Question

From the following Receipts and Payments Account of "L.D. Engineering College'', for the year ending on 31 - 03 - 2023 and additional information, prepare Income and Expenditure Account for the year ending 31 - 03 - 2023 and Balance Sheet as on that date.

Dr.	Receipts and Payments Account for the year ending 31- 03 - 2023		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
To Balance b/d		By Salaries to Teaching Staff	9,36,000
Cash in Hand	14,400	By Electricity Charges	44,000
Cash at Bank	80,320	By Books	48,800
To Interest	44,000	By Furniture	40,800
To Subscriptions	22,640	By Stationery	17,480
To Life Membership Fees	20,000	By Fixed Deposit (31 - 03 - 2023)	6,80,000
To Donation	5,60,000	By Balance c/d
To Tuition Fees	9,84,000	Cash in Hand	13,320
To Term Fees	1,60,640	Cash at Bank	1,60,000
To Sundry Receipts	6,400
To Admission Fees (Revenue)	48,000
	19,40,400		19,40,400

Additional Information:

Particulars	01-04-2022 (₹)	31-03-2023 (₹)
Books	4,80,000	4,80,000
Furniture	2,55,200	2,40,000
Building Fund	8,00,000	?
Fixed Deposit	7,28,000	?
Capital Fund	7,57,920	?

(1) 50% of donation are for Building fund and the balance is to be treated as Revenue income.

(2) Outstanding subscription ₹ 4,240.

(3) Life membership fees are to be capitalised.

Answer 1

Dr.	In the books of L.D. Engineering College Income and Expenditure Account for the year ended on 31st March, 2023				Cr.
Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Salaries to Teaching Staff		9,36,000	By Interest		44,000
To Electricity Charges		44,000	By Subscription	22,640	26,880
To Stationery		17,480	Add: Outstanding Subscription	4,240
To Depreciation			By Donations	5,60,000	2,80,000
Furniture	56,000	1,04,800	Less: 50 % for Building Fund	2,80,000
Books	48,800		By Tuition Fees		9,84,000
To Surplus (Excess of income over expenditure)		4,47,640	By Term Fees		1,60,640
			By Sundry Receipts		6,400
			By Admission Fees		48,000
		15,49,920			15,49,920

 

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Fund	7,57,920	12,25,560	Outstanding Subscription		4,240
Add: Surplus	4,47,640		Books	4,80,000	4,80,000
Add: Life Membership Fees (Capitalised)	20,000		Add: Purchases	48,800
Building Fund	8,00,000	10,80,000		5,28,800
Add: 50 % of Donation	2,80,000		Less: Depreciation	48,800
			Furniture	2,55,200	2,40,000
			Add: Purchase	40,800
				2,96,000
			Less: Depreciation	56,000
			Fixed Deposits (New)		6,80,000
			Cash in Hand		13,320
			Cash in Bank		1,60,000
			Fixed Deposits (Old)		7,28,000
		23,05,560			23,05,560

Working Notes:

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

(2) 50 % of Donations of ₹ 5,60,000 i.e., ₹ 2,80,000 is to be added to Building fund and remaining amount of donation i.e., ₹ 2,80,000 is credited to Income and Expenditure A/c.

(3) Depreciation = Opening balance + Purchases – Closing value

∴ Depreciation on Books = 4,80,000 + 48,800 – 4,80,000 = 5,28,800 – 4,80,000 = ₹ 48,800

∴ Depreciation on Furniture = 2,55,200 + 40,800 – 2,40,000 = 2,96,000 – 2,40,000 = ₹ 56,000

(4) Admission Fees ₹ 48,000 is recorded on the Credit side of Income and Expenditure A/c because it is taken as Revenue income.