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Question 36 Chapter 1 of +2-Part-1
36. (Income & Expenditure Account) Given below is the Receipts and Payments Account of Club for the year ending 31st December 2018 :
| Receipts | Amount | Payments | Amount |
| To balance b/d | 1,500 | By salaries | 600 |
| To subscriptions: | By expenses | 100 | |
| 2017 | 50 | By drama expenses | 500 |
| 2018 | 2,000 | By newspapers | 120 |
| 2019 | 80 | By municipal taxes | 60 |
| To donations | 550 | By charity | 400 |
| To sale of drama tickets | 1,050 | By investments | 2,000 |
| To sale of waste paper | 50 | By electricity charges | 200 |
| To entrance fees | 300 | By payment of new furniture | 1,000 |
| By balance c/d | 600 | ||
| 5,580 | 5,580 |
Prepare the club’s Income and Expenditure Account for the year ending 31st December 2018 and its balance sheet at that date after taking the following information into account:
a) There are 400 members each paying Rs.5 as an annual subscription. Rs.60 subscriptions are still outstanding for 2017.
b) Municipal taxes amounting to Rs.60 per annum have been paid up to 31st March 2019.
c) 6% has accrued on investments for five months.
d) Buildings stand in the books at Rs.5,000 on 1-1-2018.
Income and Expenditure account of ……. Club For the year ending 31st December 2018
| Expenditure |
Amount | Income |
Amount | ||
|---|---|---|---|---|---|
| To salaries | 600 | By subscriptions | 2,000 | ||
| To expenses | 100 | By donations | 550 | ||
| To drama expenses | 500 | By sale of drama tickets | 1,050 | ||
| To newspapers | 120 | By sale of waste paper | 50 | ||
| To Municipal taxes: | 60 | By entrance fees | 300 | ||
| Less: Prepaid (3 months) | 15 | 45 | By interest on investments (2,000*6/100*5/12) |
50 | |
| To Charity | 400 | ||||
| To Electricity | 200 | ||||
| To excess of income over expenditure (Surplus) | 2,035 | ||||
| 4,000 | 4,000 | ||||
Balance Sheet As on 31st December 2018
| Liabilities |
Amount | Assets |
Amount | |
|---|---|---|---|---|
| Capital Fund: | Cash in hand | 600 | ||
| Opening balance | 6,610 | Building | 5,000 | |
| Add: Surplus | 15 | 8,645 | Outstanding Subscriptions: 2017 | 60 |
| Subscription for 2019 received in advance | 80 | Prepaid Municipal Taxes | 15 | |
| Accrued Interest (2,000 x 6/100 x 5/12) | 50 | |||
| Investments | 2,000 | |||
| Furniture | 1,000 | |||
| 8,725 | 8,725 | |||
Working Note:
1. Opening Capital Fund:
Balance Sheet As on 1-1-2018
| Liabilities |
Amount | Assets |
Amount | ||
|---|---|---|---|---|---|
| Capital Fund ( Balancing Figure) | 6,610 | Cash in hand | 1,500 | ||
| Outstanding Subscription (50+60) | 110 | ||||
| Building | 5,000 | ||||
| 6,610 | 6,610 | ||||
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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