Question 49 Chapter 1 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 49 Chapter 1 of +2-A

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
      Subscriptions Outstanding 9,000
      Municipal Taxes Prepaid 1,000
      Building 5,00,000
Capital Fund (Balancing Figure)   6,12,500


 
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)

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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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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