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

Question No.42 - Chapter No.1 - T.S. Grewal +2 Book Part-A 2019-Solution-min-min

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

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 Depositff 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/-

Not-for-Profit Organisations – Meaning and Overview

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