Question

(Preparation of Income and Expenditure Account only)

Following is the Receipts and Payments Account of “Satara Sports Club” Satara Prepare Income and Expenditure Account for the year ending 31.03.2019.

Dr	Receipts and Payments Account for the year ending 31.03.2019.						Cr
Receipts		Amt ₹	Amt ₹	Payments	Amt ₹	Amt ₹
To Balance b/d				By Salaries		5,000
Cash in hand		4,500	16,500	By Rent (Including ₹ 2,000 for 2017 - 18)		5,000
Cash at Bank		12,000		By Electricity Charges		1,450
To Subscription				By Fixed Deposit		60,000
2017 - 18		4,000	52,000	By Printing and Stationery		750
2018 - 19		44,500		By General Expenses (Including ₹ 500 paid for next year)		5,500
2019 - 20		3,500		By Sports Material Purchased		40,000
To Entrance fees			8,000	By Balance c/d
To Donation for Building fund			70,000	Cash in Hand	8,900	33,900
To Interest			600	Cash at Bank	25,000
To Sale of furniture (Book Value ₹ 8000)			4,500
			1,51,600			1,51,600

Adjustments:

1) Outstanding Subscription for Current Year is ₹ 4,500

2) Outstanding Rent for Current Year amounted to ₹ 1,000

3) Entrance Fees are to be treated as Revenue Income

4) Stock of Sports Material as on 01.04.2018 ₹ 6,000 and on 31.03.2019 ₹ 14,000

Answer 1

Dr	In the books of ‘ Satara Sports Club’ Satara Income and Expenditure Account for the year ended on 31st March 2019						Cr
Expenditure		Amount ₹	Amount ₹	Income	Amount ₹	Amount ₹
To Salaries			5,000	By Subscription received for 2018 – 19	44,500
To rent		5,000	4,000	Add: Outstanding Subscription for Current Year	4,500	49,000
Add: Outstanding rent of Current Year		1,000		By Entrance Fees		8,000
Less: rent received for the Year 2017 – 18		2,000		By Interest		600
To Electricity Charges			1,450
To Printing and Stationery			750
To General Expense		5,500	5,000
Less: Amount Paid for Next Year		500
To Sports Material Consumed
Opening Stock		6,000
Add: Sports Material Purchased in Current Year		40,000
		46,000
Less: Closing Stock of Sports Material		14,000	32,000
To Loss due to Sale of Furniture (8,000 – 4,500)			3,500
To Surplus (Excess of income over expenditure)			5,900
			57600			57600

Working Notes :

(1) Entrance fees are to be treated as revenue income. Therefore the entire amount is recorded on the income side.

(2) Since the selling price of Furniture ₹ 4,500 is lower than its cost price of ₹ 8,000, there is Loss on sale of furniture.

It is calculated as follows :

Loss on sale of furniture = Book value (cost) – Selling price

= 8,000 – 4,500

= ₹ 3,500

It is debited to Income and Expenditure A/c.