Q.No.42 | Chapter 1 – Financial Statements of Not-for-Profit Organisations | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 42 Chapter 1 of +2-A

Preparation of the Income and Expenditure Account and Balance Sheet from Receipts and Payments Account with Additional Information

42. Following is the summary of cash transactions of the Royal Club for the year ended 31st March 2019

RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March 2019

Receipts		Rs.	Payments		Rs.
To Balance b/d (Cash)			By Rent		16,800
Cash In Hand	10,000		By Wages		24,500
Cash at Bank	21,900	31,900	By Electricity Charges		7,200
To Entrance Fees		25,500	By Honorarium		43,500
To Subscriptions		1,60,000	By Books		21,300
To Legacy		16,500	By Office Expenses		45,000
To Life Membership Fees		25,000	By 3% Fixed Deposit		80,000
To Surplus from Entertainment Events		5,600	(1st October 2018)
			By Balance C/d (Cash)
			Cash In Hand	2,000
			Cash at Bank	24,200	26,200
		2,64,500			2,64,500

Additional Information:

At the beginning of the year, the Club possessed Books of Rs 2,00,000 and Furniture of Rs 85,000. Subscriptions in arrears at the beginning of the year amounted to Rs 3,500 and at the end of the year, Rs 4,500 and six months Rent was due both at the beginning of the year and at the end of the year.

Prepare Income and Expenditure Account of the Club for the year ended 31st March 2019 and its Balance Sheet as at that date after writing off Rs 5,000 and Rs 11,300 on furniture and Books Respectively.

The solution of Question 42 Chapter 1 of +2-A: -

Income and Expenditure Account (for the year ended 31st March 2019)

Expenditure		Amount	Income		Amount
To Rent	16,800		By Subscription 2018-19	1,60,000
Add: - Closing O/s Rent	8,400		Add O/s Sub. for 2018 -19*	4,500
Less: - Opening O/s Salary	8,400	16,800	Less: O/s Sub in the beginning	3,500	1,61,000
To Wages		24,500	By Entrance Fees		25,500
To Electricity Charges		7,200	By Legacy		16,500
To Honorarium		43,500	By Surplus from Entertainment Event		5,600
To Office Expenses		45,000	By Accrued Interest on Investment*		1,200
To Depreciation on Furniture		5,000
To Depreciation on Books		11,300
To Surplus(Balancing Figure)		56,500
		2,09,800			2,09,800

Working Note: -

Balance Sheet (for the year ended 31st March 2018)

Liabilities	Amount	Assets	Amount
Outstanding Rent	8,400	Cash in Hand	10,000
		Cash at Bank	21,900
		Books	2,00,000
		Furniture	85,000
Capital Fund(Balancing Figure)	3,12,000	Outstanding Subscription	3,500
	2,09,800		2,09,800

 

Income and Expenditure Account (for the year ended 31st March 2019)

Liabilities		Amount	Assets		Amount
Capital Fund	3,12,000		Cash in Hand		2,000
Add: - Surplus	56,500	3,68,500	Cash at Bank		24,200
Outstanding Rent		8,400	Books	2,00,000
Life Membership Fees		25,000	Add: - Purchased during the year	21,300
			Less: - write o3% Fixed Deposit ff during the year	11,300	2,10,000
			Furniture	85,000
			Add: - Purchased during the year	0
			Less: - write off during the year	5,000	80,000
			3% Fixed Deposit		80,000
			Outstanding Subscription		4,500
			Accrued Interest on Investment		1,200
		4,01,900			4,01,900

 

Working Note: -
Calculation of Accrued Interest on Investment
Interest on Investment = Value of Investment X Rate of Interest X Period
Value of Asset = 80,000
Rate of Interest = 3%

Period = from 01/10/18 to 31/03/19 i.e. 6 months
(from the date of purchase to the end of the financial year)

= 80,000 X 3/100 X 6/12
Accrued Interest on Investment = 1,200/-

Calculation of Outstanding rent in the beginning and at the end
Rent paid during the year (let's assume it, Rent is for 12 months)
But it was outstanding in the beginning and at the end for the period of 6 months

= 16,800 * 6/12
= 8,400

Rent outstanding in the beginning = 8,400/-
Rent outstanding at the end= 8,400/-

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

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