NCERT Solution for Class 12 Accountancy Chapter 1 - Accounting for Not-for-Profit Organisation

*According to the latest CBSE Syllabus 2023-24, this chapter has been removed.

NCERT Solutions is an extremely helpful resource to prepare for the CBSE Class 12 Accountancy examinations. This study material provides students with deep knowledge of the concepts covered, and the NCERT solutions collated by the subject matter wizards are easy to comprehend.

NCERT Solution for Class 12 Accountancy Chapter 1 – Accounting for Not-for-Profit Organisation provides students with all-inclusive data on all the concepts. As the students would have learnt the basic fundamentals about the subject of accountancy in Class 11, the NCERT Class 12 Solutions is a continual part of it, which explains the concepts in a detailed way.

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Short Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

1. State the meaning of ‘Not-for-Profit’ Organisations.

Organisations that are established with the aim of providing services to society and not profit earning are called Not-for-Profit Organisations (NPO). Some organisations that come under NPO are hospitals, religious organisations and trade unions. An NPO earns income from life membership fees, subscriptions, grants, donations etc.

2. State the meaning of receipt and payment account.

A receipt and payment account (R & P account) is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the receipts, and all the cash payments get recorded in the payments side of the R & P account. All the cash and bank transactions are recorded in the cash book, and this book is created on the basis of all these transactions. All cash and bank transactions that are of a revenue and capital nature get recorded. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of a not-for-profit organisation or NPO.

3. State the meaning of income and expenditure account.

The income and expenditure (I & E) account is the equivalent of the P & L account (profit and loss account). In an income and expenditure account, surplus and deficit are determined during the accounting period, while in a P & L account, the net profit or loss is determined at the running of the accounting period. It is nominal account and records transactions that are of a revenue nature. The closing balance is called deficit or surplus based.

4. What are the features of a receipt and payment account?

The receipts and payments account has the following features:

1. It is known as a cash book summary for NPO (not-for-profit organisations) as it records all the cash and cash equivalents of the organisation.

2. This account shows cash transactions that are of a revenue and capital nature

3. It does not follow the double-entry bookkeeping system, as it is a summary of transactions.

4. It does not include transactions that do not have cash or bank items.

5. It helps in revealing the cash position of the organisation

5. What steps are taken to prepare an income and expenditure account from a receipt and payment account?

The following steps should be followed:

1. Exclude opening cash and bank balances and also do the same for closing cash and balances

2. Exclude income of the previous period and any such income that is received in advance

3. Exclude all items involving capital receipts and payments

4. Exclude expenditures that are of the previous or coming period

5. Include all incomes of the current period which are yet to be received

6. Include expenditures of the current period which are yet to be paid.

7. Provision for bad debts and fixed assets depreciation should be taken into account and charged to the account (income and expenditure account)

6. What is subscription? How is it calculated?

For a not-for-profit organisation, subscription acts as one of the main sources of income. It refers to money that the members pay periodically for maintaining their membership in an active state. Subscription charges can be paid in flexible options like monthly, quarterly, half-yearly or yearly. It appears on the receipt side of the R & P account.

For calculating the subscription for the current period, add the subscription received in advance, meant for the current period during the previous year, and the outstanding subscription for the current year to the subscription received for the current year, and deduct the subscription received in advance for the next year and outstanding subscription from previous year from subscription received in the current year.

Calculation of Subscription

Subscription received during the year

(+) Subscription received (in advance) during the previous year

for current year

(+) Subscription outstanding at the end of the year

(-) Subscription received in advance for the next year

(-) Subscription outstanding for the previous year

Subscription shown in the income and expenditure account

 –

–

–

–

 –

–

–

7. What is a capital fund? How is it calculated?

The scenario where the value of the assets of an NPO is more than its liabilities, it is called a capital fund. This is similar to the concept of capital for an organisation working to earn profit. If any surplus amount is received from I & E account, it gets added to the capital fund; likewise, any deficit will be deducted from the same and is known as an accumulated fund.

Calculating Capital Fund

Capital Fund at the Beginning of the Year **
Add: Surplus from Income and Expenditure Account **
Add: Subscription Amount (Capitalised amount) **
Add: Life Membership Fee. ** **
Less: Deficit from Income and Expenditure Account **
Capital Fund at the End of the Year ***

Long Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

1. Explain the statement: “Receipt and payment account is a summarised version of cash book”.

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts, and all cash payments are recorded in the payments side of the R & P Account. All the cash and bank transactions are recorded in the cash book, and this book is created on the basis of all these transactions. All cash and bank transactions that are of a revenue and capital nature get recorded. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of a not-for-profit organisation or NPO.

Here are some similarities between cash book and receipts and payments account:

1. Both are real accounts.

2. Only transactions of cash and bank are recorded

3. There is no distinction between revenue and capital items

4. Helps in assessing the cash position of an organisation

5. Starts with an opening balance consisting of cash and bank and concludes with a closing balance of cash and bank.

Therefore, it can be said that the receipt and payments account is a summarised version of the cash book.

2. “Income and expenditure account of a not-for-profit organisation is akin to profit and loss account of a business concern”. Explain the statement.

The account containing all expenses and losses for the current accounting period prepared by a not-for-profit organisation is called an income and expenditure (I & E) account, while a similar account prepared by a profit-earning organisation is called a profit and loss account (P & L).

Here are some similarities between I & E and P & L accounts:

1. Accrual basis is followed for the preparation of both accounts.

2. Expenses and losses are recorded on the expenditure (debit) side, and gains and income are recorded on the income (credit) side.

3. Records only revenue items related to the current accounting period.

4. Both exhibit a nature similar to nominal accounts

Therefore, it can be said that from the above statements, the income and expenditure account of a not-for-profit organisation is akin to the profit and loss account of a business concern.

3. Distinguish between the receipts and payments account and the income and expenditure account.

Basis of Comparison Receipts and Payments Account Income and Expenditure Account
Nature Contains bank and cash transaction summary. Contains a summary of income and expenses for the current year
Revenue and Capital Both revenue and capital transactions are recorded Only revenue transactions are recorded
Debit Side Records cash and bank receipts Records expenses and losses incurred for the current accounting year
Credit side Records payments received in the form of cash and cheques Records incomes and gains during the current accounting year
Account Type Real account Nominal account
Accounting Period Records receipts and payments made during the year, which may be related to the current, previous or next accounting year Records only the expenditure and income made during the current accounting year
Object Shows the cash position of NPO Shows the net results in terms of deficits or surplus
Depreciation Non-cash items like depreciation are not included Includes non-cash items like depreciation, bad-debts for determining net profit or loss.
Adjustment Before preparing financial statements, the payments and receipts received during the year can be adjusted. Cash and non-cash transactions can be adjusted
System Cash basis Accrual basis

4. Explain the basic features of the income and expenditure account and of the receipt and payment account.

The income and expenditure account is similar to the P & L account (Profit and Loss Account). In an income and expenditure account, surplus and deficit are determined during the accounting period, while in a P& L account, the net profit or loss is determined during an accounting period. It is a nominal account and records transactions that are of a revenue nature. The closing balance is called deficit or surplus based.

The basic features of the I & E account are as follows:

1. It is a nominal account

2. Prepared on the basis of R & P (Receipt and Payment Account). All revenue items, irrespective of income or expenditure, get transferred.

3. Transactions that are of a capital nature are not included in the account.

4. It is similar to P & L account

5. Records only current accounting year items and excludes any other transactions

6. Items like prepaid expenses, depreciation, and income received in advance can be adjusted.

7. Balancing figure is expressed as surplus or deficit based on the status of expenses and income.

A receipts and payments account is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the receipts, and all cash payments are recorded on the payments side of the receipts and payments account. This account is prepared on the basis of all the cash and bank transactions that are recorded in the cash book. It records all cash and bank transactions that are of a revenue and capital nature. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of an NPO.

The basic features of the R & P Account are as follows:

1. It is a real account, and also known as the summarised version of the cash book

2. It records only bank and cash transactions.

3. Non-cash transactions like depreciation are not recorded

4. It begins with an opening balance of cash and bank and ends with a closing balance of cash and bank.

5. Helps in assessing the cash position of an organisation

6. It does not distinguish between capital and revenue items

5. Show the treatment of the following items by a not-for-profit organisation:

(i) Annual subscription
(ii) Specific donation
(iii) Sale of fixed assets
(iv) Sale of old periodicals
(v) Sale of sports materials
(vi) Life membership fee

i) Annual subscription

1. Subscriptions that are obtained during an accounting year (it may be related to the current, previous or upcoming year) are reflected on the debit side of the R & P Account.

2. Subscriptions related to the present year, whether yet to be received or already received, reflect on the credit side of the I & E account (Income and Expenditure).

3. Advance subscriptions received for the following year are reflected on the liabilities side of the balance sheet.

4. Subscriptions which are due but yet to be received are shown on the assets part of the balance sheet.

5. Subscriptions that are due but yet to receive are reflected on the asset side of the balance sheet.

ii) Specific donation

1. Specific donation amount is reflected on the debit side of R & P accounts.

2. Specific donation amount is shown on the liabilities side of the balance sheet because it is used for the specific purpose for which it is received.

iii) Sale of fixed assets

1. Amount received recorded on the debit side of R & P Account.

2. Profit/Loss is credited/debited to the I & E account.

3. Book value of the asset deducted from the respective asset on the asset side of the balance sheet

iv) Sale of old periodicals

1. Amount received reflects on the debit side of the R & P account.

2. Sale of old periodicals is counted as revenue receipts, hence reflecting on the credit side of the I & E Account.

v) Sale of sports materials

1. Amount received is debited to the R & P account.

2. Sports materials sale is revenue earned, hence reflecting on the credit side of the I & E account.

vi) Life membership fees

1. It is considered as a receipt for an NPO. Hence, debited to the R & P account

2. It is a one-time fee and hence treated as capital receipts, hence, added to the capital fund on the liabilities side of the balance sheet

6. Show the treatment of items of the income and expenditure account when there is a specific fund for those items.

An NPO (not-for-profit organisation) has different sources of receipts in the form of subscriptions, donations, government grants etc.; of these, some receipts are general, while some are specific. Specific receipts are used only for the purpose for which it is received, while general receipts can be used for any purpose. The specific receipts are not considered as revenue income for the not-for-profit organisation and therefore are reflected in the I & E account.

In a way, specific receipts are considered as liabilities to the not-for-profit organisation as these amounts are received for a specific purpose and cannot be used elsewhere. These are reflected in the liabilities side of the balance sheet until and unless it is completely used for the purpose it was received. If such an amount is invested in the form of shares or debentures, then it is known as funds such as prize funds, match funds etc. The interest earned on such investment is not credited to the I & E Account; instead, it is credited to the respective fund account.

Similarly, any expense that is incurred for such funds gets debited from the respective fund account. Such funds are shown on the liabilities side of the balance sheet. If the expenses exceed the receipts of the fund, the difference gets reflected in the I & E account.

Treatment for items received for a specific purpose

(Tournament/Match/Prize, etc.) Fund Account
Dr. Cr.
Date Particulars L.F. Amount Date Particulars L.F. Amount
Expenses

(expenses incurred, like match expenses, tournament expenses etc.)

 Balance b/d
Incomes

(Income or interest earned on funds invested in the form of donation, interests, dividends, etc.)
Balance c/d

(see explanation)

 (a) Income and Expenditure A/c (see explanation) (b)

Explanation (a)

When receipts are more than expenses meant for a specific purpose, that time, the difference between receipts and expenses is shown on the balance sheet on the liabilities side.

Balance Sheet
Specific Fund (i.e. Tournament, Match, Prize Fund, etc.) Tournament Fund Investment

Explanation (b)

When expenses are more than receipts meant for a specific purpose, that time, the difference between expenses and receipts is shown in I & E account on the expenditure side.

Income and Expenditure A/c
Expenditure Amount Income Amount
Expenses

(i.e. Tournament, Match, Prize Expenses etc., except capital expenditures like expenses on construction of a building)

7. What is a receipt and payment account? How is it different from the income and expenditure Account?

A receipts and payments account is a summary of actual cash receipts and payments that are extracted from the cash book over a certain time period. All the cash received is recorded on the receipts, and all cash payments are recorded on the payments side of the receipts and payments account. This account is prepared on the basis of all the cash and bank transactions that are recorded in the cash book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions, i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assesses the cash position of an NPO.

Basis of Comparison Receipts and Payments Account Income and Expenditure Account
Nature Contains bank and cash transaction summary Contains a summary of income and expenses for the current year
Revenue and Capital Both revenue and capital transactions are recorded Only revenue transactions are recorded
Debit Side Records cash and bank receipts Records expenses and losses incurred for the current accounting period
Credit side Records payments received in the form of cash and cheques Records incomes and gains during the current accounting period
Account Type Real account Nominal account
Accounting Period Records receipts and payments made during the year, which may be related to the current, previous or next accounting year Records only the expenditure and income made during the current accounting year
Object Shows the cash position of NPO Shows the net results in terms of deficits or surplus
Depreciation Non-cash items like depreciation are not included Includes non-cash items like depreciation, bad-debts for determining net profit or loss.
Adjustment Before preparing financial statements, the payments and receipts received during the year can be adjusted. Cash and non-cash transactions can be adjusted
System Cash basis Accrual basis

Numerical Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

1. From the following particulars taken from the cash book of a health club, prepare a receipts and payments account.

Particulars ₹
Opening balance:
Cash in Hand 5,000
Cash at Bank 25,000
Subscriptions 1,65,000
Donations 35,000
Investment Purchased 80,000
Rent Paid 20,000
General Expenses 21,500
Postage and Stationery 2,000
Courier Charges 1,000
Sundry Expenses 2,500
Closing Cash in Hand 12,000

The solution to this question is as follows:

Books of Health Club

Receipt and Payment Account
Dr. Cr.
Receipts Amount

₹

 Payments Amount

₹
Balance b/d Investment 80,000
Cash in Hand 5,000 Rent 20,000
Cash at Bank 25,000 30,000 General Expenses 21,500
Subscriptions 1,65,000 Postage and Stationery 2,000
Donations 35,000 Courier Charges 1,000
Sundry Expenses 2,500
Balance c/d
Cash in Hand 12,000
Cast at Bank 91,000 1,03,000
(Balancing figure)
2,30,000 2,30,000

2. The receipt and payment account of Harimohan Charitable Institution is given as follows:

Receipt and Payment Account for the Year Ending March 31, 2015
Receipts Amount

₹

  Payments Amount

₹
Balance b/d: Furniture 3,000
Cash at Bank 22,000 Investments 55,000
Cash in Hand  8,800 Advance for Building 20,000
Donations 32,000 Charities  60,000
Subscriptions 50,200 Salaries 10,400
Endowment Fund  60,000 Rent and Taxes 4,000
Legacies 24,000 Printing 1,000
Interest on Investment  3,800 Postage 300
Interest on Deposits  800 Advertisements 1,100
Sale of Old Newspapers 500 Insurance 4,800
Balance c/d:
Cash at Bank 32,000
Cash in Hand 10,500
2,02,100 2,02,100

Prepare the income and expenditure account for the year ended on March 31, 2015, after considering the following:

(i) It was decided to treat fifty per cent of the amount received on account of legacies and donations as income.
(ii) Liabilities to be provided for are:
  Rent ₹ 800; salaries ₹ 1,200; advertisement ₹ 200.
(iii) ₹ 2,000 due for interest on investment was not actually received.

The solution to this question is as follows:

Books of Harimohan Charitable Institution

Income and Expenditure Account
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Rent and Taxes 4,000 Donations 16,000
Add: Outstanding 800 4,800 Legacies 12,000
Subscriptions 50,200
Salaries 10,400 Interest on Investment 3,800
 Add: Outstanding 1,200 11,600 Add: Accrued Interest 2,000 5,800
Advertisement 1,100 Interest on Deposits 800
Add: Outstanding 200 1,300 Sale of Old Newspapers 500
Charities 60,000
Printing 1,000
Postage 300
Insurance 4,800
Surplus (Excess of Income over Expenditure) 1,500
85,300 85,300

3. From the following particulars, prepare the income and expenditure account:

Details Amount ₹
Fees collected, including ₹ 80,000 on account of the previous year 5,20,000
Fees for the year outstanding 30,000
Salary paid, including ₹ 5,000 on account of the previous year 68,000
Salary outstanding at the end of the year 3,000
Entertainment expenses 8,000
Tournament expenses 25,000
Meeting expenses 18,000
Travelling expenses 7,000
Purchase of books and periodicals, including ₹ 31,000 for the purchase of books 40,000
Rent 15,000
Postage, telegrams and telephones 6,000
Printing and Stationery 18,000
Donations received 25,000

The solution to this question is as follows:

Income and Expenditure Account
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Salaries 68,000 Fees Collected 5,20,000
Less: Previous Year’s Outstanding (5,000) Less: Previous Year’s Outstanding (80,000)
63,000 4,40,000
Add: Current Year’s Outstanding 3,000 66,000 Add: Current Year’s Outstanding 30,000 4,70,000
Entertainment Expenses 8,000 Donations 25,000
Tournament Expenses 25,000
Meeting Expenses 18,000
Travelling Expenses 7,000
Purchases of Periodicals (40,000 – 31,000) 9,000
Postage, Telegrams and Telephone 6,000
Rent 15.000
Printing and Stationery 18,000
Surplus (Excess of Income over Expenditure) 3,23,000
4,95,000 4,95,000

NOTE: As per the solution, excess of income over expenditure is ₹ 3,23,000; however, as per the book, it is ₹ 3,07,000.

4. Following is the information given in respect of certain items of a sports club. Show these items in the income and expenditure account and the balance sheet of the club:

Particulars ₹
Sports Fund as on 1.4.2015  35,000
Sports Fund Investments 35,000
Interest on Sports Fund 4,000
Donations for Sports Fund 15,000
Sports Prizes Awarded 10,000
Expenses on Sports Events 4,000
General Fund 80,000
General Fund Investments 80,000
Interest on General Fund Investments 8,000

The solution to this question is as follows

Books of Sports Club

Income and Expenditure Account
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Interest on General Fund Investments 8,000
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Sports Fund 35,000 Sports Fund Investments 35,000
Add: Interest on Sports Fund 4,000 General Fund Investments 80,000
Add: Donations for Sports Fund 15,000
54,000
Less: Expenses on Sports Events (4,000)
Less: Prize Awarded (10,000) 40,000
General Fund 80,000

5. How will you deal with the following items while preparing for the Bombay Women Cricket Club, its income and expenditure account for the year ending 31.3.2017 and its balance sheet as on 31.3.2017?

₹
(a) Donations received during the year for the construction of a permanent pavilion 12,25,000
Expenditure incurred up to 31.3.2017 on its construction 10,80,000
The total estimated expenditure on the construction of the pavilion being 25,00,000
(b) Tournament Fund:
Balance as on 1.4.2016 10,700
Subscriptions for tournaments received during the year 65,800
Expenditure incurred during the year on conducting tournaments 72,400
(c) Life Membership fee received during the year 28,000

Give reasons for your answers

The solution to this question is as follows:

(a)

Books of Bombay Women Cricket Club

Balance Sheet 

As on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Donation for Pavilion 12,25,000 Construction of Pavilion in Progress 10,80,000
Less: Expenses on the construction of the pavilion (10,80,000) 1,45,000
Capital
Add: Pavilion Construction 10,80,000 10,80,000

Reason:

Donation for the construction of the pavilion is a donation for a specific purpose.

Expenses on the construction of the pavilion is a capital expenditure.

(b)

Balance Sheet 

As on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Tournament Fund 10,700
Add: Subscription for Tournament 65,800
76,500
Less: Tournament Expenses (72,400) 4,100

Reason

All funds received are treated as capital receipts, and expenses related to any fund are deduced from the concerned funds.

(c)

Balance Sheet 

as on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Life Membership Fees 28,000

Reason

When there is no specific information on the treatment of life membership fees, it is shown on the liabilities side of the balance sheet as it is considered as capital receipt. On treated as revenue, it is shown on the credit side of the I & E Account.

6. From the receipts and payments and information given below, prepare an income and expenditure account and an opening balance sheet of the Adult Literacy Organisation as on December 31, 2017.

Receipt and Payment Account for the Year Ending 

as on December 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d General Expenses 3,200
Cash in hand 4,000 Newspaper 1,850
Cash at Bank  15,550 Electricity 3,000
Subscriptions Fixed deposit with bank

(on 31.06.2017) @ 10% p.a.

 18,000
2016 1,200
2017 26,500 Books 7,000
2018 500 28,200 Salary 3,600
Sale of old newspapers 1,250 Rent 6,500
Govt. grant 12,000 Postage charges 300
Sale of old furniture (book value ₹ 5, 000)  3,700 Furniture (purchased) 10,500
Interest received on FD  450 Balance c/d
Cash in hand  3,000
Cash at bank 8,200
65,150 65,150

Information:

(i)    Subscription outstanding as on 31.12.2016 was ₹ 2,000, and on December 31, 2017, it was ₹ 1,500.

(ii)   On December 31, 2017, the salary outstanding was ₹ 600, and one month’s rent was paid in advance.

(iii)  On Jan. 01, 2016, the organisation owned furniture ₹ 12,000, Books ₹ 5,000.

The solution to this question is as follows:

 

Books of Adult Literacy Organisation

Income and Expenditure Account 

As on Dec. 31, 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Loss on Sale of Old Furniture 1,300 Subscription 26,500
General Expenses 3,200 Add: Outstanding for 2017 1,500 28,000
Newspapers 1,850
Electricity 3,000 Sale of Old Newspapers 1,250
Salary 3,600 Government Grant 12,000
Add: Outstanding for 2017 600 4,200 Interest Received on F.D. 450
Add: Accrued Interest 450 900
Rent 6,500
Less: Prepaid for 2018 {6,500×(1/13)} (500) 6,000
Postages Charges 300
Surplus (Excess of Income over Expenditure) 22,300
42,150 42,150
Balance Sheet 

as on Dec. 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund on Dec. 31, 2016 (Balancing Figure) 38,550 Subscription Outstanding 2,000
Cash in Hand 4,000
Cash at Bank 15,550
Furniture 12,000
Books 5,000
38,550 38,550
 Balance Sheet 

as on Dec. 31, 2017
Liabilities Amount 

₹

 Assets Amount 

₹
Capital 38,550 Prepaid Rent 500
Add: Surplus 22,300 60,850 Books 5,000
Add: Purchases 7,000 12,000
Salary Outstanding 600
Subscription  Received in Advance for 2018  500 Furniture 12,000
Add: Purchases 10,500
22,500
Less: Sale (5,000) 17,500
Fixed Deposit 18,000
Add: Accrued Interest 450 18,450
Cash in Hand 3,000
Cash at Bank 8,200
Subscription Outstanding for 2017 1,500
Add: Outstanding for 2016 800 2,300
61,950 61,950

7. The following is the account of cash transactions of the Nari Kalyan Samiti for the year ended December 31, 2017:

Receipts Amount

₹

 Payments Amount

₹
Balance from last year 2,270 Rent 6,600
Subscriptions 32,500 Electric charges 3,200
Life membership fee 3,250  Lecturer’s fee 730
Donation 2,500 Office expenses 1,480
Profit from entertainment 7,250 Printing and stationery 1,050
Sale of old books (books value ₹ 1,000) 750 Legal fee 1,870
Interest 350 Books 6,500
Furniture purchased  8,600
Expenses on Nukar Drama 1,300
Cash in hand 8,040
Cash at bank 9,500
48,870 48,870

You are required to prepare an income and expenditure account after the following adjustments:

(a) Subscriptions still to be received are ₹ 750, but subscriptions include ₹ 500 for the year 2018.

(b) At the beginning of the year, Sangh owned a building for ₹ 20,000 and furniture for ₹ 3,000 and Books for ₹ 2,000.

(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.

The solution to this question is as follows:

Books of  Nari Kalyan Samiti

Income and Expenditure Account 

as on Dec. 31, 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Rent 6,600 Subscription 32,500
Electric Charges 3,200 Add: Outstanding for 2017 750
Lecturer’s Fee 730 33,250
Office Expenses 1,480 Less: Advance for 2018 (500) 32,750
Printing and Stationery 1,050 Donation 2,500
Legal Fee 1,870 Profit from Entertainment 7,250
Depreciation on: Interest 350
Books 750
Furniture 580
Building 1,000 2,330
Expenses on Nukar Drama 1,300
Loss on Sale of Books 250
Surplus 24,040
42,850 42,850
Balance Sheet 

as on Dec. 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund as on Dec. 31, 2016 27,270 Building 20,000
(Balancing Figure) Furniture 3,000
Books 2,000
Cash and Bank 2,270
27,270 27,270
Balance Sheet 

as on Dec. 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund 27,270 Building 20,000
Add: Life Membership Fees 3,250 Less: 5% Depreciation (1,000)  19,000
Add: Surplus 24,040  54,560
Furniture 3,000
Advance Subscription for 2018 500 Add: Purchases 8,600
11,600
Less: 5% Depreciation 580 11,020
Books 2,000
Add: Purchases 6,500
 8,500
Less: Sales 1,000
7,500
Less: 5% Depreciation 750 6,750
Cash in Hand 8,040
Cash at Bank 9,500
Subscription Outstanding 750
55,060 55,060

8. Following is the receipt and payment account of Indian Sports Club, prepare income and expenditure account, balance sheet as on December 31, 2017:

Receipt and Payment Account 

for the year ending December 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d 7,890 Salary 11,000
Subscriptions 52,000 Electric charges 5,500
Life membership fee 2,200 Billiard Table 17,500
Entrance fee 3,200 Office expenses 4,100
Tournament fund 26,000 Printing and Stationery  2,300
Locker Rent  1,250 Tournament expenses 18,500
Sale of old sports goods (Costing ₹ 2,200) 2,500 Repair of ground  2,000
Sale of old newspaper  750 Furniture purchased  7,700
Legacy 37,500 Sports equipment’s 12,000
Cash in hand 12,690
Cash at bank  10,000
Fixed deposit (on 1.10.17 for 10% p.a) 30,000
1,33,290 1,33,290

Other Information:

The subscription outstanding was on December 31, 2016, ₹ 1,200 and ₹ 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017, was ₹ 250, and Salary outstanding on December 31, 2017, ₹ 1,000.

On January 1, 2017, the club built for ₹ 36,000, procured furniture for ₹ 12,000, and sports equipment’s for ₹ 17,500. Depreciation is charged on these items @ 10% (including purchase).
The solution to this question is as follows:

Indian Sports Club

Income and Expenditure Account 

as on Dec. 31, 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Salary 11,000 Subscriptions 52,000
Add: Outstanding for 2017 1,000 12,000 Add: Outstanding for 2017 3,200
Electric Charges 5,500 55,200
Office Expenses 4,100 Less: Outstanding for 2016 (1,200) 54,000
Printing and Stationery  2,300
Repair of Ground  2,000 Locker Rent 1,250
Depreciation on: Add: Outstanding for 2017 250  1,500
Furniture 1,970
Building 3,600 Entrance Fees  3,200
Sports Equipments 2,730  8,300 Profit on Sale of Sports
Surplus 26,300 Equipments (₹ 2,500 – ₹ 2,200) 300
Sale of Old Newspapers 750
Accrued Interest 750
60,500 60,500
Balance Sheet 

as on January 01, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund (Balancing Figure) 74,590 Subscription Outstanding 1,200
Building 36,000
Furniture 12,000
Sports Equipments 17,500
Cash and Bank 7,890
74,590 74,590
Balance Sheet 

as on Dec. 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Salary Outstanding 1,000 Subscription Outstanding 3,200
Tournament Fund 26,000 Locker Rent Outstanding 250
Less: Tournament Expenses 18,500 7,500 Building 36,000
Less: 10% Depreciation (3,600) 32,400
Capital fund 74,590
Add: Life Membership Fee 2,200 Furniture 12,000
Add: Legacy 37,500 Add: Purchases 7,700
Add: Surplus 26,300 1,40,590 19,700
Less: 10% Depreciation (1,970) 17,730
Sports Equipments 17,500
Add: Purchases 12,000
29,500
Less: Sales (2,200)
27,300
Less: 10% Depreciation (2,730) 24,570
Billiard Table 17,500
Cash in hand 12,690
Cash at Bank 10,000
Fixed Deposit 30,000
Add: Accrued Interest 750 30,750
1,49,090 1,49,090

9. From the following receipt and payment account of Jan Kalyan Club, prepare the income and expenditure account and balance sheet for the year ending March 31, 2017.      

Receipt and Payment Account 

for the year ending March 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Cash in hand as on 1.4.16 6,800 Salaries 24,000
Subscription 60,200 Travelling expenses 6,000
Donation 3,000 Stationery 2,300
Sale of furniture (Book value ₹ 6000) 4,000 Rent 16,000
Entrance fee 800 Repair 700
Life membership fee 7,000 Books purchased  6,000
Interest on investment (@ 5% for the whole year) 5,000 Building purchased 30,000
Cash in hand as on 31.3.2017 1,800
86,800 86,800

Additional Information:

As on

1.04.2016

 As on

31.03.2017
(i) Subscription received in advance 1,000  3,200
(ii) Outstanding subscription 2,000 3,700
(iii) Stock of stationery  1,200  800
(iv) Books 13,500 16,500
(v) Furniture 16,000 8,000
(vi) Outstanding rent 1,000 2,000

The solution to this question is as follows:

Books of Jan Kalyan Club

Income and Expenditure Account 

as on 31 March 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Loss on Sale of Furniture (₹ 6,000 – ₹ 4,000) 2,000 Subscription 60,200
Salaries 24,000 Less: Outstanding for 2016 (2,000)
Travelling Expenses 6,000 58,200
Stationery 2,300 Add: Outstanding for 2017 3,700
Add: Opening Stock 1,200 61,900
3,500 Add: Advance in 2016 1,000
Less: Closing Stock (800) 2,700 62,900
Less: Advance in 2017 (3,200) 59,700
Repairs 700
Rent 16,000 Donation  3,000
Less: Outstanding for 2016 (1,000) Entrance Fees 800
15,000 Interest on Investments 5,000
Add: Outstanding for 2017 2,000 17,000
Depreciation on Books 3,000
Depreciation on Furniture 2,000
Surplus 11,100
68,500 68,500
Balance Sheet 

as on April 01, 2016
Liabilities Amount

₹

 Assets Amount

₹
Advance Subscription 1,000 Cash in Hand 6,800
Outstanding Rent 1,000 Investment {5,000 × (100/5)} 1,00,000
Capital Fund (Balancing figure) 1,37,500 Subscription Outstanding 2,000
Stock of Stationery 1,200
Books 13,500
Furniture 16,000
1,39,500 1,39,500
Balance Sheet 

as on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Advance Subscription 3,200 Subscription Outstanding 3,700
Outstanding Rent 2,000 Stock of Stationery 800
Capital Fund 1,37,500 Investments 1,00,000
Add: Life Membership Fees 7,000
Add: Surplus 11,100 1,55,600 Books 13,500
Add: Purchases 6,000
19,500
Less: Depreciation (3,000) 16,500
Building 30,000
Cash in Hand 1,800
Furniture 16,000
 Less: Sales 6,000
10,000
 Less: Depreciation (2,000) 8,000
1,60,800 1,60,800

10. Receipt and payment account of Shankar Sports Club is given below for the year ended March 31, 2017:

Receipt and Payment Account 

for the year ending March 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Opening Cash in hand 2,600 Rent 18,000
Entrance fees 3,200 Wages 7,000
Donation for building 23,000 Billiard table  14,000
Locker rent  1,200 Furniture  10,000
Life membership fee 7,000 Interest  2,000
Profit from entertainment 3,000 Postage 1,000
Subscription 40,000 Salary 24,000
Cash in hand 4,000
80,000  80,000

Prepare income and expenditure account and balance sheet as per the following information:

Subscription outstanding on March 31, 2016, is ₹ 1, 200 and ₹ 2,300 on March 31, 2017; the opening stock of postage stamps is ₹ 300, and closing stock is ₹ 200, Rent ₹ 1,500 related to 2015 and ₹ 1,500 is still unpaid.

On April 01, 2016, the club owned furniture at ₹ 15,000, furniture valued at ₹ 22,500

On March 31, 2017. The club took a loan of ₹ 20,000 (@ 10% p.a.) in 2017.

The solution to this question is as follows:

Books of Shankar Sports Club

Income and Expenditure Account 

as on 31 Dec. 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Rent 18,000 Entrance Fees 3,200
Add: Outstanding for 2017 1,500 Locker Rent 1,200
19,500 Profit from Entertainment 3,000
Less: Outstanding for 2016 (1,500) 18,000
Subscription 40,000
Wages 7,000 Less: Outstanding for 2016 (1,200)
Depreciation on Furniture 2,500 38,800
Interest 2,000 Add: Outstanding for 2017 2,300 41,100
Postage 1,000 Deficit (Balancing Figure) 6,100
Add: Opening Stock 300
1,300
Less: Closing Stock (200) 1,100
Salaries 24,000
54,600 54,600
Balance Sheet 

as on  December 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Rent Outstanding 1,500 Cash in Hand 2,600
10%  Loan 20,000 Subscription Outstanding 1,200
Furniture 15,000
Stock of Postage Stamps 300
Capital fund Deficit (Balancing figure) 2,400
21,500 21,500
Balance Sheet 

as on December 31, 2017
Expenditure Amount

₹

 Income Amount

₹
Rent Outstanding 1,500 Subscription Outstanding 2,300
10%  Loan 20,000 Stock of Postage Stamps 200
Donation for Building 23,000 Billiard Table 14,000
Capital Fund (2,400) Furniture 15,000
Add: Life Membership Fee 7,000 Add: Purchases 10,000
Less: Deficit (6,100) 25,000
Less: Depreciation (2,500) 22,500
Cash in Hand 4,000
* Capital Fund (Deficit) 1500
44,500 44,500

* NOTE 1:

Capital Fund (2,400)
Add: Life Membership Fees 7,000
Less: Deficit (6,100)
Net Deficit (1,500)

11. Prepare income and expenditure account and balance sheet for the year ended March 31, 2016, from the following receipt and payment account and balance sheet of a cultural club:

Receipt and Payment Account 

for the year ending March 31, 2016
Receipts Amount

(₹)

 Payments Amount

(₹)
Opening cash balance 12,000 Furniture 4,000
Subscription Telephone expenses 800
2014-15 2,000 Salary
2015-16 22,000 24,000 2014-15 1,000
Entrance fees 2,800 2015-16 4,000
Locker rent 1,000 Newspapers 700
Life membership fee 1,200 Sundry expenses  1,000
Government grant 11,000 Defence bonds 18,000
Land 20,000
Closing cash balance 2,500
52,000 52,000
Balance Sheet 

for the year ending March 31, 2016
Liabilities Amount

(₹)

 Assets Amount

(₹)
Advance locker rent 200 Cash in hand 12,000
Subscription received in Advance 1,000 Outstanding subscription 3,000
Outstanding salary  2,000 Building 35,000
Loan 10,000
Capital fund  36,800
50,000 50,000

The solution to this question is as follows:

Books of Cultural Club

Income and Expenditure Account 

as on March 31, 2016
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Telephone Expenses 800 Subscription 22,000
Salary 4,000 Add: Advance Received in 2015 1,000 23,000
Newspapers 700
Sundry Expenses 1,000 Entrance Fees 2,800
Locker Rent 1,000
Surplus (Balancing figure) 31,500 Add: Advance Received in 2015 200 1,200
Government Grants 11,000
38,000 38,000
Balance Sheet 

as on March 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund 36,800 Subscription Still Outstanding for 2015 1,000
Add: Life Membership Fees 1,200 (₹ 3,000 – ₹ 2,000)
Add: Surplus 31,500 69,500 Furniture 4,000
Defence Bonds 18,000
Salary Still Outstanding for 2015 1,000 Land 20,000
Loan 10,000 Building 35,000
Cash in Hand 2,500
80,500 80,500

12. From the following receipt and payment account, prepare the final accounts of a Unity Club for the year ended March 31, 2017.

Receipt and Payment Accounts 

for the year ending March 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d 15,000 Furniture 18,000
Sale of old furniture (costing ₹ 6,000) 4,000 Library books 10,000
Subscriptions: Salaries  72,000
2015–16  18,000 General expenses 18,000
2016–17 60,000 Electric charges 12,000
2017–18 12,000  90,000 Newspapers 33,800
Sale of old newspapers 10,800 Postage  3,000
Profit from entertainment 44,000 Stationery  40,000
Rent 84,000 Audit fee  8,000
Balance c/d 33,000
2,47,800 2,47,800
Balance Sheet 

as on March 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Outstanding salary 6,000 Cash 15,000
Capital Fund 6,94,000 Outstanding subscription 18,000
Library Books 30,000
Furniture 37,000
Land and Building 6,00,000
7,00,000 7,00,000

Additional Information:

1. The club had 500 members, each paying an annual subscription of ₹ 150.
2. On 31.3.2016, salaries outstanding amounted to ₹ 1,200 and salaries paid included ₹ 6,000 for the year 2015–16.
3. Provide 5% depreciation on Land and Building.

The solution to this question is as follows:

Books of Unity Club

Income and Expenditure Account 

as on March 31, 2017
Dr. Cr.
Expenditure Amount 

₹

 Income Amount

₹
Loss on Sale of Old Furniture (4,000 – 6,000)  2,000 Subscription
500 Members at ₹ 150 Each 75,000
Salaries 72,000 Sale of Old Newspapers 10,800
Add: Outstanding for 2015–16 1,200 Profit from Entertainment 44,000
73,200 Rent 84,000
Less: Outstanding for 2016–17 (6,000) 67,200
General Expenses 18,000 Deficit (Balancing figure) 200
Electric Charges 12,000
Newspapers 33,800
Postage 3,000
Stationery 40,000
  Audit Fees 8,000
Depreciation on Land and Building 30,000
2,14,000 2,14,000
Balance Sheet 

as on 31 March 2017
Liabilities Amount 

₹

 Assets Amount 

₹
Advance Subscription (for 2017–18) 12,000 Subscription Outstanding 15,000
Salaries Outstanding 1,200 Furniture 37,000
Capital Fund 6,94,000 Add: Purchases 18,000
Less: Deficit (200) 6,93,800 55,000
Less: Sales (6,000) 49,000
Library Books 30,000
Add: Purchases 10,000 40,000
Land and Building 6,00,000
Less: 5% Depreciation (30,000) 5,70,000
Cash and Bank 33,000
7,07,000 7,07,000

13. Following is the information in respect of certain items of a sports club. You are required to show them in the income and expenditure account and the balance sheet.

Details Amount

₹
Sports Fund as on April 1, 2016 80,000
Sports Fund Investments 80,000
Interest on Sports Fund Investments 8,000
Donations for Sports Fund 30,000
Sports Prizes Awarded 16,000
Expenses on Sports Events 7,000
General Fund 2,00,000
General Fund Investments 2,00,000
Interest on General Fund Investments  20,000

The solution to this question is as follows:

Income and Expenditure Account 

as on March 31, 2016
Dr. Cr.
Expenditure Amount

₹

 Income Amount

₹
Interest on General Fund Investments 20,000
Balance Sheet 

as on March 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Sports Fund 80,000 Sports Fund Investments 80,000
Add: Interest on Sports Fund General Fund Investments 2,00,000
Investments 8,000
Add: Donation for Sports Fund 30,000
1,18,000
Less: Sports Prizes Awarded (16,000)
Less: Expenses on Sports Events (7,000) 95,000
General Fund  2,00,000

14. Receipt and payment account of Maitreya Sports Club showed that ₹ 68,500 were received by way of subscriptions for the year ended on March 31, 2017.

The additional information was as under:

1. Subscription Outstanding as on March 31, 2016, were ₹ 6,500,

2. Subscriptions received in advance as on March 31, 2016, were ₹ 4,100,

3. Subscription Outstanding as on March 31, 2017, were ₹ 5,400,

4. Subscriptions received in advance as on March 31, 2017, were ₹ 2,500.

Show how the above information would appear in the final accounts for the year ended on March 31, 2017, of Maitreya Sports Club.

The solution to this question is as follows:

Books of Maitreya Sports Club

Income and Expenditure Account 

as on March 31, 2017
Dr. Cr.
Expenditure Amount

 ₹

 Income Amount

₹
Subscription 68,500
Less: O/s on Mar. 31, 2016 (6,500)
62,000
Add: Advance on Mar. 31, 2016 4,100
Add: O/s on Mar. 31, 2017 5,400
71,500
Less: Advance on Mar. 31, 2017 (2,500) 69,000
Balance Sheet 

as on  March 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Subscription in Advance 4,100 Subscription Outstanding 6,500
Balance Sheet 

as on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Subscription in Advance 2,500 Subscription Outstanding 5,400

15. Following is the receipt and payment account of Rohatgi Trust:

Receipt and Payment Account 

for the year ending December 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Cash in hand 14,000 Rent 6,000
Cash at Bank 60,000 Salary 12,000
Subscriptions:

2016

2017

2018

 5,000

83,000

3,000

 91,000 Postage

Electricity charges

Purchase of furniture

Books

 300

6,000

20,000

3,000
Sale of Investment 90,000 Defence Bonds 1,50,000
Interest on investment 2,000 Help to needy students 22,000
Sale of furniture (book value ₹ 3,000)  3,200 Cash in hand

Cash at bank

 10,900

30,000
2,60,200 2,60,200

Prepare income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments: Subscription for 2017, still owing were ₹ 7,000. Interest due on defence bonds was ₹7,000, and rent still owing was ₹ 1,000. The book value of the investment sold was ₹ 80,000, and ₹ 30,000 of the investment were still in hand. Subscriptions received in 2017 included ₹ 400 from a life member. The total furniture on January 1, 2017, was worth ₹ 12,000. The salary paid for the year 2018 is ₹ 2,000.

The solution to this question is as follows:

Books of Rohatgi Trust

Income and Expenditure Account 

as on December 31, 2017
Dr. Cr.
Expenditure Amount

 ₹

 Income Amount

 ₹
Rent 6,000 Subscription 83,000
Add: Outstanding 1,000 7,000 Add: Outstanding for 2017 7,000
90,000
Salary 12,000 Less: Life Membership Fees (400) 89,600
Less: Advance for 2018 (2,000) 10,000
Interest Accrued on Defence Bonds 7,000
Postage 300 Profit on Sale of Investment

(₹ 90,000 – ₹ 80,000)

 10,000
Electricity Charges 6,000 Profit on Sale of Furniture

(₹ 3,200 – ₹ 3,000)

 200
Help to Needy Students 22,000 Interest on Investments 2,000
Surplus (Balancing Figure) 63,500
1,08,800 1,08,800
Balance Sheet 

as on December 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital fund (Balancing Figure) 2,01,000 Subscription Outstanding 5,000
Investment (₹ 80,000 + ₹ 30,000) 1,10,000
Furniture 12,000
Cash in hand 14,000
Cash at bank 60,000
2,01,000 2,01,000
Balance Sheet 

as on December 31, 2017
Expenditure Amount

 ₹

 Income Amount

 ₹
Advance Subscription 3,000 Subscription Outstanding 7,000
Rent Outstanding 1,000 Defence Bonds 1,50,000
Capital Fund 2,01,000 Add: Accrued Interest on Defence Bonds 7,000 1,57,000
Add: Surplus 63,500
Add: Life Membership Fees 400  2,64,900 Investment 30,000
Advance Salaries 2,000
Furniture 12,000
Add: Purchases 20,000
32,000
Less: Sales (3,000) 29,000
Books 3,000
Cash in Hand 10,900
Cash at Bank 30,000
2,68,900 2,68,900

16. The following receipt and payment account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017:

Receipt and Payment Account 

for the year ending December 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d Charity 11,500
Cash in hand 11,500 Rent and taxes 3,200
Cash at bank 12,600 Salary 6,000
Donation 9,000 Printing 600
Subscription 42,800 Postage 300
Legacies 18,000 Advertisements 4,500
Interest on investment 4,500 Insurances 2,000
Sale of old newspapers 200 Furniture 21,600
Investment 23,000
Balance c/d:
Cash in hand 9,900
Cash at bank 16,000
98,600 98,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:

(a) It was decided to treat one-third of the amount received on account of donation as income.
(b) The insurance premium was paid in advance for three months.
(c) Interest on investment ₹1,100 accrued was not received.
(d) Rent ₹600: salary ₹900 and advertisement expenses ₹1,000 outstanding as on December 31, 2017.

The solution to this question is as follows:

Books of Delhi Charitable Trust

Income and Expenditure Account 

as on December 31, 2017
Dr. Cr.
Expenditure Amount

 ₹

 Income Amount

 ₹
Insurance 2,000 Donation {9,000 × (1/3)} 3,000
Less: Prepaid {2,000 × (3/15)} (400) 1,600 Interest on Investments 4,500
Add: Accrued Interest 1,100 5,600
Charity 11,500
Rent and Taxes 3,200 Subscription 42,800
Add: Outstanding 600 3,800 Sale of Old Newspapers 200
Salary 6,000
Add: Outstanding 900 6,900
Printing 600
Postage 300
Advertisements 4,500
Add: Outstanding 1,000 5,500
Surplus (Balancing figure) 21,400
51,600 51,600
Balance Sheet 

as on December 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund (Balancing figure) 24,100 Cash in Hand 11,500
Cash at Bank 12,600
24,100 24,100
Balance Sheet 

as on December 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Capital Fund 24,100 Prepaid Insurance {2,000 × (3/15)} 400
Add: Donation {9,000 × (2/3) 6,000 Investment 23,000
Add: Legacies 18,000 Add: Accrued Interest 1,100 24,100
Add: Surplus 21,400 69,500 Furniture 21,600
Rent Outstanding 600 Cash in Hand 9,900
Salary Outstanding 900 Cash at Bank 16,000
Advertisement Expenses Outstanding 1,000
72,000 72,000

17. From the following receipt and payment account of a club, prepare the income and expenditure account for the year ended March 31, 2017, and the balance sheet as on that date.

Receipt and Payment Account 

for the year ending March 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d 3,500 General expenses 900
Subscription:

2015-16

2016-17

2017-18

 2,000

70,000

3,000

 75,000 Salary

Postage

Electricity charges

Furniture

 16,000

1,300

7,800

26,500
Sale of old Books 2,000 Books 13,000
(Costing ₹ 3,200) Newspapers 600
Rent from use of hall 17,000 Meeting expenses 7,200
Sale of newspapers 400 T.V. set 16,000
Profit from entertainment 7,300 Balance c/d 15,900
1,05,200 1,05,200

Additional Information:

(a) The club has 100 members, each paying an annual subscription of ₹ 900. Subscriptions outstanding on March 31, 2016, were ₹ 3,600.
(b) On March 31, 2017, the salary outstanding amounted to ₹ 1,000, salary paid included ₹ 1,000 for the year 2012.
(c) On April 1, 2017, the club owned land and building ₹ 25,000, furniture ₹ 2,600 and books ₹ 6,200.

 

The solution to this question is as follows:

Income and Expenditure Account 

as on December 31, 2017
Dr. Cr.
Expenditure Amount

 ₹

 Income Amount

 ₹
General Expenses 900 Subscription 70,000
Salary 16,000 Add: Outstanding for 2017 20,000 90,000
Add: Outstanding for 2017 1,000 (100 members at ₹ 900 each)
17,000 Rent from use of hall 17,000
Less: Outstanding for 2016 (1,000) 16,000 Sale of Old News Papers 400
Profit from Entertainment 7,300
Loss on Sale of Old Books 1,200
Electricity Charges 7,800
Newspapers 600
Meeting Expenses 7,200
Postage 1,300
Surplus (Balancing figure) 79,700
1,14,700 1,14,700
Balance Sheet as on March 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Salary Outstanding 1,000 Subscription Outstanding 3,600
Capital Fund (Balancing figure) 39,900 Furniture 2,600
Books 6,200
Cash and Bank 3,500
Building 25,000
40,900 40,900
Balance Sheet 

as on March 31, 2017
Liabilities Amount

 ₹

 Assets Amount

 ₹
Advance Subscription 3,000 Subscription Outstanding
Salary Outstanding 1,000 2017 20,000
Add: 2016 (Still Outstanding) 1,600 21,600
Capital Fund 39,900 Building 25,000
Add: Surplus 79,700 1,19,600 Furniture 2,600
Add: Purchases 26,500 29,100
Books 6,200
Add: Purchases 13,000
19,200
Less: Sales 3,200 16,000
T.V. Set 16,000
Cash and Bank 15,900
1,23,600 1,23,600

18. Following is the receipt and payment account of the Women’s Welfare Club for the year ended December 31, 2017:

The solution to this question is as follows:

Receipt and Payment Account 

for the year ending December 31, 2017
Receipts Amount

₹

 Payments Amount

₹
Balance b/d 7,250 Salary 12,500
Subscriptions 81,750 Stationery 1,700
Donations  3,000 Electricity charges 9,550
Grant from Government 15,000 Insurance 7,500
Sale of newspapers 300 Equipment 30,000
Proceeds from the charity show 16,500 Petty expenses 500
Interest on investments @ 10% for the whole year 7,000 Expenses on the charity show 12,900
Sundries income 400 Newspapers 1,000
Lectures fee 16,500
Honorarium to Secretary 12,000
Balance c/d 27,050
1,31,200 1,31,200

Additional Information:

01.01.2017

₹

 31.12.2017

₹
Outstanding salaries 1,200 1,800
Insurance prepaid 700 300
Subscription outstanding 3,750 2,500
Subscription received in advanced 1,750 1,000
Electricity charges outstanding — 1,250
Stock of stationery 2,250  700
Equipment 25,600 50,200
Building 1,20,000 1,14,000

Prepare the income and expenditure account for the year ended December 31, 2017, and the balance sheet as on that date.

The solution to this question is as follows:

Books of Women’s Welfare Club

 Income and Expenditure Account 

as on December 31, 2017
Dr. Cr.
Expenditure Amount

₹

 Income Amount

 ₹
Salary 12,500 Subscriptions 81,750
Add: O/s on Dec. 31, 2017 1,800 Add: O/s on Dec. 31, 2017 2,500
14,300 84,250
Less: O/s on Dec. 31, 2016 (1,200) 13,100 Less: O/s on Dec. 31, 2016 (3,750)
80,500
Stationery 1,700 Add: Advance on Dec. 31, 2016 1,750
Add: Opening Stock 2,250 82,250
3,950 Less: Advance on Dec.31, 2017 (1,000) 81,250
Less: Closing Stock (700) 3,250
Donations 3,000
Electric Charges 9,550 Grant from Government 15,000
Add: O/s on Dec. 31, 2017 1,250 10,800 Sale of Newspapers 300
Profit from Charity show (16,500–12,900) 3,600
Insurance 7,500 Interest on Investments 7,000
Add: Prepaid in 2016 700 Sundries Income 400
8,200
Less: Prepaid in 2017 (300) 7,900
Depreciation on Equipment 5,400
Petty Expenses 500
Newspapers 1,000
Lectures Fee 16,500
Honorarium to Secretary 12,000
Depreciation on Building 6,000
Surplus (Balancing Figure) 34,100
1,10,550 1,10,550
Balance Sheet 

as on December 31, 2016
Liabilities Amount

₹

 Assets Amount

₹
Outstanding Salaries 1,200 Insurance Prepaid 700
Subscription in Advance 1,750 Subscription Outstanding 3,750
Stock of Stationery 2,250
Capital Fund (Balancing Figure) 2,26,600 Equipment 25,600
Building 1,20,000
Cash and Bank 7,250
Investments {7,000 × (100/10)} 70,000
2,29,550 2,29,550
Balance Sheet 

as on December 31, 201
Liabilities Amount

₹

 Assets Amount

₹
Outstanding Salaries 1,800 Equipment 25,600
Subscription in Advance 1,000 Add: Purchases 30,000
Electricity Charges Outstanding 1,250 55,600
Capital Fund 2,26,600 Less: Depreciation (5,400) 50,200
Add: Surplus 34,100 2,60,700
Insurance Prepaid 300
Subscription Outstanding 2,500
Stock of Stationery 700
Building 1,20,000
Less: Depreciation (6,000) 1,14,000
Cash and Bank 27,050
Investments 70,000
2,64,750 2,64,750

19. As on March 31, 2017, the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club, and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running the restaurant and dining room and (2) Income and expenditure account for the year ended March 31, 2017 (3) and a balance sheet as at that date.

Debit Balances ₹ Credit Balances ₹
Stock-in-hand 1170 Receipts Dining Room 87,660
Purchases 24,660 Subscriptions 9,450
Dining Room 32,370 Billiard’s Receipts 7,300
Rent 10,470 Sunday Receipts 410
Wages 18,690 Interest on Fixed Deposit 270
Repairs and Renewals 5,400 Sundry Creditors  5310
Fuel and Light 5,280 Grant from Institute (permanent) 42,000
Misc. Expenses 4,050 Income and Exp. A/c (1.4.16) 1,380
Cash in Hand 560 Suspense A/c (See note) 60
Cash at Bank 2,760
Fixed Deposit 8,500
Sundry Debtors 2,250
China glass, cutlery and linen 600
Billiard Table 2,070
Fixtures and Fittings 870
Furniture 4,140
Club Premises 30,000
1,53,840 1,53,840

On March 31, 2016, the stock of a restaurant consisted of ₹ 900 and ₹ 60, respectively. Provide depreciation ₹ 60 on fixtures and fittings, ₹ 390 on a billiard table and ₹ 560 on furniture.

The solution to this question is as follows:

Books of Indian Chartered Accountants Recreation Club

Restaurant Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 1,170 Receipts from Dining Room 87,660
Purchases 24,660 Closing Stock 960
Dining Room Exp. 32,370
Profit from Restaurant 30,420
88,620 88,620
Income and Expenditure Account 

as on March 31, 2017
Dr. Cr.
Expenditure Amount

 ₹

 Income Amount

₹
Rent 10,470 Subscriptions 9,450
Wages 18,690 Sundry Receipts 410
Repairs and Renewals 5,400 Interest on Fixed Deposits 270
Fuel and Light 5,280 Profit from Restaurant 30,420
Misc. Expenses 4,050 Billiards Receipts 7,300
Depreciation on
Fixtures and Fittings 60
Billiards Table 390
Furniture 560 1,010
Surplus (Excess of Income over Expenditure) 2,950
47,850 47,850
Balance Sheet 

as on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Sundry Creditors 5,310 Cash in Hand 560
Grant from Institute 42,000 Cash at Bank 2,760
Suspense 60 Fixed Deposit 8,500
Capital Fund (Income and Exp. A/c

as on Apr.01, 2016)

 1,380 Sundry Debtors 2,250
Add: Surplus 2,950 4,330 China Glass, Cutlery and Linen 600
Billiards Table 2,070
Less: Depreciation (390) 1,680
Fixture and Fittings 870
Less: Depreciation (60) 810
Furniture 4,140
Less: Depreciation (560) 3,580
Club Premises 30,000
Stock of Restaurant 960
51,700 51,700

Concepts covered in this chapter are listed below:

  • Meaning and characteristics of a non-profit organisation
  • Accounting records of NPO
  • Balance sheet
  • Incidental trading activity
  • Income and expenditure account based on the trial balance
  • Income and expenditure account

Conclusion

NCERT Solutions for Class 12 Accountancy Chapter 1 provide a wide range of illustrative examples, which assists the students in comprehending and learning the concepts and topics quickly. The above-mentioned are the solutions for Class 12 based on the CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 12 Accountancy, visit BYJU’S or download BYJU’S – The Learning App for more information.

Also, explore – 

NCERT Solutions for Class 12 Accountancy Part I

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