From the following balance Sheet and Receipts and Payments account of Nanavati Hospital, Bombay, prepare Income and Expenditure account for the year ending on 31st March, 2007 and the Balance sheet as on that date.

Balance Sheet as on 1^st April, 2006

Liabilities	Rs.	Assets	Rs.
Salaries Unpaid	2000	Cash	11000
Medicines Bill Unpaid	1500	Securities	150000
Capital Fund	383000	Furniture	4000
		Land and Buildings	200000
		Equipments	15000
		Subscriptions Due	5000
		Interest Accrued	1500
	386500		386500

Receipts and Payment Account for the year ended 31^st March, 2007

Receipts	Amount	Payments	Amount
To Cash balance b/f	11000	By Furniture (Purchased on 1 – 4 – 2006)	1900
To Subscription	30000	By Salaries (including Rs. 2000 of last year)	23000
To Interest (Rs. 1500/- for last year)	5000	By Equipment (Purchased on 1 – 4 – 06)	7500
To Donations (Revenue)	4300	By Dispensary expenses	4700
To Life Membership fees	10000	By Medicines	5500
		By Taxes	500
		By Cash balance c/f	17200
	60300		60300

Adjustments.

1.    Capitalise the amount of life membership fees.

2.    Interest earned but not received Rs. 1,000/-

3.    Subscription include Rs.1000/- for 2008 and outstanding subscription for 31^st march, 2007 is 4,200

4.    Unpaid salary for the year 2007 is Rs. 2500/-

5.    Provide for depreciation on furniture 10%, Land and Building 5%, Equipments 20%.

6.    Prepaid taxes Rs. 100/-

Solution: In the books of Nanavati Hospital, Mumbai.

Income and Expenditure A/c for the year ended 31.03.07

Expenditure	Amount	Amount	Income	Amount	Amount
To Salaries	23000		By Subscription	30000
(-) Last year Amount	-2000		(-) Last Year Amount	-5000
	21000			25000
(+) Outstanding	2500	23500	(-) Subscription Received in Advance of Next Year	-1000
To Dispensary Expenses		4700		24000
To Medicines	5500		(+) Outstanding	4200	28200
(-) Last Year Amount	-1500	4000	By Interest	5000
To Taxes	500		(-) Last Year Amount	-1500
(-) Prepaid	-100	400		3500
To Depreciation			(+) Outstanding	1000	4500
Furniture	590		By Donation		4300
Equipments	4500		By Life Membership Fees	10000
Land & Building	10000	15090	(-) Capitalized	-10000	NIL
			By Deficit		10690
			[Expenditure Over Income]
		47690			47690

Balance Sheet as on 31.03.07

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	383000		Furniture	5900
(+) Life Membership Fees	10000		(-) Depreciation	-590	5310
	393000		Equipments	22500
(-) Deficit	-10690	382310	(-) Depreciation	-4500	18000
Advance Subscription for Next year		1000	Land & Building	200000
			(-) Depreciation	-10000	190000
			Securities		150000
			Cash		17200
			Outstanding Subscription of Current year		4200
			Outstanding Interest		1000
			Prepaid Taxes		100
		385810			385810