Question 51 Chapter 1 of +2-A - T.S. Grewal 12 Class Part

Question 51 Chapter 1 of +2-A

Table of Contents

The solution of Question 51 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)

From the following information and Receipts and Payments Account of Delhi Medical Society, prepare Income and Expenditure Account for the year ended 31st March 2019 and Balance Sheet as at that date.

RECEIPTS AND PAYMENTS ACCOUNT (for the year ended 31st March 2019)
Receipts	Rs.	Payments	Rs.
To balance b/d	31,900	By Rent	16,800
To Entrance Fees	5,500	By Wages	24,500
To Subscriptions	1,80,000	By Lighting Charges	7,200
To Donations	16,500	By Books	24,800
To Life Membership Fees	25,000	By Medicines (Polio Eradication Project)	1,00,000
To Government Grant (Polio Eradication Project)	2,00,000	By Salaries to Doctors (Polio Eradication Project)	80,000
To Proceeds of Seminar	23,200	By Office Expenses	45,000
To Interest on Deposits	2,400	By 8% Fixed Deposits	1,20,000
		(On 1st October 2018)
		By Seminar Expenses	20,200
		By Cash in Hand	26,000
		By Bank A/c (Polio Eradication Project)	20,000
	4,84,500		4,84,500

Other information:

On 31st March 2018, the Club possessed books of ₹ 2,00,000 and Furniture of ₹ 85,000. Provide depreciation on these assets @ 10% including the purchases during the year.Subscriptions in arrears at the beginning of the year amounted to ₹ 3,500 and at the end of the year, ₹ 5,500 were outstanding.The Club paid three months’ rent in advance both in the beginning and at the end of the year.

The solution of Question 51 Chapter 1 of +2-A:

Books of Delhi Medical Society Income and Expenditure Account (for the year ended 31st March 2019)
Expenditure		Amount	Income		Amount
To Rent	16,800		By Subscriptions	1,80,000
Add: – Adv. Rent in the beginning*2	4,200		Add: O/s at the end	5,500
Add: – Adv. at the end	4,200	16,800	Less: O/s in the Beginning	3,500	1,82,000
To Wages		24,500	By Entrance Fees		5,500
To Lighting Charges		7,200	By Donations		16,500
To Office Expenses		45,000	By Interest on Deposits	2,400
To Depreciation on Furniture*3		8,500	Add: Accrued Interest*1	2,400	4,800
To Depreciation on Books *4		22,480	By Profit from Seminar
			Proceeds	23,200
			Less: Expenses	20,200	3,000
To Surplus(Balancing Figure)		87,320
		2,11,800			2,11,800

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* Means: – see the working note for calculation

Balance Sheet (for the year ended 31st March 2019)
Liabilities	Amount	Assets	Amount
Advanced Subscription	20,000	Advance Rent	4,200
		Subscription-in-Arrears	3,500
		Books	2,00,000
		Cash in Hand	31,900
		Furniture	85,000
Capital Fund (Balancing Figure)	9,70,000
	9,90,000		9,90,000

Balance Sheet (for the year ended 31st March 2019)
Liabilities		Amount	Assets		Amount
Capital Fund	3,24,600		Advance Rent		4,200
Add: – Surplus	87,320	4,11,920	Subscription-in-Arrears		5,500
Life Membership		25,000	Books	2,00,000
Government Grant	2,00,000		Add: – Purchased	24,800
Less: – Medicines	1,00,000			2,24,800
– Salaries	80,000	20,000	Less: 10% Depreciation	22,480	2,02,320

			Furniture	85,000
			Less: 10% Depreciation	8,500	76,500
			8% Fixed Deposit		1,20,000
			Accrued Interest		2,400
			Cash in Hand		26,000
			Cash at Bank		20,000
		4,56,920			4,56,920

* Means: – see the working note for calculation

Working Note: –

*1:- Calculation of Accrued amount of Interest on Investment

Interest on Investment = Value of Investment X Rate of Interest X Period
Value of Asset = 1,20,000
Rate of Interest = 8%
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)

Total Interest on Investment = 1,20,000 X 8/100 X 6/12

Total Amount of Interest on Investment For the F/Y 19-20	4,800
Less: – Total Amount Interest on Investment received For the F/Y 19-20	2,400
Accrued amount of Interest on Investment For the F/Y 19-20	2,400

*2: – Calculation of rent in advance both in the beginning and at the end of the year
The Club paid three months’ rent in advance both in the beginning and at the end of the year.

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If Rent includes the three month’s rent in advance in both so the amount of advance rent will be the same for both in the beginning and at the end of the year: –

= 16,800 X 3/12

Advance Rent = 4,200/-

*3:- Calculate Depreciation on Furniture
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 85,000
Rate of Depreciation = 10%
Period = from 01/04/18 to 31/03/19 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)

= 85,000 X 10/100 X 12/12

Depreciation = 8,500/-

*4:– Calculate Depreciation on Books

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Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10% (same rate on purchased during the year also)
Period = from 01/04/18 to 31/03/19 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)

Books purchased during the year= 24,800
Total Value of Assets at the end of year = 2,00,000 + 24,800
= 2,24,800/-
= 2,24,800 X 10/100 X 12/12
Depreciation = 22,480/-

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