Question

Dr. Dhanashri started (business) of medical practitioner on 1st April, 2019.
She gives you the Receipts and Payment Account for the year ended 31st March, 2020 and the adjustments. 
Prepare Income and Expenditure account for the year ended 31st March, 2020 Balance Sheet as on that date.

Dr.	Receipts and Payments Account for the year ended 31.03.2020		Cr.
Receipts	Amt. (₹)	Payments	Amt. (₹)
To Cash introduced	50,000	By Furniture	16,000
To Visit fees	20,000	By Equipment	20,000
To Receipts from dispensary	60,000	By Drugs	14,000
To Sundry receipts	10,000	By Salary	36,000
		By Conveyance	8,000
		By Stationery	11,000
		By Journals	1,000
		By Drawings	30,000
		By Balance c/d	4,000
	1,40,000		1,40,000

Additional Information:

1. Visit fees ₹4,000 and receipts from dispensary ₹1,000 is outstanding.
2. Stock of drugs ₹2,000.
3. Depreciate furniture @ 10% p.a. and equipments ₹1,000.
4. 40% conveyance was for domestic purpose.
5. Cash introduced ₹50,000 should be considered as capital fund.

Answer 1

In the books of Dr. Dhanashri
Dr.	Income and Expenditure A/c for the year ended 31st March, 2020				Cr.
Expenditure	Amt. (₹)	Amt. (₹)	Income	Amt. (₹)	Amt. (₹)
To Salary		36,000	By Visit Fees	20,000	24,000
To Drugs consumed:	14,000	12,000	Add: Outstanding	4,000
Drugs purchased			By Receipts from Dispensary	60,000	61,000
Less: Closing stock of drugs	2,000		Add: O/s receipts from Dispensary	1,000
To Conveyance	8,000	4,800	By Sundry receipts		10,000
Less: 40% for domestic	3,200
To Stationery		11,000
To Journals		1,000
To Depreciation:	1,600	2,600
-Furniture
-Equipments	1,000
To Surplus		27,600
(Excess of income over expenditure)
		95,000			95,000

 

Balance Sheet as on 31st March, 2020
Liabilities	Amt. (₹)	Amt. (₹)	Assets	Amt. (₹)	Amt. (₹)
Capital Fund	50,000	44,400	Furniture	16,000	14,400
Add: Surplus	27,600		Less: 10% Depreciation	1,600
	77,600		Equipments	20,000	19,000
Less: Domestic conveyance	3,200		Less: Depreciation	1,000
Less: Drawings	30,000		Stock of Drugs		2,000
			Cash in Hand		4,000
			Outstanding: Visit Fees	4,000	5,000
			Dispensary Receipt	1,000
		44,400			44,400

Working Notes:

1. 40% of conveyance i.e. 40% of 8,000 = ₹3,200 is for domestic purpose, i.e. drawings. It is first deducted from conveyances and then it is deducted from Capital fund.
2. Outstanding visit fees ₹4,000 and outstanding receipts from dispensary 1,000 are to be added to visit fees and dispensary receipts respectively on credit side of Income and Expenditure A/c and they are shown on the Assets side of Balance sheet.
3. Closing cash balance of ₹4,000 is to be shown on the Assets side of Balance Sheet and Opening cash balance of 50,000 is to be shown on the Liabilities side of Balance Sheet as Capital fund.