Q.No.49 | Chapter 1 – Financial Statements of Not-for-Profit Organisations | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 49 Chapter 1 of +2-A

49. Given Below is the Receipts and Payments Account of a Mayur 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		1,02,500	By Salaries	60,000
To Subscriptions:			By Expenses	7,500
2017-18	4,000		By Drama Expenses	45,000
2018-19	2,05,000		By Newspapers	15,000
2019-20	6,000	2,15,000	By Municipal Taxes	4,000
To Donations		54,000	By Charity	35,000
To Proceeds of Drama Tickets		95,000	By Investments	2,00,000
To Sale of Waste Paper		4,500	By Electricity Charges	14,500
			By Balance c/d	90,000
		4,71,000		4,71,000

Prepare the club's Income and Expenditure Account for the year ended 31st March 2019 and Balance Sheet as at that date after taking the following information into account:
(i) There are 500 members, each paying an annual subscription of ₹ 500, ₹​ 5,000 are still in arrears for the year ended 31st March 2018.
(ii) Municipal Taxes amounted to ₹​ 4,000 per year is paid up to 30th June and ₹ ​5,000 are outstanding of salaries.
(iii) The building stands in the books at ₹​ 5,00,000.
(iv) 6% interest has accrued on investments for five months.

The solution of Question 49 Chapter 1 of +2-A: 

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

Expenditure		Amount	Income			Amount
To Salaries	60,000		By Subscriptions *1			2,50,000
Add: Outstanding Salary	5,000	65,000	By Donations			54,000
To Expenses		7,500	By Profit from Drama
To Newspapers		15,000	Total Proceeds from Drama Tickets		95,000
To Municipal Taxes	4,000	69,000	Less: Drama Expenses		45,000	50,000
Add: Prepaid in 2017-18 *3	1,000		By Sale of Waste Paper			4,500
Add: Prepaid in 2019-20	1,000	4,000	By Accrued Interest on Investments *2			5,000
To Charity		35,000
To Electricity Charges		14,500
To Surplus(Balancing Figure)		2,22,500
		3,63,500				3,63,500

* Means: - see the working note for calculation

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

Liabilities	Amount	Assets	Amount
Capital Fund (Balancing Figure)		Subscriptions Outstanding	9,000
		Municipal Taxes Prepaid	1,000
		Building	5,00,000
		Cash and Bank	1,02,500
	6,12,500		6,12,500

 

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

Liabilities		Amount	Assets				Amount
Capital Fund	6,12,500		Building				5,00,000
Add: - Surplus	2,22,500	8,35,000	Investments				2,00,000
Advanced Subscription		6,000	Subscriptions Outstanding
Outstanding Salary		5,000	2018-19*			45,000	11,000
Outstanding Advertisement Exp.		10,000	2017-18			5,000	50,000
			Accrued Interest on Investments				5,000
			Prepaid Municipal Taxes				1,000
			Cash and Bank				90,000
		8,46,000					8,46,000

Working Note: -
*1:- Calculation of Subscription outstanding at the end of the year

Total Subscription Due for the year-end 31st March 2019 (Total Member X Amount of Subscription) (this amount will be transferred to I&E a/c) 500 Members X Rs 500 each	2,50,000
Less: Subscription received during the year for the year 2018-19	2,05,000
Subscription outstanding at the end of the year	45,000

*2:- Calculation of Total Interest on Investment
Interest on Investment = Value of Investment X Rate of Interest X Period
Value of Asset = 2,00,000
Rate of Interest = 6%
Period = 5 months(given)
= 2,00,000 X 6/100 X 5/12
Total Interest on Investment = 5,000/-
*3: - Calculation of Prepaid Municipal Taxes

(ii) Municipal Taxes amounted to ₹​ 4,000 per year is paid up to 30th June.

But our Financial Year ended on 31st March 2019. that’s why from 1st April 2019 to 30th June 2019 for 3 months the premium was paid extra.
And in the receipts and payment account, there is a total amount of Municipal Taxes are given Rs 4000. It means a total payment made of Ra 4000 only during the year and from the date 1st, April 19 to 30th June 2019 was already paid in the previous year.
So, The below amount will be treated as closing prepaid for the next year and also for this year as opening prepaid.

= 4,000 X 3/12
Prepaid Insurance Premium = 1,000/-

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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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