Question

From the following transactions of Receipts and Payments Account of "Shalby Akhada", and the adjustments given, you are required to prepare Income and Expenditure Account and Balance Sheet as on 31st March, 2022.

Dr.	Receipts and Payments Account for the year ending 31- 03 - 2022				Cr.
Receipts	Amount (₹)	Amount (₹)	Payments	Amount (₹)	Amount (₹)
To Balance b/d			By Salaries		12,000
Cash in Hand		10,000	By Entertainment Expenses		4,960
To Subscriptions			By Sundry Expenses		2,600
2021-22	36,000	36,820	By Electricity Charges		2,400
2022 - 23	820		By Rent		1,400
To Donations		12,000	By Investment		30,000
To Receipts from Entertainment		10,800	By Printing and Stationery		1,600
To Interest		800	By Postage		6,400
To Entrance Fees		12,400	By Fixed Deposit		7,800
			By Balance c/d
			Cash in Hand	1,660	13,660
			Cash at Bank	12,000
		82,820			82,820

Adjustments:

(1) There are 500 members paying an annual subscription of ₹ 100 each.

(2) Outstanding salary was ₹ 2,400.

(3) The Assets on 01 - 04 - 2021 were as follows:
Building ₹ 1,00,000, Furniture ₹ 30,000.

(4) Provide depreciation on Building and Furniture at 5% and 10% respectively.

(5) 50% Entrance Fees is to be capitalised.

(6) Interest on investment at 5% p.a. has accrued for 6 months.

(7) Capital fund is of ₹ 1,40,000 as on 01 - 04 - 2021.

Answer 1

Dr.	In the books of Shalby Akhada Income and Expenditure Account for the year ended on 31st March, 2022				Cr.
Expenditure	Amount (₹)	Amount (₹)	Income	Amount (₹)	Amount (₹)
To Salaries	12,000	14,400	By Subscription	36,000	50,000
Add : Outstanding	2,400		Add : Outstanding Subscription for Current Year	14,000
To Entertainment Expenses		4,960	By Donations		12,000
To Sundry Expenses		2,600	By Receipts from Entertainment		10,800
To Electricity Charges		2,400	By Interest		800
To Rent		1,400	By Outstanding Interest on Investments (6 Months)		750
To Printing and Stationery		1,600	By Entrance Fees	12,400	6,200
To Postage		6,400	Less : 50 % capitalised	6,200
To Depreciation
Building	5,000	8,000
Furniture	3,000
To Surplus (Excess of income over expenditure)		38,790
		80,550			80,550

 

Balance Sheet as on 31st March, 2022
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Fund	1,40,000	1,84,990	Building	1,00,000	95,000
Add: Surplus	38,790		Less: Depreciation	5,000
Add: 50 % Entrance Fees	6,200		Furniture	30,000	27,000
Outstanding Salary		2,400	Less: Depreciation	3,000
Subscription Received in Advance		820	Investments		30,000
			Outstanding Interest on Investments		750
			Fixed Deposit		7,800
			Cash in Hand		1,660
			Cash at Bank		12,000
			Outstanding Subscription of Current Year		14,000
		1,88,210			1,88,210

Working Notes:

(1) Interest on investment is receivable for 6 months:

`"PRN"/100 = 30,000 xx 5/100 xx 6/12 = ₹ 750` (outstanding interest on investment)

(2) 50 % of Entrance Fees `("i.e." 6200/2 = ₹ 3100)` is to be capitalised means add it to capital fund.

(3) Total subscription of current year = 500 members × ₹ 50 = ₹ 25,000.

But actual subscription received = ₹ 18,000.

means difference (25,000 – 18,000) of ₹ 7,000 is outstanding subscription.