Question 42 Chapter 1 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 42 Chapter 1 of +2-A

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 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/-

 

 

 

 

 

 

 

 

 

Not-for-Profit Organisations – Meaning and Overview

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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)

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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2 Book 1 min - Question 42 Chapter 1 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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