OMTEX CLASSES: Chapter 2: Accounts of ‘Not for Profit’ Concerns

Balbharati Solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board.

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Select the most appropriate alternative from those given below.

Write the Word/ Term/ Phrase which can substitute of the following statement

State whether the following statement is True or False with reasons

Fill in the blank

Answer in one sentence only.

Find odd one

Complete the Table:

Sr. No.	Income (₹)	Expenditure (₹)	Surplus/Deficit (₹)
1	10,000	___________ ?	5,000 (Deficit)
2	8,000	___________ ?	4,000 (Surplus)
3	___________ ?	15,000	8,000 (Surplus)
4	7,500	9,000	___________ ?
5	15,000	11,300	___________ ?

FOR SOLUTION CLICK HERE

Complete the Table:

Salaries paid during the year

Sr. No	Total ₹	Prepaid/Outstanding	₹	Expenditure for the year
1	1,100	Prepaid	100	_____ ?
2	2,700	Prepaid	_____ ?	2,000
3	8,250	Prepaid	_____ ?	6,650
4	1,200	Outstanding	200	_____ ?
5	_____ ?	Outstanding	600	5,100
6	1,800	Outstanding	_____ ?	2,200

FOR SOLUTION CLICK HERE

Complete the Table:

Rent received during the year

Sr.No	Total Received ₹	Rent received in Advance/Accrued	₹	Income for the year ₹
1	1,300	Received in Advance	200	_____ ?
2	_____ ?	Received in Advance	400	1,400
3	2,650	Received in Advance	_____ ?	2,000
4	_____ ?	Accrued	290	3,190
5	1,700	Accrued	_____ ?	2,150
6	2,600	Accrued	500	_____ ?

FOR SOLUTION CLICK HERE

Calculate the following

10 % p.a. Depreciation on Furniture ₹ 50,000 (for three months) FOR SOLUTION CLICK HERE

12% p.a. Interest on Bank loan ₹ 80,000 for 1 year. FOR SOLUTION CLICK HERE

Opening stock of stationery ₹ 5,000, purchases of stationery ₹ 7000, outstanding stationery bill ₹ 12,000, closing stock ₹ 1000. What is the amount of stationery consumed? FOR SOLUTION CLICK HERE

Salary ₹ 10,000, outstanding salary ₹ 5,000. Calculate the salary to be debited to Income and Expenditure Account. FOR SOLUTION CLICK HERE

Library Books ₹ _________ ? Less 10 % Depreciation ₹ 5,000 = ₹ 45,000. FOR SOLUTION CLICK HERE

Practical Problems | Q 1 | Page 114

(Calculation of stationery consumed during the year)

Liabilities	Amt. ₹	Amt. ₹	Assets	Amt. ₹	Amt. ₹
			Stock of Stationery		400

Receipts and Payments Account for the year ending 31.03.2019

Receipts	Amt. ₹	Amt. ₹	Payments	Amt. ₹	Amt. ₹
			By Stationery Purchased		6,300

Adjustments :

1. ₹ 1,000 Outstanding for Stationery bill.

2. Stock of Stationery as on 31.03.2019 was valued at ₹1,800

With the above information, calculate the amount of Stationery consumed during the year and show its presentation in final Accounts of a concern.

Solution:

In the books of _____________

Income and Expenditure Account for the year ended 31st March, 2019

Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Stationery Consumed during the Year
Opening Stock	400
Add: Stationery Purchased during the Year	6,300
Add: Credit Purchase of Stationery (Outstanding bill)	1,000
	7700
Less: Closing Stock of Stationery	1800	5,900

Practical Problems | Q 2 | Page 115

Balance Sheet as on 01.04.2018

Liabilities	Amt. ₹	Amt. ₹	Assets	Amt. ₹	Amt .₹
Subscription received in Advance for 2018 - 19	20,000		Outstanding Subscription
			2016 - 17	26,000
			2017 - 18	35,000	61,000

Receipts and Payments Account for the year ending 31.03.2019.

Liabilities	Amt. ₹	Amt. ₹	Assets	Amt. ₹	Amt .₹
Subscription received in Advance for 2018 - 19	20,000		Outstanding Subscription
			2016 - 17	26,000
			2017 - 18	35,000	61,000

Adjustments :

Outstanding Subscription for 2018 - 19 is ₹ 32,000

With the above information present the item Subscription in Income and Expenditure Account for the year ended 31.03.2019 Balance Sheet as on the date.

Solution:

In the books of ________________

Income and Expenditure Account for the year ended 31st March 2019

Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
			By Subscription	4,10,000
			Add: Outstanding Subscription for Current Year 2018–19	32,000
				4,42,000
			Add: Subscription of Current Year received in Advance in the Previous Year 2017–18	20,000	4,62,000

Balance Sheet as on 31st March 2019

Liabilities	Amt (₹)	Amt (₹)	Assets	Amt (₹)	Amt (₹)
Subscription received in Advance for the Year 2019 – 20		21,000	Outstanding Subscription for
			Add: Year 2018–19 (Current year)	32,000
			Add : Year 2016–17 (26,000 – 23,000)	3,000
			Add : Year 2017–18 (35,000 – 30,000)	5,000	40,000

Working Note :

Outstanding subs. given in the balance sheet as on 01 – 04 – 2018 are ₹ 26,000 (for 2016–17) and ₹ 35,000 (for 2017 – 18). Against that as shown in receipt – Payment A/c ₹ 23,000 and ₹ 30,000 are received respectively. Means ₹ 3,000 and ₹ 5,000 are still outstanding which are known in the current year balance sheet.

Practical Problems | Q 3 | Page 115

Receipts and Payments Account for the year ending 31.03.2018.

Receipts	Amt. ₹	Amt. ₹	Payments	Amt.₹	Amt. ₹
To Subscriptions
2016 - 17	2,000
2017 - 18	60,000
2018 - 19	4,500	66,500

Adjustments :

Subscription Outstanding for the year 2017 - 18 is ₹ 6,000.

During previous year Subscription received in advance for 2017 - 18 is ₹ 2,000.

Outstanding subscription of 2016 - 2017 is ₹ 2,500

With the help of the above information present the item Subscription in Income and Expenditure Account for the year ending 31.03.2018 and Balance Sheet as on that date.

Solution:

In the books of _____________________

Income and Expenditure Account for the year ended 31st March, 2018

Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
			By Subscription (Year 2017–18)	60,000
			Add: Outstanding Subscription of Current Year 2017–18	6,000
			Add: Subscription received in Advance of Current Year in Previous Year	2,000	68,000

Balance Sheet as on 31st March, 2018

Liabilities	Amt (₹)	Amt (₹)	Assets	Amt (₹)	Amt (₹)
Subscription received in Advance in the Current Year for the Year 2018 – 19		4,500	Outstanding Subscription for Current Year (2017–18)		6,000
			Outstanding Subscription for the Year 2016 – 17 (2,500 – 2,000)		500

Practical Problems | Q 4 | Page 116

Following is the Receipts and Payments Account of “Satara Sports Club” Satara Prepare Income and Expenditure Account for the year ending 31.03.2019.

Receipts and Payments Account for the year ending 31.03.2019.

Receipts	Amt ₹	Amt ₹	Payments	Amt ₹	Amt ₹
To Balance b/d			By Salaries		5,000
Cash in hand	4,500		By Rent (Including ₹ 2,000 for 2017 - 18)		5,000
Cash at Bank	12,000	16,500	By Electricity Charges		1,450
To Subscription			By Fixed Deposit		60,000
2017 - 18	4,000		By Printing and Stationery		750
2018 - 19	44,500		By General Expenses (Including ₹ 500 paid for next year)		5,500
2019 - 20	3,500	52,000	By Sports Material Purchased		40,000
To Entrance fees		8,000	By Balance c/d
To Donation for Building fund		70,000	Cash in Hand	8,900
To Interest		600	Cash at Bank	25,000	33,900
To Sale of furniture (Book Value ₹ 8000)		4,500
		1,51,600			1,51,600

Adjustments:

1) Outstanding Subscription for Current Year is ₹ 4,500

2) Outstanding Rent for Current Year amounted to ₹ 1,000

3) Entrance Fees are to be treated as Revenue Income

4) Stock of Sports Material as on 01.04.2018 ₹ 6,000 and on 31.03.2019 ₹ 14,000

Solution:

In the books of ‘ Satara Sports Club’ Satara

Income and Expenditure Account for the year ended on 31st March 2019

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salaries		5,000	By Subscription received for 2018 – 19	44,500
To rent	5,000		Add: Outstanding Subscription for Current Year	4,500	49,000
Add: Outstanding rent of Current Year	1,000		By Entrance Fees		8,000
Less: rent received for the Year 2017 – 18	2,000	4,000	By Interest		600
To Electricity Charges		1,450
To Printing and Stationery		750
To General Expense	5,500
Less: Amount Paid for Next Year	500	5,000
To Sports Material Consumed
Opening Stock	6,000
Add: Sports Material Purchased in Current Year	40,000
	46,000
Less: Closing Stock of Sports Material	14,000	32,000
To Loss due to Sale of Furniture (8,000 – 4,500)		3,500
To Surplus (Excess of income over expenditure)		5,900
		57600			57600

Working Notes :

(1) Entrance fees are to be treated as revenue income. Therefore the entire amount is recorded on the income side.

(2) Since the selling price of Furniture ₹ 4,500 is lower than its cost price of ₹ 8,000, there is Loss on sale of furniture.

It is calculated as follows :

Loss on sale of furniture = Book value (cost) – Selling price

= 8,000 – 4,500

= ₹ 3,500

It is debited to Income and Expenditure A/c.

Practical Problems | Q 5 | Page 117

“Bhartiya Kala Kendra”, Solapur gives you the following information, for the year ended on 31.03.2018 Prepare Income and Expenditure Account for the year ending 31.03.2018

Receipts and payments Account for the year ending 31.03.2018.

Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d		By Stationery	600
Cash in Hand	200	By Furniture Purchased	7,000
Cash at Bank	12,500	By Investments in govt securities	14,000
To Locker Rent	400	By Expenses of Drama	3,000
To Entrance fees	2,900	By Postage	450
To Sale of old newspapers	250	By Magazine and newspaper	600
To Receipts from Drama	9,000	By Salaries	4,400
To Legacies	12,000	By Balance c/d
To Interest of Govt. Securities	400	Cash in Hand	700
To Miscellaneous Receipts	400	Cash at Bank	7,300
	38050		38050

Additional Information :

1) Legacies are to be capitalized

2) Outstanding Salary ₹ 200

3) 50 % of Entrance Fees are to be Capitalised

Solution:

In the books of Bhartiya Kala Kendra, Solapur

Income and Expenditure Account for the year ended 31st March

Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Stationery		600	By Locker rent		400
To Expenses of Drama		3,000	By Entrance Fees	2,900
To Postage		450	Less: 50 % Capitalised	1,450	1,450
To Magazine and Newspaper		600	By Sale of Old Newspapers		250
To Salaries	4,400		By receipts from Drama		9,000
Add: Outstanding Salaries	200	4,600	By Interest on Govt. Securities		400
To Surplus (Excess of income over expenditure)		2,650	By Miscellaneous receipts		400
		11900			11900

Practical Problems | Q 6 | Page 117

From the following particulars relating to “Radha-Krishna Charitable Hospital” Pune. Prepare Income and Expenditure Account for the year ending 31.03.2020 and Balance Sheet as on that date.

Receipts and payments Account for the year ending 31.03.2020.

Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d		By Medicines Purchased	41,000
Cash	8,230	By General Expenses	1,050
To Subscriptions	52,000	By Salaries	23,500
To Donations (General)	17,500	By Stationery	2,000
To Interest in Investments	10,000	By Expenses on Charity Show	550
To Proceeds from Charity Show	8,530	By Surgery and Dispensary Exp	4,200
		By Equipments	10,000
		By Balance c/d
		Cash in Hand	960
		Cash at Bank	13,000	13,960
	96,260		96,260

Additional Information :

Particulars	01.04.2019 ₹	31.03.2020 ₹
1. Subscription Due	310	350
2. Subscription Received in Advance	600	150
3. Stock of Medicine	8,000	11,000
4. Estimated Value of Equipment	15,000	?
5. Building	40,000	?
6. Capital Fund	1,70,940	?
7. 10 % Investment	1,00,000	?

Provide Depreciation on Equipments ₹ 1,900 and on Building ₹ 1,500

Solution:

In the books of Radha-Krishna Charitable Hospital, Pune

Income and Expenditure Account for the year ended 31st March 2020

Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Medicines Consumed			By Subscriptions	52,000
Opening Stock	8,000		Add: Outstanding of Current Year	350
Add: Purchases	41,000		Add: received in Advance in Previous Year	600
	49,000			52,950
Less: Closing Stock	11,000	38,000	Less: received in Current Year of the Previous Year	150
To General Expenses		1,050	Less: Subscription due of Previous Year	310	52,490
To Salaries		23,500	By Donations (General)		17,500
To Stationery		2,000	By Interest on Investments		10,000
To Expenses on charity show		550	By Proceeds from Charity Show		8,530
To Surgery and Dispensary Expense		4,200
To Depreciation
Equipments	1,900
Building	1,500	3,400
To Surplus (Excess of income over expenditure)		15,820
		88,520			88,520

Balance Sheet as on 31st March 2020

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Fund	1,70,940		Outstanding Subscription		350
Add : Surplus	15,820	1,86,760	Closing Stock of Medicines		11,000
Subscription received in Advance		150	Equipments opening Balance	15,000
			Add: Purchases	10,000
				25,000
			Less: Depreciation	1,900	23,100
			Buildings	40,000
			Less: Depreciation	1,500	38,500
			10% Investments		1,00,000
			Cash in Hand		960
			Cash at Bank		13,000
		1,86,910			1,86,910

Working Notes :

(1) To find medicines consumed, here in the opening stock, purchases is added and the closing stock of medicine is subtracted.

(2) For equipment, in opening balance, add equipment purchased during the year and subtract depreciation to get the closing balance of equipment.

(3) Interest ₹ 10,000 is received on 10 % investments means there is no outstanding interest.

Practical Problems | Q 7 | Page 118

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.

Receipts and Payments Account for the year ending 31.03.2019.

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

Solution:

In the books of Pavan-putra Hanuman Vyayamshala, Parbhani

Income and Expenditure Account for the year ended on 31st March, 2019

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 = PNR/100 = 15000 × (5 ÷ 100) × (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 the 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.

Practical Problems | Q 8 | Page 119

“Jeevan Jyoti Art Circle” a newly established concern has presented the following information.

Receipts and Payments Account for the year ending 31.03.2018.

Receipts	Amount ₹	Amount ₹	Payments	Amount ₹	Amount ₹
To Admission fees		22,000	By Furniture		12,000
To Subscriptions		40,000	By Stationery		4,000
To Donations		18,000	By Office Rent		2,600
			By Newspapers & Periodicals		300
			By Telephone Expenses		560
			By Investments		23,000
			By Balance c/d
			Cash in Hand	7,540
			Cash at Bank	30,000	37,540
		80,000			80,000

Adjustments:

1) Subscription Outstanding for the year was ₹ 5,000

2) Depreciate Furniture @10 % p.a

3) Full amount of Admission Fees and 50*% Donations are to be capitalized.

You are required to prepare Income and Expenditure Account for the year ending 31.03.2018 and Balance Sheet as on that date.

Solution:

In the books of Jeevan Jyoti Art Circle

Income and Expenditure Account for the year ended 31st March 2018

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Stationery		4,000	By Donations	18,000
To Office rent		2,600	Less: 50 % Capitalised	9,000	9,000
To Newspapers and Periodicals		300	By Subscription	40,000
To Telephone Expenses		560	Add: Outstanding of Current Year	5,000	45,000
To Depreciation Furniture		1,200
To Surplus (Excess of income over expenditure)		45,340
		54000			54000

Balance Sheet as on 31st March, 2018

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	-		Furniture	12,000
Add: Surplus	45,340		Less: Depreciation	1,200	10,800
Add: Admission Fees (Capitalised)	22,000		Investments		23,000
Add : Donations (50 % Capitalised)	9,000	76,340	Cash in Hand		7,540
			Cash at Bank		30,000
			Outstanding Subscription		5,000
		76,340			76,340

Working Notes:

The full amount of admission fees and 50% of donations are added to the surplus amount to get the capital funds. (Opening balance of the capital fund is not given.)

Practical Problems | Q 9 | Page 119

Given below is the Receipts and Payments Account of “Vithai Mahila Mandal” Pandharpur for the year ending 31.03.2018.

Prepare an Income and Expenditure Account for the year ended 31.03.2018 and Balance Sheet as on that date.

Receipts and Payments Account for the year ending 31.03.2018.

Receipts	Amount ₹	Amount ₹	Payments	Amount ₹	Amount ₹
To Balance b/d			By Stationery		6000
Cash in Hand	3,000		By Repairs to Furniture		950
Cash at Bank	20,000	23,000	By Rent		8,300
To Entrance Fees		3,500	By Salaries		15,000
To Subscription		19,000	By Miscellaneous Expenses		450
To Miscellaneous Receipts		850	By Balance c/d
			Cash in Hand	1,650
			Cash at Bank	14,000	15,650
		46,350			46,350

Adjustments :

1) Capital Fund on 01.04.2017 was ₹ 90,000

2) Outstanding Subscription ₹ 4,000

3) Entrance Fees are to be capitalized

4) Rent paid includes ₹ 800 paid for April 2018

5) They have the following Assets and Liabilities 01.04.2017

Furniture ₹ 9,000,

Building ₹ 70,000,

Outstanding Expenses ₹ 12,000

Solution:

In the books of Vithai Mahila Mandal, Pandharpur

Income and Expenditure Account for the year ended 31st March 2018

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Stationery		6,000	By Subscription	19,000
To Repairs to Furniture		950	Add: Outstanding Subscription	4,000	23,000
To Rent	8,300		By Miscellaneous receipts		850
Less: Prepaid Rent	800	7,500	By Deficit (Excess of expenses over incomes)		6,050
To Salaries		15,000
To Miscellaneous Expense		450
		29,900			29,900

Balance Sheet as on 31st March 2018

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	90,000		Furniture		9,000
Add: Entrance Fees (Capitalised)	3,500		Building		70,000
Less: Deficit	6,050	87,450	Outstanding Subscription		4,000
Outstanding Expenses		12,000	Cash in Hand		1,650
			Cash at Bank		14,000
			Prepaid rent		800
		99,450			99,450

Working Notes :

(1) Outstanding subscription of ₹ 4,000 is first added to subscription received on the credit side of Income and Expenditure A/c and then it is shown on the Assets side of the Balance Sheet.

(2) The entire amount of the entrance fees ₹ 3,500 is added to the capital fund.

(3) Prepaid ₹ 800 is first deducted from rent paid on the debit side of Income & Expenditure A/c and then shown on the Assets side of the Balance Sheet.

(4) Outstanding expenses ₹ 12,000 is directly shown on the Liabilities side of the Balance Sheet.

Practical Problems | Q 10 | Page 120

From the following Receipts and Payments Account “K.B.P. Engineering College” Nashik for the year ending on 31.03.2019 and additional information, prepare Income and Expenditure Account for the year ending 31.03.2019 and Balance Sheet as on that date.

Receipts and payments Account for the year ending 31.03.2019.

Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d		By Salaries to Teaching Staff	11,70,000
Cash in Hand	18,000	By Electricity Charges	55,000
Cash at Bank	1,00,400	By Books	61,000
To Interest	55,000	By Furniture	51,000
To Subscriptions	28,300	By Stationery	21,850
To Life Membership fees	25,000	By Fixed Deposit (31.03.2019)	8,50,000
To Donation	7,00,000	By Balance c/d
To Tuition Fees	12,30,000	Cash in Hand	16,650
To Term Fees	2,00,800	Cash at Bank	2,00,000
To Sundry Receipts	8,000
To Admission Fees (Revenue)	60,000
	24,25,500		24,25,500

Additional Information :

Particulars	01.04.2018 ₹	31.03.2019 ₹
Books	6,00,000	6,00,000
Furniture	3,19,000	3,00,000
Building Fund	10,00,000	?
Fixed Deposit	9,10,000	?
Capital Fund	9,47,400	?

1) 50% of Donation are for Building Fund and the balance is to be treated Revenue Income.

2) Outstanding subscription ₹ 5,300

3) Life membership fees are to capitalised

Solution:

In the books of K.B.P. Engineering College, Nashik

Income and Expenditure Account for the year ended on 31st March, 2019

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salaries to Teaching Staff		11,70,000	By Interest		55,000
To Electricity Charges		55,000	By Subscription	28,300
To Stationery		21,850	Add: Outstanding Subscription	5,300	33,600
To Depreciation			By Donations	7,00,000
Furniture	70,000		Less: 50 % for Building Fund	3,50,000	3,50,000
Books	61,000	1,31,000	By Tuition Fees		12,30,000
To Surplus (Excess of income over expenditure)		5,59,550	By Term Fees		2,00,800
			By Sundry receipts		8,000
			By Admission Fees		60,000
		19,37,400			19,37,400

Balance Sheet as on 31st March, 2019

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	9,47,400		Outstanding Subscription		5300
Add: Surplus	5,59,550		Books	6,00,000
Add: Life Membership Fees (Capitalised)	25,000	15,31,950	Add: Purchases	61,000
Building Fund	10,00,000			6,61,000
Add: 50% of Donations	3,50,000	13,50,000	Less: Depreciation	61,000	6,00,000
			Furniture	3,19,000
			Add: Purchase	51,000
				3,70,000
			Less: Depreciation	70,000	3,00,000
			Fixed Deposits (Old)		8,50,000
			Cash in Hand		16,650
			Cash in Bank		2,00,000
			Fixed Deposits (New)		9,10,000
		28,81,950			28,81,950

Working Notes :

(1) Life membership fees are to be capitalised, means add entire amount in capital fund.

(2) 50% of Donations of ₹ 7,00,000 i.e., ₹ 3,50,000 is to be added to the Building Fund, and the remaining amount of donation i.e., ₹ 3,50,000 is credited to Income and Expenditure A/c.

(3) The depreciation on Fixed assets is calculated by using following formula:

Depreciation = Opening balance + Purchases – Closing value

∴ Depreciation on Books = 6,00,000 + 61,000 – 6,00,000

= 6,61,000 – 6,00,000

= ₹ 61,000

∴ Depreciation on Furniture = 3,19,000 + 51,000 – 3,00,000

= 3,70,000 – 3,00,000

= ₹ 70,000

(4) Fixed Deposit:

Opening balance given	₹ 910000
Fixed deposit (31 – 03 – 2019) (Newly purchased)	₹ 850000
∴ Total fixed deposits	₹ 1760000

(5) Admission Fees ₹ 60,000 is recorded on the credit side of Income and Expenditure A/c because it is taken as revenue income.

Practical Problems | Q 11 | Page 121

From the following Balance Sheet and Receipts and Payments Account of “New English School”, Barshi, Prepare Income and Expenditure Account for the year ending 31.03.2020 and a Balance Sheet as on that date.

Balance Sheet as on 01.04.2019

Liabilities	Amount ₹	Assets	Amount ₹
Capital Fund	6,43,000	Cash in Hand	6,000
		Cash at Bank	10,000
		Building	4,50,000
		Furniture	72,000
		Library Books	45,000
		Computer Laboratory	60,000
	6,43,000		6,43,000

Receipts and Payments Account for the year ending 31.03.2020

Receipts	Amount ₹	Amount ₹	Payments	Amount ₹	Amount ₹
To Balance b/d			By Salary		90,000
Cash in Hand	6,000		By Library Books		14,000
Cash at Bank	10,000	16,000	By Office Rent		10,000
To Tuition Fees		90,000	By Printing and Stationery		22,000
To Term Fees		3,000	By Sundry Expenses		12,000
To Admission Fees		12,000	By Insurance		10,200
To Donation (Capital)		61,000	By Sport Expenses		8,000
To Interest Received		2,000	By Annual Gathering Exp		9,000
To Government Grant (Revenue)		1,20,000	By Furniture		50,000
To Sundry Receipts		11,000	By Repairs		15,000
			By Balance c/d
			Cash in Hand	4,800
			Cash at Bank	70,000	74,800
		315000			315000

Additional Information :

1) Outstanding Salary of ₹ 9,000

2) Outstanding Tuition Fees ₹ 15,000

3) Depreciate Library Books by ₹ 9,000 and Furniture by ₹ 10,000

Solution:

In the books of New English School, Barshi

Income and Expenditure Account for the year ended 31st March, 2020

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salary	90,000		By Tuition Fees	90,000
Add: Outstanding Salary	9,000	99,000	Add: Outstanding tuition Fees	15,000	1,05,000
To Office rent		10,000	By Term Fees		3,000
To Printing and Stationery		22,000	By Admission Fees		12,000
To Sundry Expenses		12,000	By Interest Received		2,000
To Insurance		10,200	By Government Grant		1,20,000
To Sport Expenses		8,000	By Sundry Receipts		11,000
To Annual Gathering Expenses		9,000
To Repairs		15,000
To Depreciation
Library Books	9,000
Furniture	10,000	19,000
To Surplus (Excess of income over expenditure)		48,800
		2,53,000			2,53,000

Balance Sheet as on 31st March, 2020

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	6,43,000		Building		4,50,000
Add: Surplus	48,800		Furniture	72,000
Add: Donation	61,000	7,52,800	Add: Purchases	50,000
Outstanding Salary		9,000		1,22,000
			Less: Depreciation	10,000	1,12,000
			Library Books	45,000
			Add: Purchases	14,000
				59,000
			Less: Depreciation	9,000	50,000
			Computer Laboratory		60,000
			Cash in Hand		4,800
			Cash at Bank		70,000
			Outstanding Tuition Fees		15,000
		7,61,800			7,61,800

Working Notes :

(1) Donation (Capital) is added in Capital fund.

(2) Government Grant ₹ 1,20,000 is recorded on the credit side of Income & Expenditure A/c because it is revenue income of the organisation.

(3) Outstanding tuition fees ₹ 15,000 and outstanding salary ₹ 9,000 are added to respective head of Account and then they are shown separately on the Assets side and Liabilities side of Balance Sheet respectively.

Practical Problems | Q 12 | Page 122

Following is the Receipts Payments Account of “Dhananjay Library, Mumbai” for the year ending 31.03.2020

Receipts and Payments Account for the year ending 31.03.2020.

Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d	5,000	By Salaries	9,000
To Admission Fees	4,500	By Rent	7,500
To Subscriptions	20,000	By Investments	6,000
To Lecture Hall Hire Charges	4,200	By Stationery	1,350
To Miscellaneous Income	250	By Electricity Charges	850
To Interest on Investment	900	By Books	5,000
		By Outstanding Expenses (2018 - 19)	500
		By Balance c/d	4,650
	34850		34850

You are required to prepare an Income and Expenditure Account for the year ended 31.03.2020 and Balance Sheet as on that day.

The following information is also made available to you.

1) On 31.03.2019, the Library had the following Assets also; Books at ₹ 50,000, Furniture ₹ 6,500, and Machinery of ₹ 30,000

2) Subscription received in advance amounted to ₹ 500

3) Outstanding Salaries ₹ 1300 and for Rent ₹ 950

4) 50% of the Admission Fees should be capitalized.

5) Furniture to be depreciated at 10% p.a.

6) Library Books were purchased on 1st April 2019 charge Depreciation at 10% p. a.

7) The Investments were purchased on 01.04.2019 and they carry interest at 20*% p.a

Solution:

In the books of Dhananjay Library, Mumbai

Income and Expenditure Account for the year ended 31st March 2020

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salaries	9,000		By Subscription	20,000
Add: Outstanding Salary	1,300	10,300	Less: Subscription Received in Advance	500	19,500
To Rent	7,500		By Admission Fees	4,500
Add: Outstanding Rent	950	8,450	Less: 50% Capitalised	2,250	2,250
To Stationery		1,350	By Lecture Hall Hire Charges		4,200
To Electricity Charges		850	By Miscellaneous Income		250
To Depreciation			By Interest on Investments	900
Furniture	650		Add: Outstanding Interest	300	1,200
Library Books (5000 + 500)	5,500	6,150
To Surplus (Excess of Income over expenditure)		300
		27400			27400

Balance Sheet as on 31st March 2020

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	91,000		Machinery		30,000
Add : 50 % Admission	2,250		Books	50,000
Add: Surplus	300	93,550	Add: Purchases	5,000
Outstanding Salaries		1,300		55,000
Outstanding Rent		950	Less: Depreciation (5000 + 500)	5,500	49,500
Subscription Received in Advance		500	Furniture	6,500
			Less: Depreciation	650	5,850
			Investments	6,000
			Add: Outstanding Interest	300	6,300
			Cash in Hand		4,650
		96300			96300

Working Notes :

(1) Opening Balance Sheet is prepared to find out opening capital fund :

Balance Sheet as on 31st March 2019

Liabilities	Amount ₹	Assets	Amount ₹
Outstanding Expenses	500	Books	50,000
Capital Fund (Balancing figure)	91,000	Furniture	6,500
		Machinery	30,000
		Cash in Hand (Opening balance of Receipt – Payment A/c)	5,000
	91500		91500

(2) Outstanding expenses of the previous year, paid in the current year so no entry for outstanding expenses (2018 – 19)

(3)

Interest on Investment @ 20 % on ₹ 6,000	₹ 1200
Interest on Investment received	₹ 900
Outstanding interest on investment	₹ 300

(4)

Depreciation on library books at 10 % p.a. on opening balance of ₹ 50,000 (for whole year)	₹ 5000
On purchases on 01 – 04 – 2019 (for whole year)	₹ 1500
Total Depreciation	₹ 5500

(5) Subscriptions received in advance ₹ 500 is deducted from subscription received on credit side of Income and Expenditure A/c and then subscription received in advance is shown separately on the Liabilities side of the Balance Sheet.

(6) Outstanding salaries and outstanding rent are added to the respective head of Account on the debit side of the Income & Expenditure Account and both the outstanding items are recorded on the Liabilities side of the Balance Sheet.

Practical Problems | Q 13 | Page 123

From the following information supplied to you, prepare Income and Expenditure Account for the year ending on 31.03,2020 and Balance Sheet as on that date for “Morya Sports Club” Thane.

Balance Sheet as on 01.04.2019.

Liabilities	Amount ₹	Assets	Amount ₹
Capital Fund	64,500	Machinery	69,000
Bank overdraft	38,000	Outstanding Subscriptions	8,000
Outstanding Salary	4,000	Prepaid Insurance Premium	2,000
		Furniture	15,000
		Cash in Hand	12,000
		Outstanding Locker’s Rent	500
	1,06,500		1,06,500

Receipts and Payments Account for the year ended 31.03.2020

Liabilities	Amount ₹	Payments	Amount ₹
To Balance b/d	12,000	By Balance b/d (Bank Overdraft)	38,000
To Subscription	1,05,000	By Salary	17,500
To Entrance Fees (Capitalized)	9,300	By Insurance Premium	11,000
To Locker Rent	1,500	By Interest	1,400
To Donations (Capitalized)	800	By Refreshment Expenses	4,200
		By Furniture	30,000
		By Balance c/d
		Cash in Hand	6,500
		Cash at Bank	20,000
	1,28,600		1,28,600

Adjustments :

1) Subscription received includes ₹ 3,000 for 2018 - 19 and Outstanding Subscription for 2019 - 20 was ₹ 14,000.

2) On 31.03.2020, Prepaid Insurance Premium was ₹ 2,500.

3) Depreciate Furniture by ₹ 3,000.

4) Locker Rent Outstanding for 2019 - 20 is ₹ 400

Solution:

In the books of ‘Morya Sports Club’ Thane

Income and Expenditure Account for the year ended 31st March, 2020

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salary	17,500		By Subscription	1,05,000
Less: Outstanding salary of 2018 – 19	4,000	13,500	Add: Outstanding Subscription for Current Year	14,000
To Insurance Premium	11,000			1,19,000
Less: Prepared Insurance Premium	2,500		Less: Subscription Received of 2018 – 19	3,000	1,16,000
	8,500		By Locker Rent	1,500
Add: Prepaid Insurance premium of current year Paid in previous year	2,000	10,500	Add: Outstanding Locker Rent	400
To Depreciation				1,900
Furniture		3,000	Less: Outstanding Locker Rent of Previous Year	500	1,400
To Interest		1,400
To Refreshment Expenses		4,200
To Surplus (Excess of income over Expenditure)		84,800
		1,17,400			1,17,400

Balance Sheet as on 31st March, 2020

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	64,500		Machinery		69,000
Add: Surplus	84,800		Outstanding Subscription (2018 – 19) (8,000 – 3,000)		5,000
Add: Entrance fees (Capitalised)	9,300		Outstanding Subscription (2019–20)		14,000
Add: Donations (Capitalised)	800	1,59,400	Prepaid Insurance Premium		2,500
			Furniture	15,000
			Add: Purchases	30,000
				45,000
			Less: Depreciation	3,000	42,000
			Outstanding Locker Rent (2019 – 20)		400
			Cash in Hand		6,500
			Cash at Bank		20,000
		1,59,400			1,59,400

Working Notes :

(1) Outstanding subscription (2018–19) ₹ 8,000 given in b/s against that ₹ 3,000 received in 2019–20.

Means still receivable subscription = ₹ 5,000 (8,000 – 3,000).

(2) Prepaid insurance premium (2018 – 19) ₹ 2,000 is for the current year. Therefore, in current year’s insurance premium, ₹ 2,000 is to be added and then subtract current year’s prepaid insurance premium.

(3) Outstanding salary of (2018 – 19), ₹ 4,000 of the previous year is to be subtracted from the current year’s salary.

(4) The total amount of donations and entrance fees are to be capitalised so add the entire amount of both the items to the Capital fund.

(5) Outstanding locker’s rent (2018 – 19) ₹ 500 is given in Balance Sheet. It is to be subtracted from current year’s locker’s rent and then add current year’s outstanding locker rent.

Practical Problems | Q 14 | Page 124

Following information has been provided by “Vivekanand Charitable Hospital” Latur. You are required to prepare Income and Expenditure Account for the year ending on 31.03.2019 and Balance Sheet as on that date.

Balance Sheet as on 01.04.2018.

Liabilities	Amount ₹	Assets	Amount ₹
Capital Fund	11,00,000	Building	10,50,000
Bank Loan	6,50,000	Ambulance	4,00,000
Outstanding Bill for Drugs	50,000	Stock of Drugs	42,000
		Hospital Equipments	3,04,000
		Cash in Hand	4,000
	1800000		1800000

Receipts and Payments Account for the year ended 31.03.2019

Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d	4,000	By Purchase of Drugs (Includes 40,000 for 2017 - 18)	2,00,000
To Subscription	2,22,000	By Salary to Staff	85,000
To Life Membership Fees	30,000	By Honorarium to Doctors	4,00,000
To Hospital Receipts (Revenue)	5,10,400	By Repairs and Maintenance	18,000
		By Furniture	45,000
		By General Expenses	16,000
		By Balance c/d	2,400
	7,66,400		7,66,400

Adjustments :

1) On 31.03.2019 Stock of Drugs was valued at ₹ 22,000.

2) Depreciation on Building at 5*% p.a. and on Ambulance ₹ 30,000.

3) Life Membership Fees are to be capitalized.

Solution:

In the books of Vivekanand Charitable Hospital, Latur

Income and Expenditure Account for the year ended 31st March, 2019

Expenditure	Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salary to Staff		85,000	By Subscription		2,22,000
To Honorarium to Doctors		4,00,000	By Hospital Receipts		5,10,400
To Repairs and Maintenance		18,000	By Deficit (Excess of expenditure over income)		49,100
To General Expenses		16,000
To Depreciation
Building	52,500
Ambulance	30,000	82,500
To Drugs Consumed
Opening Stock	42,000
Add : Purchases (2,00,000 – 40,000)	1,60,000
	2,02,000
Less : Closing stock	22,000	1,80,000
		7,81,500			7,81,500

Balance Sheet as on 31st March, 2019

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Fund	11,00,000		Building	10,50,000
Add: Life Membership Fees (Capitalised)	30,000		Less: Depreciation	52,500	9,97,500
	11,30,000		Ambulance	4,00,000
Less: Deficit	49,100	10,80,900	Less: Depreciation	30,000	3,70,000
Outstanding Bill for Drugs (50,000 – 40,000)		10,000	Hospital Equipment		3,04,000
Bank Loan		6,50,000	Closing stock of Drugs		22,000
			Furniture		45,000
			Cash in Hand		2,400
		17,40,900			17,40,900

Working Notes :

(1) Purchase of drugs ₹ 2,00,000 includes ₹ 40,000 of 2017–18 and in the Balance Sheet of 2017–18, the outstanding bill of drugs is ₹ 50,000 given. So, ₹ 10,000 is still outstanding

(2) Consumption of drugs :