Question

From the following information, prepare Income and Expenditure Account for the year ending 31 - 03 - 2022 and Balance Sheet as on that date for "Karnavati Club".

Balance Sheet as on 01 - 04 - 2022
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Fund	1,29,000	Machinery	1,38,000
Bank Overdraft	76,000	Outstanding Subscriptions	16,000
Outstanding Salary	8,000	Prepaid Insurance Premium	4,000
		Furniture	30,000
		Cash in Hand	24,000
		Outstanding Locker's Rent	1,000
	2,13,000		2,13,000

 

Dr.	Receipts and Payments Account for the year ended on 31 - 03 - 2023		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
To Balance b/d	24,000	By Balance b/d (Bank Overdraft)	76,000
To Subscription	2,10,000	By Salary	35,000
To Entrance Fees (Capitalised)	18,600	By Insurance Premium	22,000
To Locker Rent	3,000	By Interest	2,800
To Donations (Capitalised)	1,600	By Refreshment Expenses	8,400
		By Furniture	60,000
		By Balance c/d
		Cash in Hand	13,00
		Cash at Bank	40,000
	2,57,200		2,57,200

Adjustments:

(1) Subscription received includes ₹ 6,000 for 2021-22 and outstanding subscription for 2022 - 23 was ₹ 28,000.

(2) On 31 - 03 - 2023, Prepaid insurance premium was ₹ 5,000.

(3) Depreciate Furniture by ₹ 6,000.

(4) Locker rent outstanding for 2022 - 23 is ₹ 800.

Answer 1

Dr.	In the books of ‘Karnavati Club’ Income and Expenditure Account for the year ended 31st March, 2023				Cr.
Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Salary	35,000	27,000	By Subscription	2,10,000	2,32,000
Less: Outstanding salary of 2021–22	8,000		Add: Outstanding Subscription for Current Year	28,000
To Insurance Premium	22,000	21,000		2,38,000
Less: Prepaid Insurance Premium	5,000		Less: Subscription Received of 2021–22	6,000
	17,000		By Locker Rent	3,000	2,800
Add: Prepaid Insurance premium of current year paid in previous year	4,000		Add: Outstanding Locker Rent	800
To Depreciation on				3,800
Furniture		6,000	Less: Outstanding Locker Rent of Previous Year	1,000
To Interest		2,800
To Refreshment Expenses		8,400
To Surplus (Excess of income over Expenditure)		1,69,600
		2,34,800			2,34,800

 

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Fund	1,29,000	3,18,800	Machinery		1,38,000
Add: Surplus	1,69,600		Outstanding Subscription (2021–22) (16,000 – 6,000)		10,000
Add: Entrance Fees (Capitalised)	18,600		Outstanding Subscription (2022 – 23)		28,000
Add: Donations (Capitalised)	1,600		Prepaid Insurance Premium		5,000
			Furniture	30,000	84,000
			Add: Purchases	60,000
				90,000
			Less: Depreciation	6,000
			Outstanding Locker Rent (2022 – 23)		800
			Cash in Hand		13,000
			Cash at Bank		40,000
		3,18,800			3,18,800

Working Notes:

(1) Outstanding subscription (2021 – 22) ₹ 16,000 given in Balance Sheet against that ₹ 6,000 received in 2022 – 23. Means still receivable subscription = ₹ 10,000 (16,000 – 6,000).

(2) Prepaid insurance premium (2021 – 22) ₹ 4,000 is for current year. Therefore, in current year’s insurance premium, ₹ 5,000 is to be added and then subtract current year’s prepaid insurance premium.

(3) Outstanding salary of (2021 – 22), ₹ 8,000 of previous year is to be subtracted from current year’s salary.

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

(5) Outstanding locker’s rent (2021 – 22) ₹ 1,000 is given in Balance Sheet. It is to be substracted from current year’s locker’s rent and then add current year’s outstanding locker rent.