Question:1

State the meaning of 'Not-for-Profit' Organisations.

Solution:

Not-for-Profit Organisations (NPO) are set up with the prime objective of providing services and not to earn profit
thereby enhancing the welfare of society. Such organisations include schools, hospitals, trade unions, religious
organisations, etc. The person/s or the groups of individuals who govern and manage the working of an NPO are
known as trustees. NPO's main sources of income are donations, subscriptions, life membership fees, grants etc.
As these organisations are not set up with profit motive, they do not prepare Trading and Profit and Loss Account.
Instead, they maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet.

Question:2

State the meaning of Receipt and Payment Account.

Solution:

Receipts and Payments Account is a summary of the Cash Book. All cash receipts are recorded on the Receipts
side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and
Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins
with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure)
at the end of the accounting period. It records all cash and bank transactions both of capital and revenue nature. It
not only records the cash and bank transactions relating to the current accounting period, but also the cash and
bank receipts (or payments) received during the current accounting period that may be related to the previous or
next accounting period.

This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash
position of an NPO.

Question:3

State the meaning of Income and Expenditure Account.

Solution:

Income and Expenditure Account (I&E) is similar to the Profit and Loss Account in the sense that while the former
is prepared to ascertain surplus or deficit during an accounting period, the latter is prepared to ascertain net profit or
net loss incurred during an accounting period. I&E Account is a nominal account and is prepared on the accrual
basis. It records all transactions of revenue nature that are related to the current accounting period (whether
outstanding or prepaid) for which the books are maintained. All expenses and losses are recorded on the debit side
(Expenditure side) and all income and gains are recorded on the credit side (Income side) of I&E Account. The
closing balance or the balancing figure of I&E Account is termed as surplus (or deficit), if the sum total of the
Income side exceeds (is lesser than) the sum total of the Expenditure side.

Question:4

What are the features of Receipt and Payment Account?

Solution:

The following are the features of Receipt and Payment Account:

1. Nature: It is a Real Account. It is a summarised version of Cash Book.

2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like
depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.

3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both
capital and revenue nature.

4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing
balance of the cash and bank (balancing figure) at the end of the accounting period.

5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received
during an accounting period.

Question:5

What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

Solution:

The following steps are taken to prepare Income and Expenditure Account (I&E) from Receipts and Payment
Account (R&P).

Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side
of R&P to the Expenditure side of I&E.

Step 2: All the revenue receipts for the current accounting period are transferred from the Receipts side of R&P to
the Income side of I&E.

Step 3: Expenses outstanding for the current period and expenses paid in advance (prepaid expenses) for the
current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step
1.

Step 4: Income outstanding (accrued income) for the current period and income received in advance for the current
period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.

Step 5: Non-cash items like depreciation, appreciation for the current accounting period are to be adjusted in the
I&E.

Step 6: After adjusting all the revenue items for the current accounting period, the Income and the Expenditure
sides are totaled. If the sum total of the Income side exceeds (or is lesser than) the sum total of the Expenditure
side, then the balancing figure is termed as surplus (or deficit).

Question:6

What is subscription? How is it calculated?

Solution:

Subscription is the main source of income for an NPO besides entrance fees, donations, grants, etc. Subscriptions
refer to the amount of money paid by the members on periodic basis for keeping their membership with the
organisation alive. It is paid monthly, quarterly, half yearly or annually by the members.

It is shown in the debit side of the Receipt and Payment Account with the total amount received during the year that
may be related to the current period and to the previous and next accounting period.

While calculating subscription for the current period, advance subscription received for the current period in the
previous period and outstanding subscription for the current period are added to the subscription received during
the current period. Whereas, on the other hand, advance subscription received for the next accounting period during
the current period and outstanding subscription for the preceding period are deducted from the subscription
received during the current period.

Calculation of Subscription
 Subscription received during the year ***

Add: Subscription received (in advance) during previous year for current ***
year

Add: Subscription outstanding at the end of the year ***

***

Less: Subscription received in advance for the next year ***

Less: Subscription outstanding for the previous year *** ***

## Subscription shown in Income and Expenditure Account ***

## This subscription is related to the current accounting period and is shown in the Income side of the Income and
Expenditure Account.

Question:7

What is Capital Fund? How is it calculated?

Solution:

Capital fund is the excess of NPOs' assets over its liabilities. In other words, the excess of assets over the
liabilities for a profit earning organisation is termed as capital and the same for an NPO is termed as capital fund.
Any surplus or deficit ascertained from Income and Expenditure account is added to (deducted from) the capital
fund. It is also termed as Accumulated Fund.

Calculation of Capital Fund

Capital Fund at the beginning of the year **

Add: Surplus from Income and Expenditure Account **

Add: Subscription Amount (Capitalised amount) **

Add: Life membership fee. ** **

Less: Deficit from Income and Expenditure Account **

Capital Fund at the end of the year ***

Question:8

Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.

Solution:

Receipts and Payments Account is a summary of the Cash Book. This account is prepared by those organisations
which maintain their books on cash basis. All cash receipts are recorded on the Receipts side (i.e. Debit side) and
all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is
prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance
of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the
accounting period. It records all the cash and bank transactions both of capital and revenue nature. It not only
records the cash and bank transactions relating to the current accounting period, but also cash and bank receipts
(or payments) received during the current accounting period that may be related to the previous or next accounting
period. This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing
the cash position of an NPO. It also forms the basis for the preparation of Income and Expenditure Account.

Similarities between Receipt and Payments Account and Cash Book

The following are the features of Receipt and Payment Account that are common to those of Cash Book:

1. Nature: It is a summarised version of the Cash Book. Similar to the Cash Book, the Receipt and Payment
Account is also a Real Account.

2. Nature of Transactions: It records only cash and bank transactions similar to a Two-Column Cash Book.
Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this
account.

3. No distinction between Capital and Revenue items: It records all the cash and bank receipts and payments of
both capital and revenue nature. Likewise, the transactions recorded in the Cash Book are also of both capital and
revenue nature.

4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing
balance of the cash and bank (balancing figure) at the end of the accounting period.

5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received
during an accounting period. Similarly, a Cash Book also helps us to assess the cash position of an organisation.

Thus, on the basis of the above mentioned points and similarities, the statement 'Receipt and Payment Account is
a summarised version of Cash Book' is justified.

Question:9

“Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business
concern”. Explain the statement.

Solution:

Income and Expenditure Account (I&E) is similar to Profit and Loss Account (P&L), in the sense that the former is
prepared by Not-for-profit-Organisations and the latter is prepared by profit earning organisations. Both the accounts
are prepared on the accrual basis.

Similar to the P&L, all the expenses and losses pertaining to the current accounting period are recorded on the
debit side (Expenditure side) and all the gains and income of the current accounting period are recorded on the
credit side (Income side) of the I&E. The balancing figure of the I&E is surplus or deficit and that of the P&L is net
profit or net loss. Both the accounts record only revenue items which are related to the current accounting period.

Similarities between Income and Expenditure Account and Profit and Loss Account

I&E Account of an NPO is akin to the Profit and Loss Account of a profit earning business in the following manners.

1. Nature of Account: Both the concerned accounts are nominal in nature.

2. Basis of Recording: Both the accounts record only revenue expenses and revenue income related to the current
accounting period. The items of capital nature are not ignored while preparing these accounts.

3. Period: Transactions related to current year are recorded in Income and Expenditure account in the same manner
in which profit and loss account is prepared. Transactions related to previous year or next year are excluded.

4. Adjustments: The treatment of adjustments like, outstanding expenses, prepaid expenses, income received in
advance, income due but not received, depreciation, bad debts etc. is same as that in Profit and Loss Account.
Thus, both the accounts are prepared on the accrual basis.

Question:10

Distinguish between Receipts and Payments Account and Income and Expenditure Account.

Solution:
Basis of Difference Receipts and Payments Account Income and Expenditure Account
1. Nature It is a summary of cash and bank It is a summary of current year income and
transactions expenses
2. Revenue and It records transactions related to both It records transactions related to revenue
Capital revenue and capital nature. nature only.
3. Debit Side Debit side of this account records cash Debit side of this account records
and bank receipts during an accounting expenses and losses incurred in the current
period. accounting period.
4. Credit side Credit side of this account records Credit side of this account records income
payments in cash and through cheques. and gains earned in the current accounting
period.
5. Type of account It is a Real Account It is a Nominal Account
6. Period It records receipts and payments made It only records income and expenditure
during the year that may be related to the made during the current accounting period.
current accounting period or the preceding
period and the succeeding accounting
period.
7. Object This account depicts the cash position of This account shows the net result in terms
an NPO. of surplus or deficits due to the business
activities during the year.
8. Opening Balance This account begins with the opening Usually, it has no opening balance but
balance of cash in hand and cash at bank sometimes surplus or deficits forwarded
or overdraft. from the last accounting period (if not added
to the Capital Fund) can be shown as the
opening balance of this account.
9. Closing balance The balancing figure of this account is The balancing figure is expressed in terms
expressed in terms of the closing balance of either surplus (if incomes > expenses) or
of cash in hand and cash at bank or deficit (if expenses > incomes).
overdraft.
10. Depreciation It does not include non-cash items like It includes non-cash items like
depreciation, appreciation, etc. depreciation, bad-debts, provisions, etc. in
order to ascertain the actual net profit or net
loss.
11. Adjustment Receipts and Payments during the year Adjustments regarding both cash and non-
can be adjusted before preparation of the cash transactions can be made.
financial statements.
12. Transfer of The opening balance of this account is If the closing balance of this account is
Balance brought forward from the last year's surplus then it is added to the Capital Fund
Receipts and Payments Account and the in the Balance Sheet. If the closing balance
closing balance of this account is carried is deficit then it is deducted from the
forward to the subsequent year's Receipts Capital Fund in the Balance Sheet.
and Payments Account and is shown in
the Balance Sheet of the current
accounting period.
13. System It is prepared on cash basis. It is prepared on accrual basis.
Question:11

Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.

Solution:

Income and Expenditure Account (I&E) Account is a Nominal Account and is prepared on the accrual basis. It
records all transactions of revenue nature that are related to the current accounting period (whether outstanding or
prepaid) for which the books are maintained. All expenses and losses are recorded on the debit side (Expenditure
side) and all income and gains are recorded on the credit side (Income side) of I&E Account. The closing balance
or the balancing figure of I&E Account is termed as surplus (or deficit), if the sum total of the Income side exceeds
(is lesser than) the sum total of the Expenditure side.

The following are the basic features of Income and Expenditure Account

1. Nature: It is a Nominal Account. The debit side of I&E records all expenses and losses and the credit side
records all incomes and gains related to the current accounting period.

2. Basis: It is prepared on the basis of Receipt and Payment Account (R&P). All the revenues items whether
incomes or expenditures are transferred from R&P.

3. Excludes Capital Transactions: The transactions those are capital in nature are excluded from this account. For
example, only profit or loss on sale of fixed assets is recorded but the total amount of sales is not recorded since
sale of fixed asset is considered as a capital receipt.

4. Akin to Profit and Loss Account: Income and Expenditure Account (I&E) is similar to the Profit and Loss
Account in the sense that while the former is prepared to ascertain surplus or deficit during an accounting period
the latter is prepared to ascertain net profit or net loss incurred during an accounting period.

5. Records only Current Year’s items: This account records only those transactions that are related to current
accounting year. In other words, transactions related to the preceding or succeeding accounting period are
excluded even if these transactions are realised in the current period.

6. Adjustments: Various cash and non-cash items like, outstanding expenses, prepaid expenses, income received
in advance, income due but not received, depreciation, bad debts, etc. can be adjusted in this account.

7. Balancing Figure: The balancing figure of this account is expressed in terms of either surplus (if incomes >
expenses) or deficit (if expenses > incomes). The surplus balance, if any, is added to the Capital Fund, whereas,
the deficit balance, if any, is deducted from the Capital Fund.

Receipts and Payments Account is a summary of the Cash Book. All the cash receipts are recorded on the
Receipts side (i.e. Debit side) and all the cash payments are recorded on the Payments side (i.e. Credit side) of
Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash
Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank
(balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital
and revenue nature. It not only records the cash and bank transactions relating to the current accounting period but
also cash and bank receipts (or payments) received during the current accounting period that may be related to the
previous or next accounting period.

The following are the features of Receipt and Payment Account.

1. Nature: It is a Real Account. It is a summarised version of the Cash Book.

2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like
depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.

3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both
capital and revenue nature.

4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing
balance of the cash and bank (balancing figure) at the end of the accounting period.

5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received
during an accounting period.

Question:12

Show the treatment of the following items by a Not-for-Profit Organisation:

(i) Annual subscription

(ii) Specific donation

(iii) Sale of fixed assets

(iv) Sale of old periodicals

(v) Sale of sports materials

(vi) Life membership fee

Solution:

i) Annual Subscription

a) Subscriptions received during an accounting year (whether related to the current year or previous and
subsequent year) are shown on the debit side of the Receipts and Payments Account.

b) Subscription amount related to the current accounting year only, whether received or yet to be received are
shown on the credit side of the Income and Expenditure Account.

c) Subscriptions received in advance for the subsequent year are shown on the Liabilities side of the Balance
Sheet.

d) Subscriptions due but not received are shown in the Assets side of the Balance Sheet.

ii) Specific donation

a) The amount received for specific donation is shown on the debit side of the Receipts and Payments Accounts.

b) The amount received for specific donation is shown on the Liabilities side of the Balance Sheet as it is used
for the specific purpose for which it is received.

iii) Sale of fixed assets

a) The amount received from the sale of fixed assets are recorded on the debit side of the Receipts and
Payments Account.

b) Profit (or loss) on the sale of fixed assets is credited (or debited) to the Income and Expenditure Account.

c) The book-value of the fixed assets sold is deducted from its respective assets on the Assets side of the
Balance Sheet.

iv) Sale of old periodicals

a) The amount received from the sale of old periodicals are shown on the debit side of the Receipts and
Payments Account.

b) As the sale of old periodicals by any organisation is considered as revenue receipts, so it is shown on the
credit side of the Income and Expenditure Account.

v) Sale of sport Materials

 a) The amount received from the sale of sport materials are debited to the Receipt and Payments Account.

b) As the sale of sport materials by any sport club is considered as revenue income, so it is shown on the credit
side of the Income and Expenditure Account.

vi) Life Membership Fees

a) The amount paid by a person to become a member of an organisation is called life membership fees. As this
is a receipt for an NPO, so it is debited to the Receipt and Payment Account.

b) Life Membership fees is not recurring in nature and received once for a whole life from a member. Thus, as Life
Membership Fees are capital receipts, so these are added to the Capital Fund on the Liabilities side of the
Balance Sheet.

Question:13

Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.

Solution:

There are various sources of receipts like donations, subscriptions, government grants, etc. to an NPO. Some
receipts are specific while others are general. While the former can only be used for the specific purpose for which
they are received, the latter can be used for any purpose. For example, if donation is received for construction of
buildings, then this donation is a specific donation and thereby can only be used for construction of the building.
The specific receipts are not considered as revenue income for the NPO and hence are not shown in the Income
and Expenditure Account. In fact, such receipts are considered as liabilities to the NPO as these amounts are
received for specific purpose and cannot be used for any other purpose. Specific receipts are shown in the
Liabilities side of the Balance Sheet, until and unless they are fully set off against the purpose for which they are
received. On the other hand, if these amounts are invested outside the organisations (in the form of shares,
debentures, etc.), then these are called funds like, match funds, prize fund, etc. The interest and income earned on
such investments are not credited to the Income and Expenditure Account but in fact are credited to the respective
Fund Account. Similarly, the expenses incurred for such funds are not debited to the Income and Expenditure
Account but, in fact, are debited to the respective Fund Account. These special funds are shown in the Liabilities
side of the Balance Sheet. In case, if the related expenses exceed the related receipts of the fund, then the
difference is shown in the income and Expenditure Account.

Treatment

(Tournament/Match/Prize, etc.) Fund Account

Dr. Cr.

Date Particulars L.F. Amount Date Particulars L.F. Amount

Expenses Balance b/d

(expenses incurred
like, match expenses,
tournament expenses)

Incomes

(income or interest
earned on funds
invested in the form of
donation, interests,
dividends, etc.)
 Balanace c/d (a) Income and Expenditure (b)
A/c (see explanation)
(see explanation)

Explanation (a)

If the receipts exceed the expenses for specific purpose then the difference between the two is shown in the
Liabilities side of the Balance Sheet

Balance Sheet

Specific Fund (i.e. Tournament, Tournament Fund Investment

Match, Prize Fund, etc.)

Explanation (b)

If the expenses exceed the receipts for the specific purpose then the difference between the two is shown in the
Expenditure side of the Income and Expenditure Account.

Income and Expenditure A/c

Expenditure Amount Income Amount

Expenses

(i.e. Tournament, Match, Prize

Expenses etc. except capital
expenditure like, i.e. expenses
on construction of building)

Question:14

What is Receipt and Payment Account? How is it different from Income and Expenditure Account?

Solution:

Receipts and Payments Account is a summary of the Cash Book. All the cash receipts are recorded on the
Receipts side (i.e. Debit side) and all the cash payments are recorded on the Payments side (i.e. Credit side) of
Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash
Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank
(balancing figure) at the end of the accounting period. It records all cash and bank transactions both of capital and
revenue nature. It not only records cash and bank transactions relating to the current accounting period, but also
cash and bank receipts (or payments) received during the current accounting period that may be related to the
previous or next accounting period.
Distinguish between Receipts and Payments Account and Income and Expenditure Account

Basis of Difference Receipts and Payments Account Income and Expenditure Account
1. Nature It is a summary of cash and bank It is a summary of current year income and
transactions expenses
2. Revenue and It records transactions related to both It records transactions related to revenue
Capital revenue and capital nature. nature only.
3. Debit Side Debit side of this account records cash Debit side of this account records expenses
and bank receipts during an accounting and losses incurred in the current accounting
period. period.
4. Credit side Credit side of this account records Credit side of this account records income
payments in cash and through cheques. and gains earned in the current accounting
period.
5. Type of account It is a Real Account It is a Nominal Account
6. Period It records receipts and payments made It only records income and expenditure made
during the year that may be related to during the current accounting period.
the current accounting period or the
preceding period and the succeeding
accounting period.
7. Object This account depicts the cash position This account shows the net result in terms of
of an NPO. surplus or deficits due to the business
activities during the year.
8. Opening Balance This account begins with the opening Usually, it has no opening balance, but
balance of cash in hand and cash at sometimes surplus or deficits forwarded from
bank or overdraft. the last accounting period (if not added to the
Capital Fund) can be shown as the opening
balance of this account.
9. Closing balance The balancing figure of this account is The balancing figure is expressed in terms of
expressed in terms of the closing either surplus (if incomes > expenses) or
balance of cash in hand and cash at deficit (if expenses > incomes).
bank or overdraft.
10. Depreciation It does not include non-cash items like It includes non-cash items like depreciation,
depreciation, appreciation, etc. bad-debts, provisions, etc. in order to
ascertain the actual net profit or net loss.
11. Adjustment Receipts and Payments during the year Adjustments regarding both cash and non-
can be adjusted before preparation of cash transactions can be made.
the financial statements.
12. Transfer of The opening balance of this account is If the closing balance of this account is
Balance brought forward from the last year's surplus then it is added to the Capital Fund in
Receipts and Payments Account and the Balance Sheet. If the closing balance is
the closing balance of this account is deficit then it is deducted from the Capital
carried forward to the subsequent year's Fund in the Balance Sheet.
Receipts and Payments Account and is
shown in the Balance Sheet of the
current accounting period.
13. System It is prepared on the cash basis. It is prepared on the accrual basis.

Question:15

From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments
Account.
 Particulars Rs

Opening balance:

Cash in Hand 5,000

Cash at Bank 25,000

Subscriptions 1,65,000

Donations 35,000

Investment Purchased 80,000

Rent Paid 20,000

General Expenses 21,500

Postage and stationery 2,000

Courier charges 1,000

Sundry Expenses 2,500

Closing Cash in Hand 12,000

Solution:

Books of Health Club

Receipt and Payment Account

Dr. Cr.

Amount Amount

Receipts Rs Payments Rs

Balance b/d Investment 80,000

Cash in Hand 5,000 Rent 20,000

Cash at Bank 25,000 30,000 General Expenses 21,500

Subscriptions 1,65,000 Postage and Stationery 2,000

Donations 35,000 Courier Charges 1,000

Sundry Expenses 2,500

 Balance c/d

Cash in Hand 12,000

Cast at Bank 91,000 1,03,000

(Balancing figure)

2,30,000 2,30,000

Question:16

The Receipt and Payment Account of Harimohan charitable institution is given:

Receipt and Payment Account for the year ending March 31, 2015

Amount Amount
Receipts Payments
Rs Rs

Balance b/d: Furniture 3,000

Cash at Bank 22,000 Investments 55,000

Cash in Hand 8,800 Advance for building 20,000

Donations 32,000 Charities 60,000

Subscriptions 50,200 Salaries 10,400

Endowment Fund 60,000 Rent and Taxes 4,000

Legacies 24,000 Printing 1,000

Interest on Investment 3,800 Postage 300

Interest on Deposits 800 Advertisements 1,100

Sale of old newspapers 500 Insurance 4,800

Balance c/d:

Cash at Bank 32,000

 Cash in Hand 10,500

2,02,100 2,02,100

Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after considering the following:

(i) It was decided to treat Fifty per cent of the amount received on account of Legacies and
Donations as income.

(ii) Liabilities to be provided for are:

Rent Rs 800; Salaries Rs 1,200; advertisement Rs 200.

(iii) Rs 2,000 due for interest on investment was not actually received.

Solution:

Books of Harimohan Charitable Institution

Income and Expenditure Account

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Rent and Taxes Donations 16,000

4,000

Add: Outstanding 800 4,800 Legacies 12,000

Subscriptions 50,200

Salaries 10,400 Interest on Investment 3,800

Add: Outstanding 1,200 11,600 Add: Accrued Interest 2,000 5,800

Advertisement 1,100 Interest on Deposits 800

Add: Outstanding 200 1,300 Sale of Old Newspapers 500

Charities 60,000

Printing 1,000
 Postage 300

Insurance 4,800

Surplus (Excess of Income 1,500

over Expenditure)

85,300 85,300

Question:17

From the following particulars, prepare Income and Expenditure account:

Amount
Details
Rs

Fees collected, including Rs 80,000 on account of the previous year 5,20,000

Fees for the year outstanding 30,000

Salary paid, including Rs 5,000 on account of the previous year 68,000

Salary outstanding at the end of the year 3,000

Entertainment expenses 8,000

Tournament expenses 25,000

Meeting Expenses 18,000

Traveling Expenses 7,000

Purchase of Books and Periodicals, including Rs 31,000 for purchase 40,000

of Books

Rent 15,000

Postage, telegrams and telephones 6,000

Printing and Stationery 18,000

Donations received 25,000

Solution:

Income and Expenditure Account

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Salaries 68,000 Fees Collected 5,20,000

Less: Previous year's Less: Previous year's

(5,000) (80,000)
Outstanding Outstanding

63,000 4,40,000

Add: Current year's Add: Current year's

30,000 4,70,000
Outstanding 3,000 66,000 Outstanding

Entertainment Expenses 8,000 Donations 25,000

Tournament Expenses 25,000

Meeting Expenses 18,000

Traveling Expenses 7,000

Purchases of Periodicals (40,000 –

31,000) 9,000

Postage, Telegrams and Telephone’s 6,000

Rent 15.000

Printing and Stationery 18,000

Surplus (Excess of Income over 3,23,000

Expenditure)

4,95,000 4,95,000

NOTE: As per the solution, Excess of Income over Expenditure is Rs 3,23,000; however, as per the book, it is Rs
3,07,000.
Question:18

Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and
Expenditure Account and the Balance Sheet of the Club:

Particulars Rs

Sports Fund as on 1.4.2015 35,000

Sports Fund Investments 35,000

Interest on Sports Fund 4,000

Donations for Sports Fund 15,000

Sports Prizes awarded 10,000

Expenses on Sports Events 4,000

General Fund 80,000

General Fund Investments 80,000

Interest on General Fund Investments 8,000

Solution:

Books of Sports Club

Income and Expenditure Account

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Interest on General Fund 8,000

Investments

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Sports Fund 35,000 Sports Fund Investments 35,000

 Add: Interest on Sports Fund 4,000 General Fund Investments 80,000

Add: Donations for Sports

Fund 15,000

54,000

Less: Expenses on Sports

Event (4,000)

Less: Prize Awarded (10,000) 40,000

General Fund 80,000

Question:19

How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and
expenditure account for the year ending 31.3.2017 and its Balance Sheet as on 31.3.2017:

Rs

(a) Donation received during the year for the construction of a permanent 12,25,000
Pavilion

Expenditure incurred up to 31.3.2017 on its construction 10,80,000

The total estimated expenditure on construction of Pavilion being 25,00,000

(b) Tournament Fund:

Balance as on 1.4.2016 10,700

Subscriptions for tournament received during the year 65,800

Expenditure incurred during the year on conducting tournaments 72,400

(c) Life Membership fee received during the year 28,000

Give reasons for your answers

Solution:

(a)
 Books of Bombay Women Cricket Club

Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Donation for Pavilion 12,25,000 Construction of Pavilion in Progress 10,80,000

Less: Exp. on construction of (10,80,000) 1,45,000

Pavilion

Capital

Add: Pavilion Construction 10,80,000 10,80,000

Reason

Donation for construction of Pavilion is a donation for specific purpose.

Expenses on construction on Pavilion is a capital expenditure.

(b)

Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Tournament Fund 10,700

Add: Subscription for Tournament 65,800

76,500

Less: Tournament Expenses (72,400) 4,100

Reason

All funds received are treated as capital receipts and expenses related to any fund are deduced from the concerned
funds.

(c)
 Balance Sheet

as on March 31, 2017

Amount Amount

Liabilities Rs Assets Rs

Life Membership Fees 28,000

Reason

Life Membership Fees are considered as capital receipts and are shown on the Liabilities side of the Balance
Sheet, if nothing is specified about its treatment. But if it is to be treated as revenue item, then it is shown on the
credit side of the Income and Expenditure Account.

Question:20

From the following receipts and payments and information given below, Prepare Income and Expenditure Account
and opening Balance Sheet of Adult Literacy Organisation as on December 31, 2017.

Receipt and Payment Account for the year ending

as on December 31, 2017

Amount Amount
Receipts Payments
Rs Rs

Balance b/d General Expenses 3,200

Cash in hand 4,000 News paper 1,850

Cash at Bank 15,550 Electricity 3,000

Subscriptions Fixed deposit with bank 18,000

(on 31.06.2017) @ 10% p.a.

2016 1,200

2017 26,500 Books 7,000

2018 500 28,200 Salary 3,600

Sale of old newspapers 1,250 Rent 6,500

Govt. grant 12,000 Postage charges 300

Sale of old furniture (book value Rs 5, 3,700 Furniture (purchased) 10,500

000)
 Interest received on FD 450 Balance c/d

Cash in Hand 3,000

Cash at Bank 8,200

65,150 65,150

Information:

(i) Subscription outstanding as on 31.12.2016 Rs 2,000 and on December 31, 2017 Rs 1,500.

(ii) On December 31, 2017 Salary outstanding Rs 600, and one month Rent paid in advance.

(iii) On Jan. 01, 2016 organisation owned Furniture Rs 12,000, Books Rs 5,000.

Solution:

Books of Adult Literacy Organisation

Income and Expenditure Account

as on Dec. 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

1,300 Subscription 26,500

Loss on Sale of Old Furniture

General Expenses 3,200 Add: Outstanding for 2017 1,500 28,000

Newspapers 1,850

Electricity 3,000 Sale of Old Newspapers 1,250

Salary 3,600 Government Grant 12,000

450
Add: Outstanding for 2017 600 4,200 Interest received on F.D.

Add: Accrued Interest 450 900

Rent 6,500

Less: Prepaid for 2018

{6,500×(1/13)} (500) 6,000

Postages Charges 300

Surplus (Excess of Income over 22,300
Expenditure)

42,150 42,150

Balance Sheet

as on Dec. 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Capital Fund on Dec. 31, 2016 (Balancing 38,550 Subscription Outstanding 2,000
Figure)

Cash in Hand 4,000

Cash at Bank 15,550

Furniture 12,000

Books 5,000

38,550 38,550

Balance Sheet

as on Dec. 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Capital 38,550 Prepaid Rent 500

Add: Surplus 22,300 60,850 Books

5,000

Add: Purchases 12,000

7,000

Salary Outstanding 600

 Subscription Received in Advance for
2018
500 Furniture 12,000

Add: Purchases
10,500

22,500

Less: Sale 17,500

(5,000)

Fixed Deposit
18,000

Add: Accrued Interest 18,450

450

Cash in Hand 3,000

Cash at Bank 8,200

Subscription Outstanding for

2017
1,500

Add: Outstanding for 2016 2,300

800

61,950 61,950

Question:21

The following is the account of cash transactions of the Nari Kalayan Samittee for the year ended December 31,
2017:

Amount Amount
Receipts Payments
Rs Rs

Balance from last year 2,270 Rent 6,600

Subscriptions 32,500 Electric charges 3,200

Life membership fee 3,250 Lecturer’s fee 730

 Donation 2,500 Office expenses 1,480

Profit from entertainment 7,250 Printing and Stationery 1,050

Sale of old Books (books value Rs 1,000) 750 Legal fee 1,870

Interest 350 Books 6,500

Furniture purchased 8,600

Expenses on nukar drama 1,300

Cash in hand 8,040

Cash at bank 9,500

48,870 48,870

You are required to prepare an Income and Expenditure Account after the following adjustments:

(a) Subscription still to be received are Rs 750, but subscription include Rs 500 for the year 2018.

(b) In the beginning of the year the Sangh owned building Rs 20,000 and furniture Rs 3,000 and Books Rs 2,000.

(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.

Solution:

Books of Nari Kalyan Samittee

Income and Expenditure Account

as on Dec. 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Rent 6,600 Subscription

32,500

Add: Outstanding for

Electric Charges 3,200 2017
750

Lecturer’s fee 730

33,250

Office Expenses 1,480 Less: Advance for 2018 32,750

(500)

Printing and Stationery 1,050 Donation 2,500

Legal Fee 1,870 Profit from Entertainment 7,250

Depreciation on: Interest 350

Books 750

Furniture 580

Building 1,000 2,330

Expenses on Nukar Drama 1,300

Loss on Sale of Books 250

Surplus 24,040

42,850 42,850

Balance Sheet

as on Dec. 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Capital Fund as Dec. 31, 2016 27,270 Building 20,000

(Balancing Figure) Furniture 3,000

Books 2,000

Cash and Bank 2,270

27,270 27,270

Balance Sheet

as on Dec. 31, 2017

 Amount Amount
Liabilities Assets
Rs Rs

Capital Fund 27,270 Building 20,000

Add: Life Membership Fees 3,250 Less: 5% Depreciation (1,000) 19,000

Add: Surplus 54,560

24,040

Furniture 3,000

Advance Subscription for 2018 500 Add: Purchases 8,600

11,600

Less: 5% Depreciation 580 11,020

Books 2,000

Add: Purchases 6,500

8,500

Less: Sales 1,000

7,500

Less: 5% Depreciation 750 6,750

Cash in Hand 8,040

Cash at Bank 9,500

Subscription Outstanding 750

55,060 55,060

Question:22

Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account,
Balance Sheet as on December 31, 2017:

Receipt and Payment Account

for the year ending December 31, 2017

Amount Amount
Receipts Payments
Rs Rs

Balance b/d 7,890 Salary 11,000

Subscriptions 52,000 Electric charges 5,500

Life member ship fee 2,200 Billiard Table 17,500

Entrance fee 3,200 Office expenses 4,100

Tournament fund 26,000 Printing and Stationery 2,300

Locker Rent 1,250 Tournament expenses 18,500

Sale of old sports goods (Costing Rs 2,500 Repair of ground 2,000

2,200)

Sale of Old Newspaper 750 Furniture purchased 7,700

Legacy 37,500 Sports equipments 12,000

Cash in Hand 12,690

Cash at Bank 10,000

Fixed Deposit (on 1.10.17 for 10% 30,000

p.a)

1,33,290 1,33,290

Other Information:

Subscription outstanding was on December 31, 2016 Rs 1,200 and Rs 3,200 on December 31, 2017. Locker rent
outstanding on December 31, 2017 Rs 250. Salary outstanding on December 31, 2017 Rs 1,000.

On January 1, 2017, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation
charged on these items @ 10% (including Purchase).

Solution:
 Indian Sports Club

Income and Expenditure Account

as on Dec. 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Salary 11,000 Subscriptions

52,000

Add: Outstanding for

Add: Outstanding for 2017 1,000 12,000 2017 3,200

Electric Charges 5,500

55,200

Less: Outstanding for

Office Expenses 4,100 2016 54,000
(1,200)

Printing and Stationery 2,300

Repair of Ground 2,000 Locker Rent

1,250

Add: Outstanding for

Depreciation on: 2017 1,500
250

Furniture 1,970

Building 3,600 Entrance Fees 3,200

Sports Equipments 2,730 8,300 Profit on Sale of Sports

Surplus 26,300 Equipments (Rs 2,500 – Rs 2,200) 300

Sale of Old Newspapers 750

Accrued Interest 750

60,500 60,500

Balance Sheet

as on January 01, 2016

 Amount Amount
Liabilities Assets
Rs Rs

Capital Fund (Balancing Figure) 74,590 Subscription Outstanding 1,200

Building 36,000

Furniture 12,000

Sports Equipments 17,500

Cash and Bank 7,890

74,590 74,590

Balance Sheet

as on Dec. 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Salary Outstanding 1,000 Subscripting Outstanding 3,200

Tournament Fund 26,000 Locker Rent Outstanding 250

Less: Tournament Expenses 18,500 7,500 Building 36,000

Less: 10% Depreciation (3,600) 32,400

Capital fund 74,590

Add: Life Membership Fee 2,200 Furniture 12,000

Add: Legacy 37,500 Add: Purchases 7,700

Add: Surplus 26,300 1,40,590 19,700

Less: 10% Depreciation (1,970) 17,730

Sports Equipments 17,500

Add: Purchases 12,000

 29,500

Less: Sales (2,200)

27,300

Less: 10% Depreciation (2,730) 24,570

Billiard Table 17,500

Cash in hand 12,690

Cash at Bank 10,000

Fixed Deposit 30,000

Add: Accrued Interest 750 30,750

1,49,090 1,49,090

Question:23

From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account
and Balance Sheet for the year ending March 31, 2017.

Receipt and Payment Account

for the year ending March 31, 2017

Receipts Amount Payments Amount

Rs Rs

Cash in hand as on 1.4.16 6,800 Salaries 24,000

Subscription 60,200 Traveling Expenses 6,000

Donation 3,000 Stationery 2,300

Sale of furniture (Book value Rs 4,000 Rent 16,000

6000)
 Entrance fee 800 Repair 700

Life membership fee 7,000 Books purchased 6,000

Interest on investment (@ 5% for full 5,000 Building purchased 30,000

year)

Cash in hand as 31.3.2017 1,800

86,800 86,800

Additional Information:

As on As on

1.04.2016 31.03.2017

(i) Subscription received in advance 1,000 3,200

(ii) Outstanding subscription 2,000 3,700

(iii) Stock of stationery 1,200 800

(iv) Books 13,500 16,500

(v) Furniture 16,000 8,000

(vi) Outstanding rent 1,000 2,000

Solution:

Books of Jan Kalyan Club

Income and Expenditure Account

as on 31 March 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Loss on Sale of Furniture (Rs 6,000 – Rs

4,000) 2,000 Subscription 60,200
 Less: Outstanding for
2016
Salaries 24,000 (2,000)

Traveling Expenses 6,000 58,200

Add: Outstanding for

Stationery 2,300 2017 3,700

Add: Opening Stock 1,200 61,900

3,500 Add: Advance in 2016 1,000

Less: Closing Stock (800) 2,700 62,900

Less: Advance in 2017 (3,200) 59,700

Repairs 700

Rent 16,000 Donation 3,000

Less: Outstanding for 2016 (1,000) Entrance Fees 800

15,000 Interest on Investments 5,000

Add: Outstanding for 2017 2,000 17,000

Depreciation on Books 3,000

Depreciation on Furniture 2,000

Surplus 11,100

68,500 68,500

Balance Sheet

as on April 01, 2016

Amount Amount
Liabilities Assets
Rs Rs

Advance Subscription 1,000 Cash in Hand 6,800

Outstanding Rent 1,000 Investment {5,000 × (100/5)} 1,00,000

Capital Fund (Balancing figure) 1,37,500 Subscription Outstanding 2,000

Stock of Stationery 1,200

Books 13,500

Furniture 16,000

1,39,500 1,39,500

Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Advance Subscription 3,200 Subscription Outstanding 3,700

Outstanding Rent 2,000 Stock of Stationery 800

Capital Fund 1,37,500 Investments 1,00,000

Add: Life Membership Fees 7,000

Add: Surplus 11,100 1,55,600 Books 13,500

Add: Purchases 6,000

19,500

Less: Depreciation (3,000) 16,500

Building 30,000

Cash in Hand 1,800

Furniture 16,000

Less: Sales 6,000

10,000
 Less: Depreciation (2,000) 8,000

1,60,800 1,60,800

Question:24

Receipt and Payment Account of Shankar Sports club is given below, for the year ended March 31, 2017

Receipt and Payment Account

for the year ending March 31, 2017

Amount Amount
Receipts Payments
Rs Rs

Opening Cash in hand 2,600 Rent 18,000

Entrance fees 3,200 Wages 7,000

Donation for building 23,000 Billiard table 14,000

Locker rent 1,200 Furniture 10,000

Life membership fee 7,000 Interest 2,000

Profit from entertainment 3,000 Postage 1,000

Subscription 40,000 Salary 24,000

Cash in hand 4,000

80,000 80,000

Prepare Income and Expenditure Account and Balance Sheet with help of following Information:

Subscription outstanding on March 31, 2016 is Rs 1, 200 and Rs 2,300 on March 31, 2017, opening stock of
postage stamps is Rs 300 and closing stock is Rs 200, Rent Rs 1,500 related to 2015 and Rs 1,500 is still unpaid.

On April 01, 2016 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500

On March 31, 2017. The club took a loan of Rs 20,000 (@ 10% p.a.) in 2017.

Solution:
 Books of Shankar Sports Club

Income and Expenditure Account

as on 31 Dec. 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Rent 18,000 Entrance Fees 3,200

Add: Outstanding for 2017 1,500 Locker Rent 1,200

19,500 Profit from Entertainment 3,000

Less: Outstanding for 2016 (1,500) 18,000

Subscription 40,000

Less: Outstanding for

Wages 7,000 2016 (1,200)

Depreciation on Furniture 2,500 38,800

Add: Outstanding for

Interest 2,000 2017 2,300 41,100

Postage 1,000 Deficit (Balancing Figure) 6,100

Add: Opening Stock 300

1,300

Less: Closing Stock (200) 1,100

Salaries 24,000

54,600 54,600

Balance Sheet

as on December 31, 2016

 Amount Amount
Liabilities Assets
Rs Rs

Rent Outstanding 1,500 Cash in Hand 2,600

10% Loan 20,000 Subscription Outstanding 1,200

Furniture 15,000

Stock of Postage Stamps 300

Capital fund Deficit (Balancing 2,400

figure)

21,500 21,500

Balance Sheet

as on December 31, 2017

Amount Amount
Expenditure Income
Rs Rs

Rent Outstanding 1,500 Subscription Outstanding 2,300

10% Loan 20,000 Stock of Postage Stamps 200

Donation for Building 23,000 Billiard Table 14,000

Capital Fund (2,400) Furniture 15,000

Add: Life Membership Fee 7,000 Add: Purchases 10,000

Less: Deficit (6,100) 25,000

Less: Depreciation (2,500) 22,500

Cash in Hand 4,000

* Capital Fund (Deficit) 1500

44,500 44,500
* NOTE 1:

Capital Fund (2,400)

Add:Life Membership Fees 7,000

Less:Deficit (6,100)

Net Deficit (1,500)

Question:25

Prepare Income and Expenditure Account and Balance Sheet for the year ended December 31, 2016 from the
following Receipt and Payment Account and Balance Sheet of culture club:

Receipt and Payment Account

for the year ending March 31, 2016

Amount Amount
Receipts Payments
Rs Rs

Opening cash balance 12,000 Furniture 4,000

Subscription Telephone expenses 800

2014-2015 2,000 Salary

2015-2016 22,000 24,000 2014-2015 1,000

Entrance fees 2,800 2015-2016 4,000

Locker rent 1,000 Newspapers 700

Life membership fee 1,200 Sundry expenses 1,000

Government grant 11,000 Defence bonds 18,000

Land 20,000

Closing cash balance 2,500

52,000 52,000
 Balance Sheet

for the year ending March 31, 2015

Amount Amount
Liabilities Assets
Rs Rs

Advance locker rent 200 Cash in hand 12,000

Subscription Received in Advance 1,000 Outstanding Expenses 3,000

Outstanding salary 2,000 Building 35,000

Loan 10,000

Capital fund 36,800

50,000 50,000

Solution:

Books of Culture Club

Income and Expenditure Account

as on March 31, 2016

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Telephone Expenses 800 Subscription 22,000

Add: Advance Received in

Salary 4,000 2015 1,000 23,000

Newspapers 700

Sundry Expenses 1,000 Entrance Fees 2,800

Locker Rent 1,000

Add: Advance Received in

Surplus (Balancing figure) 31,500 2015 200 1,200
 Government Grants 11,000

38,000 38,000

Balance Sheet

as on March 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Subscription Still Outstanding for

Capital Fund 36,800 2015 1,000

Add: Life Membership Fees 1,200 (Rs 3,000 – Rs 2,000)

Add: Surplus 31,500 69,500 Furniture 4,000

Defence Bonds 18,000

Salary Still Outstanding for 2015 1,000 Land 20,000

Loan 10,000 Building 35,000

Cash in Hand 2,500

80,500 80,500

Question:26

From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March
31, 2017.

Receipt and Payment Accounts

for the year ending March 31, 2017

Amount Amount
Receipts Payments
Rs Rs
 Balance b/d 15,000 Furniture 18,000

Sale of Old furniture (costing Rs 4,000 Library books 10,000

6,000)

Subscriptions: Salaries 72,000

2015–16 18,000 General expenses 18,000

2016–17 60,000 Electric charges 12,000

2017–18 12,000 90,000 Newspapers 33,800

Sale of old newspapers 10,800 Postage 3,000

Profit from entertainment 44,000 Stationery 40,000

Rent 84,000 Audit fee 8,000

Balance c/d 33,000

2,47,800 2,47,800

Balance Sheet

as on March 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Outstanding Salary 6,000 Cash 15,000

Capital Fund 6,94,000 Outstanding subscription 18,000

Library Books 30,000

Furniture 37,000

Land and Building 6,00,000

7,00,000 7,00,000

Additional Information:
1. The Club had 500 members each paying an annual subscription of Rs 150.

2. On 31.3.2016 salaries outstanding amounted to Rs 1,200 and salaries paid included Rs

6,000 for the year 2015–16.

3. Provide 5% depreciation on Land and Building.

Solution:

Books of Unity Club

Income and Expenditure Account

as on March 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Loss on Sale of Old Furniture (4,000 –

6,000) 2,000 Subscription

500 members at Rs 150 each 75,000

Salaries 72,000 Sale of Old Newspapers 10,800

Add: Outstanding for 2015–

16 1,200 Profit from Entertainment 44,000

73,200 Rent 84,000

Less: Outstanding for 2016–

17 (6,000) 67,200

General Expenses 18,000 Deficit (Balancing figure) 200

Electric Charges 12,000

Newspapers 33,800

Postage 3,000

Stationery 40,000

Audit Fees 8,000

Depreciation on Land and Building 30,000

2,14,000 2,14,000
 Balance Sheet

as on 31 March 2017

Amount Amount
Liabilities Assets
Rs Rs

Advance Subscription (for 2017–18) 12,000 Subscription Outstanding 15,000

Salaries Outstanding 1,200 Furniture

37,000

Capital Fund 6,94,000 Add: Purchases

18,000

Less: Deficit (200) 6,93,800

55,000

Less: Sales 49,000

(6,000)

Library Books
30,000

Add: Purchases 40,000

10,000

Land and Building

6,00,000

Less: 5% Depreciation 5,70,000

(30,000)

Cash and Bank 33,000

7,07,000 7,07,000

Question:27

Following is the information in respect of certain items of a Sports Club. You are required to show them in the
Income and Expenditure Account and the Balance Sheet.
 Amount
Details
Rs

Sports Fund as on April 1, 2016 80,000

Sports Fund Investments 80,000

Interest on Sports Fund Investments 8,000

Donations for Sports Fund 30,000

Sports Prizes awarded 16,000

Expenses on Sports Events 7,000

General Fund 2,00,000

General Fund Investments 2,00,000

Interest on General Fund Investments 20,000

Solution:

Income and Expenditure Account

as on March 31, 2016

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Interest on General Fund Investments 20,000

Balance Sheet

as on March 31, 2016

Amount Amount
Liabilities Assets
Rs Rs
 Sports Fund 80,000 Sports Fund Investments 80,000

Add: Interest on Sports

Fund General Fund Investments 2,00,000

Investments 8,000

Add: Donation for Sports

Fund 30,000

1,18,000

Less: Sports Prizes

Awarded (16,000)

Less: Expenses on Sports

Events (7,000) 95,000

General Fund 2,00,000

Question:28

Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of
subscriptions for the year ended on March 31, 2017.

The additional information was as under:

1. Subscription Outstanding as on March 31, 2016 were Rs 6,500,

2. Subscription received in advance as on March 31, 2016 were Rs 4,100,

3. Subscription Outstanding as on March 31, 2017 were Rs 5,400,

4. Subscription received in advance as on March 31, 2017 were Rs 2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of
Maitrey Sports Club.

Solution:

Books of Maitrey Sports Club

Income and Expenditure Account

as on March 31, 2017

Dr. Cr.
 Amount Amount
Expenditure Income
Rs Rs

Subscription 68,500

Less: O/s on Mar. 31, 2016 (6,500)

62,000

Add: Advance on Mar. 31,

2016 4,100

Add: O/s on Mar. 31, 2017 5,400

71,500

Less: Advance on Mar. 31,

2017 (2,500) 69,000

Balance Sheet

as on March 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Subscription in Advance 4,100 Subscription Outstanding 6,500

Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Subscription in Advance 2,500 Subscription Outstanding 5,400

Question:29

Following is the Receipt and Payment account of Rohatgi Trust :

Receipt and Payment Account

for the year ending December 31, 2017

Amount Amount
Receipts Payments
Rs Rs

Cash in hand 14,000 Rent 6,000

Cash at Bank 60,000 Salary 12,000

Subscriptions: Postage 300

2016 5,000 Electricity charges 6,000

2017 83,000 Purchase of furniture 20,000

2018 3,000 91,000 Books 3,000

Sale of Investment 90,000 Defence Bonds 1,50,000

Interest on investment 2,000 Help to needy students 22,000

Sale of furniture (book value Rs 3,200 Cash in hand 10,900

3,000)
Cash at bank 30,000

2,60,200 2,60,200

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that
date after the following adjustments: Subscription for 2017, still owing were Rs 7,000. Interest due on defence
bonds was Rs7,000, Rent still owing was Rs 1,000. The Book value of investment sold was Rs 80,000, Rs 30,000
of the investment were still in hand. Subscription received in 2017 included Rs 400 from a life member. The total
furniture on January 1, 2017 was worth Rs 12,000. Salary paid for the year 2018 is Rs 2,000.

Solution:

Books of Rohatgi Trust

Income and Expenditure Account

as on December 31, 2017

Dr. Cr.
 Amount Amount
Expenditure Income
Rs Rs

Rent 6,000 Subscription 83,000

Add: Outstanding 1,000 7,000 Add: Outstanding for 2017 7,000

90,000

Less: Life Membership

Salary 12,000 Fees (400) 89,600

Less: Advance for 2018 (2,000) 10,000

Interest Accrued on Defence Bonds 7,000

Profit on Sale of Investment

Postage 300 (Rs 90,000 – Rs 80,000) 10,000

Profit on Sale of Furniture

Electricity Charges 6,000 (Rs 3,200 – Rs 3,000) 200

Help to Needy Students 22,000 Interest on Investments 2,000

Surplus (Balancing Figure) 63,500

1,08,800 1,08,800

Balance Sheet

as on December 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Capital fund (Balancing Figure) 2,01,000 Subscription Outstanding 5,000

Investment (Rs 80,000 + Rs

30,000) 1,10,000

Furniture 12,000

Cash in hand 14,000

Cash at bank 60,000

 2,01,000 2,01,000

Balance Sheet

as on December 31, 2017

Amount Amount
Expenditure Income
Rs Rs

Advance Subscription 3,000 Subscription Outstanding 7,000

Rent Outstanding 1,000 Defence Bonds 1,50,000

Add: Accrued Interest

Capital Fund on Defence Bonds 7,000 1,57,000
2,01,000

Add: Surplus
63,500

Add: Life Membership

Fees 2,64,900 Investment 30,000
400

Advance Salaries 2,000

Furniture
12,000

Add: Purchases
20,000

32,000

Less: Sales 29,000

(3,000)

Books 3,000

Cash in Hand 10,900

Cash at Bank 30,000

2,68,900 2,68,900

Question:30

Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year
Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year
ending December 31, 2017

Receipt and Payment Account

for the year ending December 31, 2017

Amount Amount
Receipts Payments
Rs Rs

Balance b/d Charity 11,500

Cash in hand 11,500 Rent and taxes 3,200

Cash at bank 12,600 Salary 6,000

Donation 9,000 Printing 600

Subscription 42,800 Postage 300

Legacies 18,000 Advertisements 4,500

Interest on investment 4,500 Insurances 2,000

Sale of old newspapers 200 Furniture 21,600

Investment 23,000

Balance c/d:

Cash in hand 9,900

Cash at bank 16,000

98,600 98,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that
date after the following adjustments:

(a) It was decided to treat one-third of the amount received on account of donation as
income.

(b) Insurance premium was paid in advance for three months.

(c) Interest on investment Rs1,100 accrued was not received.

(d) Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on
December 31, 2017.
Solution:

Books of Delhi Charitable Trust

Income and Expenditure Account

as on December 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Insurance 2,000 Donation {9,000 × (1/3)} 3,000

Less: Prepaid {2,000 × (3/15)} (400) Interest on Investments 4,500

1,600

Add: Accrued Interest 1,100

5,600

Charity
11,500

Rent and Taxes 3,200 Subscription

42,800

Add: Outstanding 600 Sale of Old Newspapers

3,800 200

Salary 6,000

Add: Outstanding 900

6,900

Printing
600

Postage
300

Advertisements 4,500

Add: Outstanding 1,000

5,500

Surplus (Balancing figure)

21,400

51,600 51,600

Balance Sheet

as on December 31, 2016

 Amount Amount
Liabilities Assets
Rs Rs

Capital Fund (Balancing figure) 24,100 Cash in Hand 11,500

Cash at Bank 12,600

24,100 24,100

Balance Sheet

as on December 31, 2017

Amount Amount

Liabilities Rs Assets Rs

Capital Fund 24,100 Prepaid Insurance {2,000 × (3/15)} 400

Add: Donation {9,000 × (2/3) 6,000 Investment 23,000

Add: Legacies 18,000 Add: Accrued Interest 1,100 24,100

Add: Surplus 21,400 69,500 Furniture 21,600

Rent Outstanding 600 Cash in Hand 9,900

Salary Outstanding 900 Cash at Bank 16,000

Advertisement Expenses
Outstanding 1,000

72,000 72,000

Question:31

From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year
ended March 31, 2017 and the Balance Sheet as on that date.

Receipt and Payment Account

for the year ending March 31, 2017

 Amount Amount
Receipts Payments
Rs Rs

Balance b/d 3,500 General expenses 900

Subscription: Salary 16,000

2015-16 2,000 Postage 1,300

2016-17 70,000 Electricity charges 7,800

2017-18 3,000 75,000 Furniture 26,500

Sale of old Books 2,000 Books 13,000

(Costing Rs 3,200) Newspapers 600

Rent from use of hall 17,000 Meeting expenses 7,200

Sale of newspapers 400 T.V. set 16,000

Profit from entertainment 7,300 Balance c/d 15,900

1,05,200 1,05,200

Additional Information:

(a) The club has 100 members each paying an annual subscription of Rs 900. Subscriptions
outstanding on March 31, 2016 were Rs 3,600.

(b) On March 31, 2017, salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000
for the year 2012.

(c) On April 1, 2017 the club owned land and building Rs 25,000, furniture Rs 2,600 and books Rs
6,200.

Solution:

Income and Expenditure Account

as on December 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs
General Expenses 900 Subscription 70,000

Salary 16,000 Add: Outstanding for 2017 20,000 90,000

Add: Outstanding for 2017 1,000 (100 members at Rs 900 each)

17,000 Rent from use of hall 17,000

Less: Outstanding for 2016 (1,000) 16,000 Sale of Old News Papers 400

Profit from Entertainment 7,300

Loss on Sale of Old Books 1,200

Electricity Charges 7,800

Newspapers 600

Meeting Expenses 7,200

Postage 1,300

Surplus (Balancing figure) 79,700

1,14,700 1,14,700

Balance Sheet as on March 31, 2016

Amount Amount

Liabilities Rs Assets Rs

Salary Outstanding 1,000 Subscription Outstanding 3,600

Capital Fund (Balancing figure) 39,900 Furniture 2,600

Books 6,200

Cash and Bank 3,500

Building 25,000

40,900 40,900
 Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Advance Subscription Subscription Outstanding

3,000

Salary Outstanding 2017 20,000

1,000

Add: 2016 (Still

Outstanding) 1,600 21,600

Capital Fund 39,900 Building 25,000

Add: Surplus 79,700 Furniture 2,600

1,19,600

Add: Purchases 26,500 29,100

Books 6,200

Add: Purchases 13,000

19,200

Less: Sales 3,200 16,000

T.V. Set 16,000

Cash and Bank 15,900

1,23,600
1,23,600

Question:32

Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:

Receipt and Payment Account

for the year ending December 31, 2017

 Amount Amount
Receipts Payments
Rs Rs

Balance b/d 7,250 Salary 12,500

Subscriptions 81,750 Stationery 1,700

Donations 3,000 Electricity charges 9,550

Grant from Government 15,000 Insurance 7,500

Sale of newspapers 300 Equipments 30,000

Proceeds of charity show 16,500 Petty expenses 500

Interest on investments @ 10% for 7,000 Expenses on charity show 12,900

full year

Sundries income 400 Newspapers 1,000

Lectures fee 16,500

Honorarium to Secretary 12,000

Balance c/d 27,050

1,31,200 1,31,200

Additional Information:

01.01.2017 31.12.2017

Rs Rs

Outstanding salaries 1,200 1,800

Insurance prepaid 700 300

Subscription outstanding 3,750 2,500

Subscription received in advanced 1,750 1,000

Electricity charges outstanding — 1,250

Stock of stationery 2,250 700

Equipments 25,600 50,200

 Building 1,20,000 1,14,000

Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on that
date.

Solution:

Books of Women Welfare Club

Income and Expenditure Account

as on December 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Salary 12,500 Subscriptions 81,750

Add: O/s on Dec. 31, 2017 1,800 Add: O/s on Dec. 31, 2017 2,500

14,300 84,250

Less: O/s on Dec. 31,

Less: O/s on Dec. 31, 2016 (1,200) 13,100 2016 (3,750)

80,500

Add: Advance on Dec. 31,

Stationery 1,700 2016 1,750

Add: Opening Stock 2,250 82,250

Less: Advance on Dec.31,

3,950 2017 (1,000)
81,250

Less: Closing Stock (700) 3,250

Donations
3,000

Electric Charges 9,550 Grant from Government

15,000

Add: O/s on Dec. 31, 2017 1,250 10,800 Sale of Newspapers

300

Profit from Charity show (16,500–

12,900)
3,600

Insurance 7,500 Interest on Investments

7,000

Add: Prepaid in 2016 700 Sundries Income

400

8,200
 Less: Prepaid in 2017 (300) 7,900

Depreciation on Equipments 5,400

Petty Expenses 500

Newspapers 1,000

Lectures Fee 16,500

Honorarium to Secretary 12,000

Depreciation on Building 6,000

Surplus (Balancing Figure) 34,100

1,10,550 1,10,550

Balance Sheet

as on December 31, 2016

Amount Amount
Liabilities Assets
Rs Rs

Outstanding Salaries 1,200 Insurance Prepaid 700

Subscription in Advance 1,750 Subscription Outstanding 3,750

Stock of Stationery 2,250

Capital Fund (Balancing Figure) 2,26,600 Equipments 25,600

Building 1,20,000

Cash and Bank 7,250

Investments {7,000 × (100/10)} 70,000

2,29,550 2,29,550
 Balance Sheet

as on December 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

1,800 Equipments 25,600

Outstanding Salaries

1,000 30,000
Subscription in Advance Add: Purchases

1,250 55,600
Electricity Charges Outstanding

2,26,600 (5,400) 50,200

Capital Fund Less: Depreciation

34,100 2,60,700
Add: Surplus

300
Insurance Prepaid

2,500
Subscription Outstanding

700
Stock of Stationery

1,20,000
Building

(6,000) 1,14,000
Less: Depreciation

27,050
Cash and Bank

70,000
Investments

2,64,750 2,64,750

Question:33

As at March 31, 2017 the following balances have been extracted from the books of the Indian Chartered
Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived
from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31,
2017 (3) and a Balance Sheet as at that date.
 Debit Balances Rs Credit Balances Rs

Stock-in-hand 1170 Receipts Dining Room 87,660

Purchases 24,660 Subscriptions 9,450

Dining Room 32,370 Billiard's Receipts 7,300

Rent 10,470 Sunday Receipts 410

Wages 18,690 Interest on Fixed Deposit 270

Repairs and Renewals 5,400 Sundry Creditors 5310

Fuel and Light 5,280 Grant from Institute (permanent) 42,000

Misc. Expenses 4,050 Income and Exp. A/c (1.4.16) 1,380

Cash in hand 560 Suspense A/c (See note) 60

Cash at bank 2,760

Fixed Deposit 8,500

Sundry Debtors 2,250

China glass, cutlery and linen 600

Billiard Table 2,070

Fixtures and Fittings 870

Furniture 4,140

Club Premises 30,000

1,53,840 1,53,840

On March 31, 2016 stock of restaurant consisted of Rs 900 and Rs 60 respectively. Provide depreciations Rs 60 on
fixtures and fittings, Rs 390 on billiard table and Rs 560 on furniture.

Solution:

Important Note:

1. Credit side of the Trial Balance of the question is short by Rs 60. Thus, in order to tally both sides of the Trial
Balance, Suspense Account will be opened with the difference amount of Rs 60.

2. In the adjustment, Closing Stock should be Rs 960 instead of Rs 900.

 Books of Indian Chartered Accountants Recreation Club

Restaurant Trading Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Opening Stock 1,170 Receipts from Dining Room 87,660

Purchases 24,660 Closing Stock 960

Dining Room Exp. 32,370

Profit from Restaurant 30,420

88,620 88,620

Income and Expenditure Account

as on March 31, 2017

Dr. Cr.

Amount Amount
Expenditure Income
Rs Rs

Rent 10,470 Subscriptions 9,450

Wages 18,690 Sundry Receipts 410

Repairs an Renewals 5,400 Interest on Fixed Deposits 270

Fuel and Light 5,280 Profit from Restaurant 30,420

Misc. Expenses 4,050 Billiards Receipts 7,300

Depreciation on

Fixtures and Fittings 60

Billiards Table 390

Furniture 560 1,010

Surplus (Excess of Income over
Expenditure) 2,950

47,850 47,850

Balance Sheet

as on March 31, 2017

Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 5,310 Cash in Hand 560

Grant from Institute 42,000 Cash at Bank 2,760

Suspense 60 Fixed Deposit 8,500

Capital Fund (Income and

Exp. A/c

as on Apr.01, 2016) 1,380 Sundry Debtors 2,250

Add: Surplus 2,950 4,330 China Glass, Cutlery and Linen 600

Billiards Table
2,070

Less: Depreciation (390) 1,680

Fixture and Fittings 870

Less: Depreciation (60) 810

Furniture 4,140

Less: Depreciation (560) 3,580

 Club Premises 30,000

Stock of Restaurant 960

51,700 51,700