OMTEX CLASSES: 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.

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 :