Dr. Manohar 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	5000	By Furniture	2500
To Visits	10000	By Equipment	1500
To Sundry Receipts	2400	By Drugs	1000
		By Salaries	2000
		By Rent	300
		By Conveyance	900
		By Stationery	100
		By Lighting	125
		By Periodicals	1000
		By Drawings	3975
		By Balance c/d	4000
	17400		17400

Rs 500 were to be received on account of visits.

Unpaid Salaries Rs. 300

50% of conveyance is for private purposes.

Value of drugs on hand was estimated at Rs. 100.

Depreciate furniture and equipment by 10%

Prepare Income and Expenditure account and balance sheet.

Solution: In the books of Dr. Manohar

Income and Expenditure A/c for the year ended 31.03.08

Expenditure	Amount	Amount	Income	Amount	Amount
To Drugs		900	By Visits	10000
To Salaries	2000		(+) Outstanding	500	10500
(+) Outstanding	300	2300	By Sundry Receipt		2400
To Rent		300
To Conveyance	900
(-) Drawings	-450	450
To Stationery		100
To Lighting		125
To Periodicals		1000
To Depreciation
Furniture	250
Equipment	150	400
To Surplus [Income over Expenditure]		7325
		12900			12900

Balance Sheet as on 31.03.08

Liability	Amount	Amount	Asset	Amount	Amount
Capital Fund	5000		Furniture	2500
(-) Drawings	-3975		(-) Depreciation	-250	2250
	1025		Equipment	1500
(-) Drawings Conveyance	-450		(-) Depreciation	-150	1350
	575		Stock of Drugs		100
(+) Surplus	7325	7900	Cash Balance		4000
Outstanding Salaries		300	Outstanding Visit		500
		8200			8200