
Expenditure		Amount (₹)	Income		Amount (₹)
To Salaries	3,60,000	3,65,000	By Subscriptions	4,00,000	3,60,000
Add: Outstanding	5,000		Less: Advance for the year 2022	(40,000)
To Printing & Stationary	19,000	22,000	By Interest on Investments	1,000	2,000
Add: Payable	3,000		Add: Accrued interest	1,000
			By Excess of expenditure over income		25,000
		3,87,000			3,87,000

Note: The stationery closing stock has not been disclosed. Therefore, it is estimated that all of the stationery worth (19,000 + 3,000) = about 22,000 has been used.

Working Note:

Interest on Investments = `80,000 xx 5/100 xx 6/12` = ₹ 2,000

Interest already received = ₹ 1,000

Interest accrued = ₹ 2,000 - ₹ 1,000 = ₹ 1,000