Question

Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017

Receipt and Payment Account 
for the year ending December 31, 2017 

Receipts	Amount (Rs)	Payments	Amount (Rs)
Balance b/d		Charity	11500
Cash in hand	11500	Rent and taxes	3200
Cash at bank	12600	Salary	6000
Donation	9000	Printing	600
Subscription	42,800	Postage	300
Legacies	18,000	Advertisements	4500
Interest on investment	4,500	Insurances	2000
Sale of old newspapers	200	Furniture	21600
		Investment	23000
		Balance c/d:
		Cash in hand	9900
		Cash at bank	16000
	98,600		98,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:

1. It was decided to treat one-third of the amount received on account of donation as income.

2. Insurance premium was paid in advance for three months.

3. Interest on investment Rs1,100 accrued was not received.

4. Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on December 31, 2017.

Answer 1

Books of Delhi Charitable Trust
Income and Expenditure Account 
as on December 31, 2017 

Dr.                                                                     Cr.

Expenditure		Amount (Rs)	Income		Amount (Rs)
Insurance	2,000	1,600	Donation {9,000 × (1/3)}		3,000
Less: Prepaid {2,000 × (3/15)}	(400)		Interest on Investments	4,500	5600
Charity		11500	Add: Accrued Interest	1100
Rent and Taxes	3200	3800	Subscription		42800
Add: Outstanding	600		Sale of Old Newspapers		200
Salary	6000	6900
Add: Outstanding	900
Printing		600
Postage		300
Advertisements	4500	5,500
Add: Outstanding	1000
Surplus (Balancing figure)		21400
		51600			51600

Balance Sheet 
as on December 31, 2016 

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital Fund (Balancing figure)	24,100	Cash in Hand	11500
		Cash at Bank	12600
	24,100		24,100

Balance Sheet 
as on December 31, 2017

Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital Fund	24100	69500	Prepaid Insurance {2,000 × (3/15)}		400
Add: Donation {9,000 × (2/3)	6,000		Investment	23000	24100
Add: Legacies	18,000		Add: Accrued Interest	1100
Add: Surplus	21400		Furniture		21600
Rent Outstanding		600	Cash in Hand		9900
Salary Outstanding		900	Cash at Bank		16000
Advertisement Expenses  Outstanding		1000
		72000			72000