Dr. Narendra commenced practice in the month of April 2007. He prepared the following Receipts & Payments Account for the year ended 31st March, 2008.

Receipts and Payments A/c For the year ended 31^st March, 2008

Receipts	Amounts	Payments	Amounts
To Cash	10000	By Furniture	1500
To Visits	7000	By Equipment	2500
To Sundry Receipts	400	By Drugs	2000
		By Salaries	1000
		By Rent	500
		By Conveyance	700
		By Stationery	100
		By Lighting	125
		By Periodicals	100
		By Drawings	4375
		By Balance c/d	4500
	17400		17400

1.  Rs 200 were to be received on account of visits.

2.  Unpaid Salaries Rs. 200

3.  60% of conveyance is for private purposes.

4.  Value of drugs on hand was estimated at Rs. 1,000.

5.  Depreciate furniture and equipment by 10%

6.  Prepare Income and Expenditure account and balance sheet.

Solution: In the books of Dr. Narendra

Income and Expenditure A/c for the year ended 31.03.08

Expenditure	Amount	Amount	Income	Amount	Amount
To Drugs		1000	By Visits	7000
To Salaries	1000		(+) Outstanding	200	7200
(+) Outstanding	200	1200	By Sundry Receipt		400
To Rent		500
To Conveyance	700
(-) Drawings	-420	280
To Stationery		100
To Lighting		125
To Periodicals		100
To Depreciation
Furniture	150
Equipment	250	400
To Surplus [Income over Expenditure]		3895
		7600			7600

Balance Sheet as on 31.03.08

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	10000		Furniture	1500
(-) Drawings	-4375		(-) Depreciation	-150	1350
	5625		Equipment	2500
(-) Drawings Conveyance	-420		(-) Depreciation	-250	2250
	5205		Stock of Drugs		1000
(+) Surplus	3895	9100	Cash Balance		4500
Outstanding Salaries		200	Outstanding Visit		200
		9300			9300