Dr. Arjun Patil commenced Medical practice on 1.4.2006. He has prepared the following Receipts and payments account for the years 31.3.2007. [September, 2009]

Receipts and payments account for the year 31^st March 2007

Receipts	Amount	Payments	Amount
To Cash Introduced (Capital Fund)	30000	By Furniture	40000
To Income from Visits	40000	By Honorarium to Doctor	10000
To Receipts from Dispensary	80000	By Equipments	50000
To Miscellaneous receipts	1000	By Purchase of Drugs	10000
To Interest on Investments	500	By Compounders Salary	12000
To Receipts from Operation Fees	10000	By Rent of Dispensary	6000
		By Conveyance Charges	2000
		By Stationery	600
		By Operation Expenses	8000
		By Lighting	400
		By Journals and Newspapers	800
		By Telephone Expenses	500
		By Investments	7200
		By Balance C/d	14000
	161500		161500

Adjustments.

i.             Rs. 5000 were still to be received on account of the visits.

ii.            Compounder salary of Rs. 3000 and Bill of stationary Rs. 1000 and Rent of dispensary Rs. 1000 are outstanding.

iii.          25% amount of conveyance charges were for private use.

iv.           Stock of Drugs on hand was estimated at Rs. 2000.

v.            Furniture and Equipments are to be depreciated at 10%.

Prepare Income and expenditure account for the year ended 31^st March 2007 and Balance sheet as on that date from the above information.

Solution: In the books of Dr. Arjun Patil

Income and Expenditure A/c for the year ended 31.03.08

Expenditure	Amount	Amount	Income	Amount	Amount
To Honorarium to Doctor		10000	By income from Visits	40000
To Drugs		8000	(+) Outstanding	5000	45000
To Compounder Salary	12000		By Receipts from Dispensary		80000
(+) Outstanding	3000	15000	By Miscellaneous receipts		1000
To Rent of Dispensary	6000		By Interest on Investment		500
(+) Outstanding	1000	7000	By Receipts from operation fees		10000
To Conveyance Charges	2000
(-) Drawings	-500	1500
To Stationery	600
(+) Outstanding	1000	1600
To Operation Expenses		8000
To Lighting		400
To Journal & Newspapers		800
To Telephone Expenses		500
To Depreciation
Furniture	4000
Equipment	5000	9000
To Surplus [Income Over Expenditure]		74700
		136500			136500

Balance Sheet as on 31.03.08

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	30000		Furniture	40000
(-)Conveyance Drawings	-500		(-) Depreciation	-4000	36000
	29500		Equipments	50000
(+) Surplus	74700	104200	(-) Depreciation	-5000	45000
Outstanding			Investments		7200
Salaries	3000		Cash Balance		14000
Rent	1000		Outstanding Visits		5000
Stationery	1000	5000	Stock of Drugs		2000
		109200			109200