Question

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.

Dr	Receipts and Payments Account for the year ending 31.03.2019.						Cr
Receipts			Amount ₹	Payments		Amount ₹
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		18,000		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	6000	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

Answer 1

 

Dr	In the books of Pavan-putra Hanuman Vyayamshala, Parbhani Income and Expenditure Account for the year ended on 31st March, 2019							Cr
Expenditure			Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
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	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
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 Advance		410	Investments		15,000
			Outstanding Interest on Investments		375
			Fixed Deposit		3,900
			Cash in Hand		830
			Cash at Bank		6,000
			Outstanding Subscription of Current Year		7,000
		94,105			94,105

Working Notes :

(1) Interest on investment is receivable for 6 months

`"I" = ("PRN")/100 = 15,000 xx 5/100 xx 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 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.