Subscription received during the year (+) Subscription received (in advance) during the previous year for current year (+) Subscription outstanding at the end of the year (-) Subscription received in advance for the next year (-) Subscription outstanding for the previous year Subscription shown in the income and expenditure account	– – – –	– – –

7. What is a capital fund? How is it calculated?

The scenario where the value of the assets of an NPO is more than its liabilities, it is called a capital fund. This is similar to the concept of capital for an organisation working to earn profit. If any surplus amount is received from I & E account, it gets added to the capital fund; likewise, any deficit will be deducted from the same and is known as an accumulated fund.

Calculating Capital Fund

Capital Fund at the Beginning of the Year		**
Add: Surplus from Income and Expenditure Account	**
Add: Subscription Amount (Capitalised amount)	**
Add: Life Membership Fee.	**	**
Less: Deficit from Income and Expenditure Account		**
Capital Fund at the End of the Year		***

Long Questions for NCERT Solutions for Class 12 Accountancy Part 1 Chapter 1 Accounting For Not For Profit Organisation

1. Explain the statement: “Receipt and payment account is a summarised version of cash book”.

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts, and all cash payments are recorded in the payments side of the R & P Account. All the cash and bank transactions are recorded in the cash book, and this book is created on the basis of all these transactions. All cash and bank transactions that are of a revenue and capital nature get recorded. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of a not-for-profit organisation or NPO.

Here are some similarities between cash book and receipts and payments account:

1. Both are real accounts.

2. Only transactions of cash and bank are recorded

3. There is no distinction between revenue and capital items

4. Helps in assessing the cash position of an organisation

5. Starts with an opening balance consisting of cash and bank and concludes with a closing balance of cash and bank.

Therefore, it can be said that the receipt and payments account is a summarised version of the cash book.

2. “Income and expenditure account of a not-for-profit organisation is akin to profit and loss account of a business concern”. Explain the statement.

The account containing all expenses and losses for the current accounting period prepared by a not-for-profit organisation is called an income and expenditure (I & E) account, while a similar account prepared by a profit-earning organisation is called a profit and loss account (P & L).

Here are some similarities between I & E and P & L accounts:

1. Accrual basis is followed for the preparation of both accounts.

2. Expenses and losses are recorded on the expenditure (debit) side, and gains and income are recorded on the income (credit) side.

3. Records only revenue items related to the current accounting period.

4. Both exhibit a nature similar to nominal accounts

Therefore, it can be said that from the above statements, the income and expenditure account of a not-for-profit organisation is akin to the profit and loss account of a business concern.

3. Distinguish between the receipts and payments account and the income and expenditure account.

Basis of Comparison	Receipts and Payments Account	Income and Expenditure Account
Nature	Contains bank and cash transaction summary.	Contains a summary of income and expenses for the current year
Revenue and Capital	Both revenue and capital transactions are recorded	Only revenue transactions are recorded
Debit Side	Records cash and bank receipts	Records expenses and losses incurred for the current accounting year
Credit side	Records payments received in the form of cash and cheques	Records incomes and gains during the current accounting year
Account Type	Real account	Nominal account
Accounting Period	Records receipts and payments made during the year, which may be related to the current, previous or next accounting year	Records only the expenditure and income made during the current accounting year
Object	Shows the cash position of NPO	Shows the net results in terms of deficits or surplus
Depreciation	Non-cash items like depreciation are not included	Includes non-cash items like depreciation, bad-debts for determining net profit or loss.
Adjustment	Before preparing financial statements, the payments and receipts received during the year can be adjusted.	Cash and non-cash transactions can be adjusted
System	Cash basis	Accrual basis

4. Explain the basic features of the income and expenditure account and of the receipt and payment account.

The income and expenditure account is similar to the P & L account (Profit and Loss Account). In an income and expenditure account, surplus and deficit are determined during the accounting period, while in a P& L account, the net profit or loss is determined during an accounting period. It is a nominal account and records transactions that are of a revenue nature. The closing balance is called deficit or surplus based.

The basic features of the I & E account are as follows:

1. It is a nominal account

2. Prepared on the basis of R & P (Receipt and Payment Account). All revenue items, irrespective of income or expenditure, get transferred.

3. Transactions that are of a capital nature are not included in the account.

4. It is similar to P & L account

5. Records only current accounting year items and excludes any other transactions

6. Items like prepaid expenses, depreciation, and income received in advance can be adjusted.

7. Balancing figure is expressed as surplus or deficit based on the status of expenses and income.

A receipts and payments account is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the receipts, and all cash payments are recorded on the payments side of the receipts and payments account. This account is prepared on the basis of all the cash and bank transactions that are recorded in the cash book. It records all cash and bank transactions that are of a revenue and capital nature. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of an NPO.

The basic features of the R & P Account are as follows:

1. It is a real account, and also known as the summarised version of the cash book

2. It records only bank and cash transactions.

3. Non-cash transactions like depreciation are not recorded

4. It begins with an opening balance of cash and bank and ends with a closing balance of cash and bank.

5. Helps in assessing the cash position of an organisation

6. It does not distinguish between capital and revenue items

5. Show the treatment of the following items by a not-for-profit organisation:

(i)	Annual subscription
(ii)	Specific donation
(iii)	Sale of fixed assets
(iv)	Sale of old periodicals
(v)	Sale of sports materials
(vi)	Life membership fee

i) Annual subscription

1. Subscriptions that are obtained during an accounting year (it may be related to the current, previous or upcoming year) are reflected on the debit side of the R & P Account.

2. Subscriptions related to the present year, whether yet to be received or already received, reflect on the credit side of the I & E account (Income and Expenditure).

3. Advance subscriptions received for the following year are reflected on the liabilities side of the balance sheet.

4. Subscriptions which are due but yet to be received are shown on the assets part of the balance sheet.

5. Subscriptions that are due but yet to receive are reflected on the asset side of the balance sheet.

ii) Specific donation

1. Specific donation amount is reflected on the debit side of R & P accounts.

2. Specific donation amount is shown on the liabilities side of the balance sheet because it is used for the specific purpose for which it is received.

iii) Sale of fixed assets

1. Amount received recorded on the debit side of R & P Account.

2. Profit/Loss is credited/debited to the I & E account.

3. Book value of the asset deducted from the respective asset on the asset side of the balance sheet

iv) Sale of old periodicals

1. Amount received reflects on the debit side of the R & P account.

2. Sale of old periodicals is counted as revenue receipts, hence reflecting on the credit side of the I & E Account.

v) Sale of sports materials

1. Amount received is debited to the R & P account.

2. Sports materials sale is revenue earned, hence reflecting on the credit side of the I & E account.

vi) Life membership fees

1. It is considered as a receipt for an NPO. Hence, debited to the R & P account

2. It is a one-time fee and hence treated as capital receipts, hence, added to the capital fund on the liabilities side of the balance sheet

6. Show the treatment of items of the income and expenditure account when there is a specific fund for those items.

An NPO (not-for-profit organisation) has different sources of receipts in the form of subscriptions, donations, government grants etc.; of these, some receipts are general, while some are specific. Specific receipts are used only for the purpose for which it is received, while general receipts can be used for any purpose. The specific receipts are not considered as revenue income for the not-for-profit organisation and therefore are reflected in the I & E account.

In a way, specific receipts are considered as liabilities to the not-for-profit organisation as these amounts are received for a specific purpose and cannot be used elsewhere. These are reflected in the liabilities side of the balance sheet until and unless it is completely used for the purpose it was received. If such an amount is invested in the form of shares or debentures, then it is known as funds such as prize funds, match funds etc. The interest earned on such investment is not credited to the I & E Account; instead, it is credited to the respective fund account.

Similarly, any expense that is incurred for such funds gets debited from the respective fund account. Such funds are shown on the liabilities side of the balance sheet. If the expenses exceed the receipts of the fund, the difference gets reflected in the I & E account.

Treatment for items received for a specific purpose

(Tournament/Match/Prize, etc.) Fund Account
Dr.				Cr.
Date	Particulars	L.F.	Amount	Date	Particulars	L.F.	Amount
	Expenses (expenses incurred, like match expenses, tournament expenses etc.)				Balance b/d
					Incomes (Income or interest earned on funds invested in the form of donation, interests, dividends, etc.)
	Balance c/d (see explanation)		(a)		Income and Expenditure A/c (see explanation)		(b)

Explanation (a)

When receipts are more than expenses meant for a specific purpose, that time, the difference between receipts and expenses is shown on the balance sheet on the liabilities side.

Balance Sheet
Specific Fund (i.e. Tournament, Match, Prize Fund, etc.)		Tournament Fund Investment

Explanation (b)

When expenses are more than receipts meant for a specific purpose, that time, the difference between expenses and receipts is shown in I & E account on the expenditure side.

Income and Expenditure A/c
Expenditure	Amount	Income	Amount
Expenses (i.e. Tournament, Match, Prize Expenses etc., except capital expenditures like expenses on construction of a building)

7. What is a receipt and payment account? How is it different from the income and expenditure Account?

A receipts and payments account is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the receipts, and all cash payments are recorded on the payments side of the receipts and payments account. This account is prepared on the basis of all the cash and bank transactions that are recorded in the cash book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of an NPO.

Basis of Comparison	Receipts and Payments Account	Income and Expenditure Account
Nature	Contains bank and cash transaction summary	Contains a summary of income and expenses for the current year
Revenue and Capital	Both revenue and capital transactions are recorded	Only revenue transactions are recorded
Debit Side	Records cash and bank receipts	Records expenses and losses incurred for the current accounting period
Credit side	Records payments received in the form of cash and cheques	Records incomes and gains during the current accounting period
Account Type	Real account	Nominal account
Accounting Period	Records receipts and payments made during the year, which may be related to the current, previous or next accounting year	Records only the expenditure and income made during the current accounting year
Object	Shows the cash position of NPO	Shows the net results in terms of deficits or surplus
Depreciation	Non-cash items like depreciation are not included	Includes non-cash items like depreciation, bad-debts for determining net profit or loss.
Adjustment	Before preparing financial statements, the payments and receipts received during the year can be adjusted.	Cash and non-cash transactions can be adjusted
System	Cash basis	Accrual basis

Numerical Questions for NCERT Solutions for Class 12 Accountancy Part 1 Chapter 1 Accounting For Not For Profit Organisation

1. From the following particulars taken from the cash book of a health club, prepare a receipts and payments account.

Particulars	₹
Opening balance:
Cash in Hand	5,000
Cash at Bank	25,000
Subscriptions	1,65,000
Donations	35,000
Investment Purchased	80,000
Rent Paid	20,000
General Expenses	21,500
Postage and Stationery	2,000
Courier Charges	1,000
Sundry Expenses	2,500
Closing Cash in Hand	12,000

The solution to this question is as follows:

Books of Health Club Receipt and Payment Account
Dr.							Cr.
Receipts			Amount ₹	Payments		Amount ₹
Balance b/d				Investment		80,000
Cash in Hand		5,000		Rent		20,000
Cash at Bank		25,000	30,000	General Expenses		21,500
Subscriptions			1,65,000	Postage and Stationery		2,000
Donations			35,000	Courier Charges		1,000
				Sundry Expenses		2,500
				Balance c/d
				Cash in Hand	12,000
				Cast at Bank	91,000	1,03,000
				(Balancing figure)
			2,30,000			2,30,000

2. The receipt and payment account of Harimohan Charitable Institution is given as follows:

Receipt and Payment Account for the Year Ending March 31, 2015
Receipts	Amount ₹	Payments	Amount ₹
Balance b/d:		Furniture	3,000
Cash at Bank	22,000	Investments	55,000
Cash in Hand	8,800	Advance for Building	20,000
Donations	32,000	Charities	60,000
Subscriptions	50,200	Salaries	10,400
Endowment Fund	60,000	Rent and Taxes	4,000
Legacies	24,000	Printing	1,000
Interest on Investment	3,800	Postage	300
Interest on Deposits	800	Advertisements	1,100
Sale of Old Newspapers	500	Insurance	4,800
		Balance c/d:
		Cash at Bank	32,000
		Cash in Hand	10,500
	2,02,100		2,02,100

Prepare the income and expenditure account for the year ended on March 31, 2015, after considering the following:

(i)	It was decided to treat fifty per cent of the amount received on account of legacies and donations as income.
(ii)	Liabilities to be provided for are:
	Rent ₹ 800; salaries ₹ 1,200; advertisement ₹ 200.
(iii)	₹ 2,000 due for interest on investment was not actually received.

The solution to this question is as follows:

Books of Harimohan Charitable Institution Income and Expenditure Account
Dr.	Cr.
Expenditure			Amount ₹	Income		Amount ₹
Rent and Taxes		4,000		Donations		16,000
Add: Outstanding		800	4,800	Legacies		12,000
				Subscriptions		50,200
Salaries		10,400		Interest on Investment	3,800
Add: Outstanding		1,200	11,600	Add: Accrued Interest	2,000	5,800
Advertisement		1,100		Interest on Deposits		800
Add: Outstanding		200	1,300	Sale of Old Newspapers		500
Charities			60,000
Printing			1,000
Postage			300
Insurance			4,800
Surplus (Excess of Income over Expenditure)			1,500
			85,300			85,300

3. From the following particulars, prepare the income and expenditure account:

Details	Amount ₹
Fees collected, including ₹ 80,000 on account of the previous year	5,20,000
Fees for the year outstanding	30,000
Salary paid, including ₹ 5,000 on account of the previous year	68,000
Salary outstanding at the end of the year	3,000
Entertainment expenses	8,000
Tournament expenses	25,000
Meeting expenses	18,000
Travelling expenses	7,000
Purchase of books and periodicals, including ₹ 31,000 for the purchase of books	40,000
Rent	15,000
Postage, telegrams and telephones	6,000
Printing and Stationery	18,000
Donations received	25,000

The solution to this question is as follows:

Income and Expenditure Account
Dr.	Cr.
Expenditure			Amount ₹	Income		Amount ₹
Salaries		68,000		Fees Collected	5,20,000
Less: Previous Year’s Outstanding		(5,000)		Less: Previous Year’s Outstanding	(80,000)
		63,000			4,40,000
Add: Current Year’s Outstanding		3,000	66,000	Add: Current Year’s Outstanding	30,000	4,70,000
Entertainment Expenses			8,000	Donations		25,000
Tournament Expenses			25,000
Meeting Expenses			18,000
Travelling Expenses			7,000
Purchases of Periodicals (40,000 – 31,000)			9,000
Postage, Telegrams and Telephone			6,000
Rent			15.000
Printing and Stationery			18,000
Surplus (Excess of Income over Expenditure)			3,23,000
			4,95,000			4,95,000

NOTE: As per the solution, excess of income over expenditure is ₹ 3,23,000; however, as per the book, it is ₹ 3,07,000.

4. Following is the information given in respect of certain items of a sports club. Show these items in the income and expenditure account and the balance sheet of the club:

Particulars	₹
Sports Fund as on 1.4.2015	35,000
Sports Fund Investments	35,000
Interest on Sports Fund	4,000
Donations for Sports Fund	15,000
Sports Prizes Awarded	10,000
Expenses on Sports Events	4,000
General Fund	80,000
General Fund Investments	80,000
Interest on General Fund Investments	8,000

The solution to this question is as follows

Books of Sports Club Income and Expenditure Account
Dr.			Cr.
Expenditure	Amount ₹	Income	Amount ₹
		Interest on General Fund Investments	8,000

Balance Sheet
Liabilities		Amount ₹	Assets	Amount ₹
Sports Fund	35,000		Sports Fund Investments	35,000
Add: Interest on Sports Fund	4,000		General Fund Investments	80,000
Add: Donations for Sports Fund	15,000
	54,000
Less: Expenses on Sports Events	(4,000)
Less: Prize Awarded	(10,000)	40,000
General Fund		80,000

5. How will you deal with the following items while preparing for the Bombay Women Cricket Club, its income and expenditure account for the year ending 31.3.2017 and its balance sheet as on 31.3.2017?

		₹
(a)	Donations received during the year for the construction of a permanent pavilion	12,25,000
	Expenditure incurred up to 31.3.2017 on its construction	10,80,000
	The total estimated expenditure on the construction of the pavilion being	25,00,000
(b)	Tournament Fund:
	Balance as on 1.4.2016	10,700
	Subscriptions for tournaments received during the year	65,800
	Expenditure incurred during the year on conducting tournaments	72,400
(c)	Life Membership fee received during the year	28,000

Give reasons for your answers

The solution to this question is as follows:

(a)

Books of Bombay Women Cricket Club Balance Sheet As on March 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Donation for Pavilion	12,25,000		Construction of Pavilion in Progress	10,80,000
Less: Expenses on the construction of the pavilion	(10,80,000)	1,45,000
Capital
Add: Pavilion Construction	10,80,000	10,80,000

Reason:

Donation for the construction of the pavilion is a donation for a specific purpose.

Expenses on the construction of the pavilion is a capital expenditure.

(b)

Balance Sheet As on March 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Tournament Fund	10,700
Add: Subscription for Tournament	65,800
76,500
Less: Tournament Expenses	(72,400)	4,100

Reason

All funds received are treated as capital receipts, and expenses related to any fund are deduced from the concerned funds.

(c)

Balance Sheet as on March 31, 2017
Liabilities	Amount ₹	Assets	Amount ₹
Life Membership Fees	28,000

Reason

When there is no specific information on the treatment of life membership fees, it is shown on the liabilities side of the balance sheet as it is considered as capital receipt. On treated as revenue, it is shown on the credit side of the I & E Account.

6. From the receipts and payments and information given below, prepare an income and expenditure account and an opening balance sheet of the Adult Literacy Organisation as on December 31, 2017.

Receipt and Payment Account for the Year Ending as on December 31, 2017
Receipts		Amount ₹	Payments	Amount ₹
Balance b/d			General Expenses	3,200
Cash in hand		4,000	Newspaper	1,850
Cash at Bank		15,550	Electricity	3,000
Subscriptions			Fixed deposit with bank (on 31.06.2017) @ 10% p.a.	18,000
2016	1,200
2017	26,500		Books	7,000
2018	500	28,200	Salary	3,600
Sale of old newspapers		1,250	Rent	6,500
Govt. grant		12,000	Postage charges	300
Sale of old furniture (book value ₹ 5, 000)		3,700	Furniture (purchased)	10,500
Interest received on FD		450	Balance c/d
			Cash in hand	3,000
			Cash at bank	8,200
		65,150		65,150

Information:

(i) Subscription outstanding as on 31.12.2016 was ₹ 2,000, and on December 31, 2017, it was ₹ 1,500.

(ii) On December 31, 2017, the salary outstanding was ₹ 600, and one month’s rent was paid in advance.

(iii) On Jan. 01, 2016, the organisation owned furniture ₹ 12,000, Books ₹ 5,000.

The solution to this question is as follows:

 

Books of Adult Literacy Organisation Income and Expenditure Account As on Dec. 31, 2017
Dr.			Cr.
Expenditure		Amount ₹		Income		Amount ₹
Loss on Sale of Old Furniture		1,300		Subscription	26,500
General Expenses		3,200		Add: Outstanding for 2017	1,500	28,000
Newspapers		1,850
Electricity		3,000		Sale of Old Newspapers		1,250
Salary	3,600			Government Grant		12,000
Add: Outstanding for 2017	600	4,200		Interest Received on F.D.	450
				Add: Accrued Interest	450	900
Rent	6,500
Less: Prepaid for 2018 {6,500×(1/13)}	(500)	6,000
Postages Charges		300
Surplus (Excess of Income over Expenditure)		22,300
		42,150				42,150
Balance Sheet as on Dec. 31, 2016
Liabilities		Amount ₹		Assets		Amount ₹
Capital Fund on Dec. 31, 2016 (Balancing Figure)		38,550		Subscription Outstanding		2,000
				Cash in Hand		4,000
				Cash at Bank		15,550
				Furniture		12,000
				Books		5,000
		38,550				38,550

Balance Sheet as on Dec. 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Capital	38,550		Prepaid Rent		500
Add: Surplus	22,300	60,850	Books	5,000
			Add: Purchases	7,000	12,000
Salary Outstanding		600
Subscription Received in Advance for 2018		500	Furniture	12,000
			Add: Purchases	10,500
				22,500
			Less: Sale	(5,000)	17,500
			Fixed Deposit	18,000
			Add: Accrued Interest	450	18,450
			Cash in Hand		3,000
			Cash at Bank		8,200
			Subscription Outstanding for 2017	1,500
			Add: Outstanding for 2016	800	2,300
		61,950			61,950

7. The following is the account of cash transactions of the Nari Kalyan Samiti for the year ended December 31, 2017:

Receipts	Amount ₹	Payments	Amount ₹
Balance from last year	2,270	Rent	6,600
Subscriptions	32,500	Electric charges	3,200
Life membership fee	3,250	Lecturer’s fee	730
Donation	2,500	Office expenses	1,480
Profit from entertainment	7,250	Printing and stationery	1,050
Sale of old books (books value ₹ 1,000)	750	Legal fee	1,870
Interest	350	Books	6,500
		Furniture purchased	8,600
		Expenses on Nukar Drama	1,300
		Cash in hand	8,040
		Cash at bank	9,500
	48,870		48,870

You are required to prepare an income and expenditure account after the following adjustments:

(a) Subscriptions still to be received are ₹ 750, but subscriptions include ₹ 500 for the year 2018.

(b) At the beginning of the year, Sangh owned a building for ₹ 20,000 and furniture for ₹ 3,000 and Books for ₹ 2,000.

(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.

The solution to this question is as follows:

Books of Nari Kalyan Samiti Income and Expenditure Account as on Dec. 31, 2017
Dr.					Cr.
Expenditure		Amount ₹	Income		Amount ₹
Rent		6,600	Subscription	32,500
Electric Charges		3,200	Add: Outstanding for 2017	750
Lecturer’s Fee		730	33,250
Office Expenses		1,480	Less: Advance for 2018	(500)	32,750
Printing and Stationery		1,050	Donation		2,500
Legal Fee		1,870	Profit from Entertainment		7,250
Depreciation on:			Interest		350
Books	750
Furniture	580
Building	1,000	2,330
Expenses on Nukar Drama		1,300
Loss on Sale of Books		250
Surplus		24,040
		42,850			42,850

Balance Sheet as on Dec. 31, 2016
Liabilities	Amount ₹	Assets	Amount ₹
Capital Fund as on Dec. 31, 2016	27,270	Building	20,000
(Balancing Figure)		Furniture	3,000
		Books	2,000
		Cash and Bank	2,270
	27,270		27,270

Balance Sheet as on Dec. 31, 2017
Liabilities		Amount ₹	Assets			Amount ₹
Capital Fund	27,270		Building		20,000
Add: Life Membership Fees	3,250		Less: 5% Depreciation		(1,000)	19,000
Add: Surplus	24,040	54,560
			Furniture		3,000
Advance Subscription for 2018		500	Add: Purchases		8,600
					11,600
			Less: 5% Depreciation		580	11,020
			Books		2,000
			Add: Purchases		6,500
			8,500
			Less: Sales		1,000
					7,500
			Less: 5% Depreciation		750	6,750
			Cash in Hand			8,040
			Cash at Bank			9,500
			Subscription Outstanding			750
		55,060				55,060

8. Following is the receipt and payment account of Indian Sports Club, prepare income and expenditure account, balance sheet as on December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount ₹	Payments	Amount ₹
Balance b/d	7,890	Salary	11,000
Subscriptions	52,000	Electric charges	5,500
Life membership fee	2,200	Billiard Table	17,500
Entrance fee	3,200	Office expenses	4,100
Tournament fund	26,000	Printing and Stationery	2,300
Locker Rent	1,250	Tournament expenses	18,500
Sale of old sports goods (Costing ₹ 2,200)	2,500	Repair of ground	2,000
Sale of old newspaper	750	Furniture purchased	7,700
Legacy	37,500	Sports equipment’s	12,000
		Cash in hand	12,690
		Cash at bank	10,000
		Fixed deposit (on 1.10.17 for 10% p.a)	30,000
	1,33,290		1,33,290

Other Information:

The subscription outstanding was on December 31, 2016, ₹ 1,200 and ₹ 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017, was ₹ 250, and Salary outstanding on December 31, 2017, ₹ 1,000.

On January 1, 2017, the club built for ₹ 36,000, procured furniture for ₹ 12,000, and sports equipment’s for ₹ 17,500. Depreciation is charged on these items @ 10% (including purchase).

The solution to this question is as follows:

Indian Sports Club Income and Expenditure Account as on Dec. 31, 2017
Dr.					Cr.
Expenditure		Amount ₹	Income		Amount ₹
Salary	11,000		Subscriptions	52,000
Add: Outstanding for 2017	1,000	12,000	Add: Outstanding for 2017	3,200
Electric Charges		5,500		55,200
Office Expenses		4,100	Less: Outstanding for 2016	(1,200)	54,000
Printing and Stationery		2,300
Repair of Ground		2,000	Locker Rent	1,250
Depreciation on:			Add: Outstanding for 2017	250	1,500
Furniture	1,970
Building	3,600		Entrance Fees		3,200
Sports Equipments	2,730	8,300	Profit on Sale of Sports
Surplus		26,300	Equipments (₹ 2,500 – ₹ 2,200)		300
			Sale of Old Newspapers		750
			Accrued Interest		750
		60,500			60,500

Balance Sheet as on January 01, 2016
Liabilities			Amount ₹	Assets		Amount ₹
Capital Fund (Balancing Figure)			74,590	Subscription Outstanding		1,200
				Building		36,000
				Furniture		12,000
				Sports Equipments		17,500
				Cash and Bank		7,890
			74,590			74,590
Balance Sheet as on Dec. 31, 2017
Liabilities			Amount ₹	Assets		Amount ₹
Salary Outstanding			1,000	Subscription Outstanding		3,200
Tournament Fund		26,000		Locker Rent Outstanding		250
Less: Tournament Expenses		18,500	7,500	Building	36,000
				Less: 10% Depreciation	(3,600)	32,400
Capital fund		74,590
Add: Life Membership Fee		2,200		Furniture	12,000
Add: Legacy		37,500		Add: Purchases	7,700
Add: Surplus		26,300	1,40,590		19,700
				Less: 10% Depreciation	(1,970)	17,730
				Sports Equipments	17,500
				Add: Purchases	12,000
					29,500
				Less: Sales	(2,200)
					27,300
				Less: 10% Depreciation	(2,730)	24,570
				Billiard Table		17,500
				Cash in hand		12,690
				Cash at Bank		10,000
				Fixed Deposit	30,000
				Add: Accrued Interest	750	30,750
			1,49,090			1,49,090

9. From the following receipt and payment account of Jan Kalyan Club, prepare the income and expenditure account and balance sheet for the year ending March 31, 2017.

Receipt and Payment Account for the year ending March 31, 2017
Receipts	Amount ₹	Payments	Amount ₹
Cash in hand as on 1.4.16	6,800	Salaries	24,000
Subscription	60,200	Travelling expenses	6,000
Donation	3,000	Stationery	2,300
Sale of furniture (Book value ₹ 6000)	4,000	Rent	16,000
Entrance fee	800	Repair	700
Life membership fee	7,000	Books purchased	6,000
Interest on investment (@ 5% for the whole year)	5,000	Building purchased	30,000
		Cash in hand as on 31.3.2017	1,800
	86,800		86,800

Additional Information:

		As on 1.04.2016	As on 31.03.2017
(i)	Subscription received in advance	1,000	3,200
(ii)	Outstanding subscription	2,000	3,700
(iii)	Stock of stationery	1,200	800
(iv)	Books	13,500	16,500
(v)	Furniture	16,000	8,000
(vi)	Outstanding rent	1,000	2,000

The solution to this question is as follows:

Books of Jan Kalyan Club Income and Expenditure Account as on 31 March 2017
Dr.						Cr.
Expenditure			Amount ₹	Income		Amount ₹
Loss on Sale of Furniture (₹ 6,000 – ₹ 4,000)			2,000	Subscription	60,200
Salaries			24,000	Less: Outstanding for 2016	(2,000)
Travelling Expenses			6,000		58,200
Stationery		2,300		Add: Outstanding for 2017	3,700
Add: Opening Stock		1,200			61,900
		3,500		Add: Advance in 2016	1,000
Less: Closing Stock		(800)	2,700		62,900
				Less: Advance in 2017	(3,200)	59,700
Repairs			700
Rent		16,000		Donation		3,000
Less: Outstanding for 2016		(1,000)		Entrance Fees		800
		15,000		Interest on Investments		5,000
Add: Outstanding for 2017		2,000	17,000
Depreciation on Books			3,000
Depreciation on Furniture			2,000
Surplus			11,100
			68,500			68,500
Balance Sheet as on April 01, 2016
Liabilities		Amount ₹	Assets		Amount ₹
Advance Subscription		1,000	Cash in Hand		6,800
Outstanding Rent		1,000	Investment {5,000 × (100/5)}		1,00,000
Capital Fund (Balancing figure)		1,37,500	Subscription Outstanding		2,000
			Stock of Stationery		1,200
			Books		13,500
			Furniture		16,000
		1,39,500			1,39,500

Balance Sheet as on March 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Advance Subscription		3,200	Subscription Outstanding		3,700
Outstanding Rent		2,000	Stock of Stationery		800
Capital Fund	1,37,500		Investments		1,00,000
Add: Life Membership Fees	7,000
Add: Surplus	11,100	1,55,600	Books	13,500
			Add: Purchases	6,000
				19,500
			Less: Depreciation	(3,000)	16,500
			Building		30,000
			Cash in Hand		1,800
			Furniture	16,000
			Less: Sales	6,000
				10,000
			Less: Depreciation	(2,000)	8,000
		1,60,800			1,60,800

10. Receipt and payment account of Shankar Sports Club is given below for the year ended March 31, 2017:

Receipt and Payment Account for the year ending March 31, 2017
Receipts	Amount ₹	Payments	Amount ₹
Opening Cash in hand	2,600	Rent	18,000
Entrance fees	3,200	Wages	7,000
Donation for building	23,000	Billiard table	14,000
Locker rent	1,200	Furniture	10,000
Life membership fee	7,000	Interest	2,000
Profit from entertainment	3,000	Postage	1,000
Subscription	40,000	Salary	24,000
		Cash in hand	4,000
	80,000		80,000

Prepare income and expenditure account and balance sheet as per the following information:

Subscription outstanding on March 31, 2016, is ₹ 1, 200 and ₹ 2,300 on March 31, 2017; the opening stock of postage stamps is ₹ 300, and closing stock is ₹ 200, Rent ₹ 1,500 related to 2015 and ₹ 1,500 is still unpaid.

On April 01, 2016, the club owned furniture at ₹ 15,000, furniture valued at ₹ 22,500

On March 31, 2017. The club took a loan of ₹ 20,000 (@ 10% p.a.) in 2017.

The solution to this question is as follows:

Books of Shankar Sports Club Income and Expenditure Account as on 31 Dec. 2017
Dr.					Cr.
Expenditure		Amount ₹	Income		Amount ₹
Rent	18,000		Entrance Fees		3,200
Add: Outstanding for 2017	1,500		Locker Rent		1,200
	19,500		Profit from Entertainment		3,000
Less: Outstanding for 2016	(1,500)	18,000
			Subscription	40,000
Wages		7,000	Less: Outstanding for 2016	(1,200)
Depreciation on Furniture		2,500		38,800
Interest		2,000	Add: Outstanding for 2017	2,300	41,100
Postage	1,000		Deficit (Balancing Figure)		6,100
Add: Opening Stock	300
	1,300
Less: Closing Stock	(200)	1,100
Salaries		24,000
		54,600			54,600

Balance Sheet as on December 31, 2016
Liabilities	Amount ₹	Assets	Amount ₹
Rent Outstanding	1,500	Cash in Hand	2,600
10% Loan	20,000	Subscription Outstanding	1,200
		Furniture	15,000
		Stock of Postage Stamps	300
		Capital fund Deficit (Balancing figure)	2,400
	21,500		21,500

Balance Sheet as on December 31, 2017
Expenditure		Amount ₹	Income			Amount ₹
Rent Outstanding		1,500	Subscription Outstanding			2,300
10% Loan		20,000	Stock of Postage Stamps			200
Donation for Building		23,000	Billiard Table			14,000
Capital Fund	(2,400)		Furniture		15,000
Add: Life Membership Fee	7,000		Add: Purchases		10,000
Less: Deficit	(6,100)				25,000
			Less: Depreciation		(2,500)	22,500
			Cash in Hand			4,000
			* Capital Fund (Deficit)			1500
		44,500				44,500

* NOTE 1:

Capital Fund		(2,400)
Add:	Life Membership Fees	7,000
Less:	Deficit	(6,100)
	Net Deficit	(1,500)

11. Prepare income and expenditure account and balance sheet for the year ended March 31, 2016, from the following receipt and payment account and balance sheet of a cultural club:

Receipt and Payment Account for the year ending March 31, 2016
Receipts		Amount (₹)	Payments	Amount (₹)
Opening cash balance		12,000	Furniture	4,000
Subscription			Telephone expenses	800
2014-15	2,000		Salary
2015-16	22,000	24,000	2014-15	1,000
Entrance fees		2,800	2015-16	4,000
Locker rent		1,000	Newspapers	700
Life membership fee		1,200	Sundry expenses	1,000
Government grant		11,000	Defence bonds	18,000
			Land	20,000
			Closing cash balance	2,500
		52,000		52,000

Balance Sheet for the year ending March 31, 2016
Liabilities	Amount (₹)	Assets	Amount (₹)
Advance locker rent	200	Cash in hand	12,000
Subscription received in Advance	1,000	Outstanding subscription	3,000
Outstanding salary	2,000	Building	35,000
Loan	10,000
Capital fund	36,800
	50,000		50,000

The solution to this question is as follows:

Books of Cultural Club Income and Expenditure Account as on March 31, 2016
Dr.	Cr.
Expenditure			Amount ₹		Income			Amount ₹
Telephone Expenses			800		Subscription	22,000
Salary			4,000		Add: Advance Received in 2015	1,000		23,000
Newspapers			700
Sundry Expenses			1,000		Entrance Fees			2,800
					Locker Rent		1,000
Surplus (Balancing figure)			31,500		Add: Advance Received in 2015		200	1,200
					Government Grants			11,000
			38,000					38,000
Balance Sheet as on March 31, 2016
Liabilities			Amount ₹	Assets Amount ₹
Capital Fund		36,800		Subscription Still Outstanding for 2015 1,000
Add: Life Membership Fees		1,200		(₹ 3,000 – ₹ 2,000)
Add: Surplus		31,500	69,500	Furniture 4,000
				Defence Bonds 18,000
Salary Still Outstanding for 2015			1,000	Land 20,000
Loan			10,000	Building 35,000
				Cash in Hand 2,500
			80,500	80,500

12. From the following receipt and payment account, prepare the final accounts of a Unity Club for the year ended March 31, 2017.

Receipt and Payment Accounts for the year ending March 31, 2017
Receipts		Amount ₹	Payments	Amount ₹
Balance b/d		15,000	Furniture	18,000
Sale of old furniture (costing ₹ 6,000)		4,000	Library books	10,000
Subscriptions:			Salaries	72,000
2015–16	18,000		General expenses	18,000
2016–17	60,000		Electric charges	12,000
2017–18	12,000	90,000	Newspapers	33,800
Sale of old newspapers		10,800	Postage	3,000
Profit from entertainment		44,000	Stationery	40,000
Rent		84,000	Audit fee	8,000
			Balance c/d	33,000
		2,47,800		2,47,800

Balance Sheet as on March 31, 2016
Liabilities	Amount ₹	Assets	Amount ₹
Outstanding salary	6,000	Cash	15,000
Capital Fund	6,94,000	Outstanding subscription	18,000
		Library Books	30,000
		Furniture	37,000
		Land and Building	6,00,000
	7,00,000		7,00,000

Additional Information:

1.	The club had 500 members, each paying an annual subscription of ₹ 150.
2.	On 31.3.2016, salaries outstanding amounted to ₹ 1,200 and salaries paid included ₹ 6,000 for the year 2015–16.
3.	Provide 5% depreciation on Land and Building.

The solution to this question is as follows:

Books of Unity Club Income and Expenditure Account as on March 31, 2017
Dr.							Cr.
Expenditure			Amount ₹	Income		Amount ₹
Loss on Sale of Old Furniture (4,000 – 6,000)			2,000	Subscription
				500 Members at ₹ 150 Each		75,000
Salaries		72,000		Sale of Old Newspapers		10,800
Add: Outstanding for 2015–16		1,200		Profit from Entertainment		44,000
		73,200		Rent		84,000
Less: Outstanding for 2016–17		(6,000)	67,200
General Expenses			18,000	Deficit (Balancing figure)		200
Electric Charges			12,000
Newspapers			33,800
Postage			3,000
Stationery			40,000
Audit Fees			8,000
Depreciation on Land and Building			30,000
			2,14,000			2,14,000
Balance Sheet as on 31 March 2017
Liabilities			Amount ₹	Assets		Amount ₹
Advance Subscription (for 2017–18)			12,000	Subscription Outstanding		15,000
Salaries Outstanding			1,200	Furniture	37,000
Capital Fund		6,94,000		Add: Purchases	18,000
Less: Deficit		(200)	6,93,800		55,000
				Less: Sales	(6,000)	49,000
				Library Books	30,000
				Add: Purchases	10,000	40,000
				Land and Building	6,00,000
				Less: 5% Depreciation	(30,000)	5,70,000
				Cash and Bank		33,000
			7,07,000			7,07,000

13. Following is the information in respect of certain items of a sports club. You are required to show them in the income and expenditure account and the balance sheet.

Details	Amount ₹
Sports Fund as on April 1, 2016	80,000
Sports Fund Investments	80,000
Interest on Sports Fund Investments	8,000
Donations for Sports Fund	30,000
Sports Prizes Awarded	16,000
Expenses on Sports Events	7,000
General Fund	2,00,000
General Fund Investments	2,00,000
Interest on General Fund Investments	20,000

The solution to this question is as follows:

Income and Expenditure Account as on March 31, 2016
Dr.		Cr.
Expenditure Amount ₹ Income Amount ₹
Interest on General Fund Investments 20,000
Balance Sheet as on March 31, 2016
Liabilities			Amount ₹	Assets	Amount ₹
Sports Fund		80,000		Sports Fund Investments	80,000
Add: Interest on Sports Fund				General Fund Investments	2,00,000
Investments		8,000
Add: Donation for Sports Fund		30,000
		1,18,000
Less: Sports Prizes Awarded		(16,000)
Less: Expenses on Sports Events		(7,000)	95,000
General Fund			2,00,000

14. Receipt and payment account of Maitreya Sports Club showed that ₹ 68,500 were received by way of subscriptions for the year ended on March 31, 2017.

The additional information was as under:

1. Subscription Outstanding as on March 31, 2016, were ₹ 6,500,

2. Subscriptions received in advance as on March 31, 2016, were ₹ 4,100,

3. Subscription Outstanding as on March 31, 2017, were ₹ 5,400,

4. Subscriptions received in advance as on March 31, 2017, were ₹ 2,500.

Show how the above information would appear in the final accounts for the year ended on March 31, 2017, of Maitreya Sports Club.

The solution to this question is as follows:

Books of Maitreya Sports Club Income and Expenditure Account as on March 31, 2017
Dr.							Cr.
Expenditure		Amount ₹		Income		Amount ₹
				Subscription	68,500
				Less: O/s on Mar. 31, 2016	(6,500)
				62,000
				Add: Advance on Mar. 31, 2016	4,100
				Add: O/s on Mar. 31, 2017	5,400
				71,500
				Less: Advance on Mar. 31, 2017	(2,500)	69,000
Balance Sheet as on March 31, 2016
Liabilities		Amount ₹	Assets			Amount ₹
Subscription in Advance		4,100	Subscription Outstanding			6,500

Balance Sheet as on March 31, 2017
Liabilities	Amount ₹	Assets	Amount ₹
Subscription in Advance	2,500	Subscription Outstanding	5,400

15. Following is the receipt and payment account of Rohatgi Trust:

Receipt and Payment Account for the year ending December 31, 2017
Receipts		Amount ₹	Payments	Amount ₹
Cash in hand		14,000	Rent	6,000
Cash at Bank		60,000	Salary	12,000
Subscriptions: 2016 2017 2018	5,000 83,000 3,000	91,000	Postage Electricity charges Purchase of furniture Books	300 6,000 20,000 3,000
Sale of Investment		90,000	Defence Bonds	1,50,000
Interest on investment		2,000	Help to needy students	22,000
Sale of furniture (book value ₹ 3,000)		3,200	Cash in hand Cash at bank	10,900 30,000
		2,60,200		2,60,200

Prepare income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments: Subscription for 2017, still owing were ₹ 7,000. Interest due on defence bonds was ₹7,000, and rent still owing was ₹ 1,000. The book value of the investment sold was ₹ 80,000, and ₹ 30,000 of the investment were still in hand. Subscriptions received in 2017 included ₹ 400 from a life member. The total furniture on January 1, 2017, was worth ₹ 12,000. The salary paid for the year 2018 is ₹ 2,000.

The solution to this question is as follows:

Books of Rohatgi Trust Income and Expenditure Account as on December 31, 2017
Dr.							Cr.
Expenditure			Amount ₹	Income		Amount ₹
Rent		6,000		Subscription	83,000
Add: Outstanding		1,000	7,000	Add: Outstanding for 2017	7,000
				90,000
Salary		12,000		Less: Life Membership Fees	(400)	89,600
Less: Advance for 2018		(2,000)	10,000
				Interest Accrued on Defence Bonds		7,000
Postage			300	Profit on Sale of Investment (₹ 90,000 – ₹ 80,000)		10,000
Electricity Charges			6,000	Profit on Sale of Furniture (₹ 3,200 – ₹ 3,000)		200
Help to Needy Students			22,000	Interest on Investments		2,000
Surplus (Balancing Figure)			63,500
			1,08,800			1,08,800
Balance Sheet as on December 31, 2016
Liabilities			Amount ₹	Assets		Amount ₹
Capital fund (Balancing Figure)			2,01,000	Subscription Outstanding		5,000
				Investment (₹ 80,000 + ₹ 30,000)		1,10,000
				Furniture		12,000
				Cash in hand		14,000
				Cash at bank		60,000
			2,01,000			2,01,000

Balance Sheet as on December 31, 2017
Expenditure			Amount ₹	Income		Amount ₹
Advance Subscription			3,000	Subscription Outstanding		7,000
Rent Outstanding			1,000	Defence Bonds	1,50,000
Capital Fund		2,01,000		Add: Accrued Interest on Defence Bonds	7,000	1,57,000
Add: Surplus		63,500
Add: Life Membership Fees		400	2,64,900	Investment		30,000
				Advance Salaries		2,000
				Furniture	12,000
				Add: Purchases	20,000
				32,000
				Less: Sales	(3,000)	29,000
				Books		3,000
				Cash in Hand		10,900
				Cash at Bank		30,000
			2,68,900			2,68,900

16. The following receipt and payment account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount ₹	Payments	Amount ₹
Balance b/d		Charity	11,500
Cash in hand	11,500	Rent and taxes	3,200
Cash at bank	12,600	Salary	6,000
Donation	9,000	Printing	600
Subscription	42,800	Postage	300
Legacies	18,000	Advertisements	4,500
Interest on investment	4,500	Insurances	2,000
Sale of old newspapers	200	Furniture	21,600
		Investment	23,000
		Balance c/d:
		Cash in hand	9,900
		Cash at bank	16,000
	98,600		98,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:

(a)	It was decided to treat one-third of the amount received on account of donation as income.
(b)	The insurance premium was paid in advance for three months.
(c)	Interest on investment ₹1,100 accrued was not received.
(d)	Rent ₹600: salary ₹900 and advertisement expenses ₹1,000 outstanding as on December 31, 2017.

The solution to this question is as follows:

Books of Delhi Charitable Trust Income and Expenditure Account as on December 31, 2017
Dr.			Cr.
Expenditure		Amount ₹		Income		Amount ₹
Insurance	2,000			Donation {9,000 × (1/3)}		3,000
Less: Prepaid {2,000 × (3/15)}	(400)	1,600		Interest on Investments	4,500
				Add: Accrued Interest	1,100	5,600
Charity		11,500
Rent and Taxes	3,200			Subscription		42,800
Add: Outstanding	600	3,800		Sale of Old Newspapers		200
Salary	6,000
Add: Outstanding	900	6,900
Printing		600
Postage		300
Advertisements	4,500
Add: Outstanding	1,000	5,500
Surplus (Balancing figure)		21,400
		51,600				51,600
Balance Sheet as on December 31, 2016
Liabilities		Amount ₹		Assets		Amount ₹
Capital Fund (Balancing figure)		24,100		Cash in Hand		11,500
				Cash at Bank		12,600
		24,100				24,100

Balance Sheet as on December 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Capital Fund	24,100		Prepaid Insurance {2,000 × (3/15)}		400
Add: Donation {9,000 × (2/3)	6,000		Investment	23,000
Add: Legacies	18,000		Add: Accrued Interest	1,100	24,100
Add: Surplus	21,400	69,500	Furniture		21,600
Rent Outstanding		600	Cash in Hand		9,900
Salary Outstanding		900	Cash at Bank		16,000
Advertisement Expenses Outstanding		1,000
		72,000			72,000

17. From the following receipt and payment account of a club, prepare the income and expenditure account for the year ended March 31, 2017, and the balance sheet as on that date.

Receipt and Payment Account for the year ending March 31, 2017
Receipts		Amount ₹	Payments	Amount ₹
Balance b/d		3,500	General expenses	900
Subscription: 2015-16 2016-17 2017-18	2,000 70,000 3,000	75,000	Salary Postage Electricity charges Furniture	16,000 1,300 7,800 26,500
Sale of old Books		2,000	Books	13,000
(Costing ₹ 3,200)			Newspapers	600
Rent from use of hall		17,000	Meeting expenses	7,200
Sale of newspapers		400	T.V. set	16,000
Profit from entertainment		7,300	Balance c/d	15,900
		1,05,200		1,05,200

Additional Information:

(a)	The club has 100 members, each paying an annual subscription of ₹ 900. Subscriptions outstanding on March 31, 2016, were ₹ 3,600.
(b)	On March 31, 2017, the salary outstanding amounted to ₹ 1,000, salary paid included ₹ 1,000 for the year 2012.
(c)	On April 1, 2017, the club owned land and building ₹ 25,000, furniture ₹ 2,600 and books ₹ 6,200.

 

The solution to this question is as follows:

Income and Expenditure Account as on December 31, 2017
Dr.					Cr.
Expenditure		Amount ₹	Income		Amount ₹
General Expenses		900	Subscription	70,000
Salary	16,000		Add: Outstanding for 2017	20,000	90,000
Add: Outstanding for 2017	1,000		(100 members at ₹ 900 each)
17,000			Rent from use of hall		17,000
Less: Outstanding for 2016	(1,000)	16,000	Sale of Old News Papers		400
			Profit from Entertainment		7,300
Loss on Sale of Old Books		1,200
Electricity Charges		7,800
Newspapers		600
Meeting Expenses		7,200
Postage		1,300
Surplus (Balancing figure)		79,700
		1,14,700			1,14,700

Balance Sheet as on March 31, 2016
Liabilities	Amount ₹	Assets	Amount ₹
Salary Outstanding	1,000	Subscription Outstanding	3,600
Capital Fund (Balancing figure)	39,900	Furniture	2,600
		Books	6,200
		Cash and Bank	3,500
		Building	25,000
	40,900		40,900

Balance Sheet as on March 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Advance Subscription		3,000	Subscription Outstanding
Salary Outstanding		1,000	2017	20,000
			Add: 2016 (Still Outstanding)	1,600	21,600
Capital Fund	39,900		Building		25,000
Add: Surplus	79,700	1,19,600	Furniture	2,600
			Add: Purchases	26,500	29,100
			Books	6,200
			Add: Purchases	13,000
			19,200
			Less: Sales	3,200	16,000
			T.V. Set		16,000
			Cash and Bank		15,900
		1,23,600			1,23,600

18. Following is the receipt and payment account of the Women’s Welfare Club for the year ended December 31, 2017:

The solution to this question is as follows:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount ₹	Payments	Amount ₹
Balance b/d	7,250	Salary	12,500
Subscriptions	81,750	Stationery	1,700
Donations	3,000	Electricity charges	9,550
Grant from Government	15,000	Insurance	7,500
Sale of newspapers	300	Equipment	30,000
Proceeds from the charity show	16,500	Petty expenses	500
Interest on investments @ 10% for the whole year	7,000	Expenses on the charity show	12,900
Sundries income	400	Newspapers	1,000
		Lectures fee	16,500
		Honorarium to Secretary	12,000
		Balance c/d	27,050
	1,31,200		1,31,200

Additional Information:

	01.01.2017 ₹	31.12.2017 ₹
Outstanding salaries	1,200	1,800
Insurance prepaid	700	300
Subscription outstanding	3,750	2,500
Subscription received in advanced	1,750	1,000
Electricity charges outstanding	—	1,250
Stock of stationery	2,250	700
Equipment	25,600	50,200
Building	1,20,000	1,14,000

Prepare the income and expenditure account for the year ended December 31, 2017, and the balance sheet as on that date.

The solution to this question is as follows:

Books of Women’s Welfare Club Income and Expenditure Account as on December 31, 2017
Dr.					Cr.
Expenditure		Amount ₹	Income		Amount ₹
Salary	12,500		Subscriptions	81,750
Add: O/s on Dec. 31, 2017	1,800		Add: O/s on Dec. 31, 2017	2,500
14,300			84,250
Less: O/s on Dec. 31, 2016	(1,200)	13,100	Less: O/s on Dec. 31, 2016	(3,750)
			80,500
Stationery	1,700		Add: Advance on Dec. 31, 2016	1,750
Add: Opening Stock	2,250		82,250
3,950			Less: Advance on Dec.31, 2017	(1,000)	81,250
Less: Closing Stock	(700)	3,250
			Donations		3,000
Electric Charges	9,550		Grant from Government		15,000
Add: O/s on Dec. 31, 2017	1,250	10,800	Sale of Newspapers		300
			Profit from Charity show (16,500–12,900)		3,600
Insurance	7,500		Interest on Investments		7,000
Add: Prepaid in 2016	700		Sundries Income		400
8,200
Less: Prepaid in 2017	(300)	7,900
Depreciation on Equipment		5,400
Petty Expenses		500
Newspapers		1,000
Lectures Fee		16,500
Honorarium to Secretary		12,000
Depreciation on Building		6,000
Surplus (Balancing Figure)		34,100
		1,10,550			1,10,550

Balance Sheet as on December 31, 2016
Liabilities	Amount ₹	Assets	Amount ₹
Outstanding Salaries	1,200	Insurance Prepaid	700
Subscription in Advance	1,750	Subscription Outstanding	3,750
		Stock of Stationery	2,250
Capital Fund (Balancing Figure)	2,26,600	Equipment	25,600
		Building	1,20,000
		Cash and Bank	7,250
		Investments {7,000 × (100/10)}	70,000
	2,29,550		2,29,550

Balance Sheet as on December 31, 201
Liabilities		Amount ₹	Assets		Amount ₹
Outstanding Salaries		1,800	Equipment	25,600
Subscription in Advance		1,000	Add: Purchases	30,000
Electricity Charges Outstanding		1,250	55,600
Capital Fund	2,26,600		Less: Depreciation	(5,400)	50,200
Add: Surplus	34,100	2,60,700
			Insurance Prepaid		300
			Subscription Outstanding		2,500
			Stock of Stationery		700
			Building	1,20,000
			Less: Depreciation	(6,000)	1,14,000
			Cash and Bank		27,050
			Investments		70,000
		2,64,750			2,64,750

19. As on March 31, 2017, the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club, and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running the restaurant and dining room and (2) Income and expenditure account for the year ended March 31, 2017 (3) and a balance sheet as at that date.

Debit Balances	₹	Credit Balances	₹
Stock-in-hand	1170	Receipts Dining Room	87,660
Purchases	24,660	Subscriptions	9,450
Dining Room	32,370	Billiard’s Receipts	7,300
Rent	10,470	Sunday Receipts	410
Wages	18,690	Interest on Fixed Deposit	270
Repairs and Renewals	5,400	Sundry Creditors	5310
Fuel and Light	5,280	Grant from Institute (permanent)	42,000
Misc. Expenses	4,050	Income and Exp. A/c (1.4.16)	1,380
Cash in Hand	560	Suspense A/c (See note)	60
Cash at Bank	2,760
Fixed Deposit	8,500
Sundry Debtors	2,250
China glass, cutlery and linen	600
Billiard Table	2,070
Fixtures and Fittings	870
Furniture	4,140
Club Premises	30,000
	1,53,840		1,53,840

On March 31, 2016, the stock of a restaurant consisted of ₹ 900 and ₹ 60, respectively. Provide depreciation ₹ 60 on fixtures and fittings, ₹ 390 on a billiard table and ₹ 560 on furniture.

The solution to this question is as follows:

Books of Indian Chartered Accountants Recreation Club Restaurant Trading Account
Dr.	Cr.
Particulars			Amount ₹	Particulars		Amount ₹
Opening Stock			1,170	Receipts from Dining Room		87,660
Purchases			24,660	Closing Stock		960
Dining Room Exp.			32,370
Profit from Restaurant			30,420
			88,620			88,620
Income and Expenditure Account as on March 31, 2017
Dr.						Cr.
Expenditure			Amount ₹	Income		Amount ₹
Rent			10,470	Subscriptions		9,450
Wages			18,690	Sundry Receipts		410
Repairs and Renewals			5,400	Interest on Fixed Deposits		270
Fuel and Light			5,280	Profit from Restaurant		30,420
Misc. Expenses			4,050	Billiards Receipts		7,300
Depreciation on
Fixtures and Fittings		60
Billiards Table		390
Furniture		560	1,010
Surplus (Excess of Income over Expenditure)			2,950
			47,850			47,850

Balance Sheet as on March 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Sundry Creditors		5,310	Cash in Hand		560
Grant from Institute		42,000	Cash at Bank		2,760
Suspense		60	Fixed Deposit		8,500
Capital Fund (Income and Exp. A/c as on Apr.01, 2016)	1,380		Sundry Debtors		2,250
Add: Surplus	2,950	4,330	China Glass, Cutlery and Linen		600
			Billiards Table	2,070
			Less: Depreciation	(390)	1,680
			Fixture and Fittings	870
			Less: Depreciation	(60)	810
			Furniture	4,140
			Less: Depreciation	(560)	3,580
			Club Premises		30,000
			Stock of Restaurant		960
		51,700			51,700