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 | 99,000 | |||
| 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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