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

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

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 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