Question 48 Chapter 1 of +2-A - T.S. Grewal 12 Class Part

Question 48 Chapter 1 of +2-A

Table of Contents

The solution of Question 48 Chapter 1 of +2-A:

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

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

48. Following Receipts and Payments Account was prepared from the Cash Book of Delhi Charitable Trust for the year ending 31st March 2019:

RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March 2019
Receipts	Rs.	Payments	Rs.
To Balance b/d:		By Charity	1,15,000
Cash in Hand	1,15,000	By Rent and Taxes	32,000
Cash at Bank	1,26,000	By Salary	60,000
To Donations	90,000	By Printing	6,000
To Subscriptions	4,28,000	By Postage	3,000
To Legacies Donations	1,80,000	By Advertisements	45,000
To Interest on Investment	45,000	By Insurance	20,000
To Sale of old Newspaper	2,000	By Furniture	2,16,000
		By Investment	2,30,000
		By Balance c/d:
		Cash in Hand	99,000
		Cash at Bank	1,60,000
	9,86,000		9,86,000

Prepare Income and Expenditure Account for the year ended 31st March 2019, and Balance Sheet as on that date after the following adjustments:
(i) Insurance premium was paid for insurance taken w.e.f. 1st July 2018.
(ii) Interest on investment ₹ 11,000 accrued was not received.
(iii) Rent ₹ 6,000; Salary ₹ 9,000 and advertisement expenses ₹ 10,000 outstanding as on 31st March 2019.
(iv) Legacy Donation is towards the construction of Library Block.

The solution of Question 48 Chapter 1 of +2-A:

Income and Expenditure Account (for the year ended 31st March 2019)
Expenditure		Amount	Income		Amount
To Charity		1,15,000	By Subscriptions		4,28,000
To Rent and Taxes	32,000		By Donations		90,000
Less: Prepaid Expenses	6,000	38,000	By Interest on Investments	45,000
To Salary	60,000		Add: Accrued Interest	11,000	56,000
Add: Outstanding	9,000	69,000	By Sale of Old Newspapers		2,000
To Advertisement	45,000
Add: Outstanding	10,000	55,000
To Insurance	20,000
Less: Prepaid Insurance *1	5,000	15,000
To Printing		6,000
To Postage		3,000
To Surplus(Bal Fig.)		2,75,000
		5,76,000			5,76,000

* Means: – see the working note for calculation

Balance Sheet (for the year ended 31st March 2018)
Liabilities	Amount	Assets	Amount
		Cash in Hand	1,15,000
		Cash and Bank	1,26,000
Capital Fund (Balancing Figure)	2,41,000
	2,41,000		2,41,000

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Balance Sheet (for the year ended 31st March 2018)
Liabilities		Amount	Assets	Amount
Capital Fund	2,41,000		Furniture	2,16,000
Add: – Surplus	2,75,000		Investments	2,30,000
Add: – Legacy	1,80,000	6,96,000
Outstanding Rent		6,000	Prepaid Insurance	5,000
Outstanding Salary		9,000	Accrued Interest on Investments	11,000
Outstanding Advertisement Exp.		10,000	Cash in Hand	99,000
			Cash at Bank	1,60,000
		5,30,400		5,30,400

Working Note: –
*1: – Calculation of Prepaid Insurance

Insurance premium was paid for insurance taken w.e.f. 1st July 2018 So, it will be valid for a minimum of 1 year (up to 30th June 2019) 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.

This is Related to the next year not the expense for this year so we have to subtract it from the total amount.

= 20,000 X 3/12
Prepaid Insurance Premium = 5,000/-

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