Question

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.

Dr	Receipts and payments Account for the year ending 31.03.2019.				Cr
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

Answer 1

Dr	In the books of K.B.P. Engineering College, Nashik Income and Expenditure Account for the year ended on 31st March, 2019						Cr
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	= ₹ 9,10,000
Fixed deposit (31 – 03 – 2019) (Newly purchased)	= ₹ 8,50,000
∴ Total fixed deposits	= ₹ 17,60,00

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