Question

Following is the Receipt and Payment Account of Literacy Club for the year ended 31-3-2006.
$\begin{array}{cccccc}\text{Receipts}& & & \text{Amount}& \text{Payments}& \text{Amount}\\ & & & \text{(Rs)}& & \text{(Rs)}\\ \text{Balance b/d}& & & 19,550& \text{Salary}& 3,000\\ \text{Subscriptions :}& & & & \text{Newspapers}& 2,050\\ & 2004-05& 1,200& & \text{Electiricty Bill}& 1,000\\ & 2005-06& 26,500& & \text{Fixed Deposits}& \\ & 2006-07& \underset{–}{500}& 28,200& \text{(on}1-7-2005@9\%\text{p.a})& 20,000\\ \text{Sale of old newspapers}& & & 1,250& \text{Books}& 10,600\\ \text{Government Grants}& & & 10,000& \text{Rent}& 6,800\\ \text{Sale of Old Furniture}& & & & \text{Furniture}& 10,500\\ \text{(Book value Rs 7,000)}& & & 5,700& \text{Balance c/d}& 11,200\\ \text{Interest on Fixed Deposits}& & & 450& & \\ & & & \overline{65,150}& & \overline{65,150}\end{array}$

Additional information :

(i) Subscriptions outstanding as on 31-3-2005 were Rs 2,000 and on 31-3-2006 Rs 2,500.

(ii) On 31-3-2006 salary outstanding was Rs 600 and rent outstanding was Rs 1,200.

(iii) The club owned furniture Rs 15,000 and books Rs 7,000 on 1-4-2005.

Prepare Income and Expenditure Account of the Club for the year ended 31-3-2006 and ascertain 'Capital Fund' on 31-3-2005. Also prepare a Balance Sheet as on 31st March, 2006.

Answer 1

BALANCE SHEET
as on 31st March, 2005
$\begin{array}{cccc}\text{Liabilities and Capital}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Capital Fund (Balancing Figure)}& 43,550& \text{Cash in Hand}& 19,550\\ & & \text{Subscription Outstanding}& 2,000\\ & & \text{Furniture}& 15,000\\ & & \text{Books}& 7,000\\ & \overline{43,550}& & \overline{43,550}\end{array}$

INCOME AND EXPENDITURE ACCOUNT
Dr for the year ending 31st March, 2006 Cr
$\begin{array}{cccccc}\text{Expenditure}& & \text{Amount}& \text{Income}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{Salary}& 3,000& & \text{Subscriptions}& 26,500& \\ \text{Add: Outstanding Salary}& \underset{–}{600}& 3,600& \text{Add: Outstanding for}& & \\ \text{Newspapers}& & 2,050& 2005-{06}^{\ast }& \underset{–}{1,700}& 28,200\\ \text{Electricity Bill}& & 1,000& \text{Sale of Old Newspapers}& & 1,250\\ \text{Rent}& 6,800& & \text{Government Grants}& & 10,000\\ \text{Add: Outstanding Rent}& \underset{–}{1,200}& 8,000& \text{Interest on Fixed}& & \\ \text{Loss on Sale of}& & & \text{Deposit}& 450& \\ \text{Furniture (Rs 7,000 - Rs 5,700)}& & 1,300& \text{Add: Accrued Interest}& \underset{–}{900}& 1,350\\ \text{Excess of Income over}& & & & & \\ \text{Expenditure}& & 24,850& & & \\ & & \overline{40,800}& & & \overline{40,800}\end{array}$

*Subscription outstanding on 31-3-2006 is Rs 2,500 which includes the subscription outstanding for the year 2004-05 Rs 800 (i.e, Rs 2,000 - Rs 1,260 received during 2005-06). Hence, the subscription outstanding for 2005-06 is Rs 1,700 (i.e., Rs 2,500 - Rs 800). It should be noted that there is a difference between subscription outstanding on 31-3-2006 and subscription outstanding for 2005-06 (Which indicates subscription outstanding only for 2005-06).

BALANCE SHEET
as on 31st March, 2006
$\begin{array}{cccccc}\text{Liabilities and Capital}& & \text{Amount}& \text{Assets}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{Salary Outstanding}& & 600& \text{Cash in Hand}& & 11,200\\ \text{Rent Outstanding}& & 1,200& \text{Subscription Outstanding}& & \\ \text{Subscription Received in}& & & \text{For 2004-205}& & \\ \text{Advance}& & 500& \text{(Rs 2,000 - Rs 1,200)}& 800& \\ \text{Capital Fund (31-3-2005)}& 43,550& & \text{For 2005 - 06}& \underset{–}{1,700}& 2,500\\ \text{Add : Excess of Income}& & & \text{Fixed Deposit}& & 20,000\\ \text{over Expenditure}& \underset{–}{24,850}& 68,400& \text{Accrued Interest on Fixed}& & \\ & & & \text{Deposit}& & 900\\ & & & \text{Furniture (Rs 15,000 - Rs 7,000}& & \\ & & & \text{+ Rs 10,500)}& & 18,500\\ & & & \text{Books (Rs 7,000 + Rs 10,600)}& & 17,600\\ & & \overline{70,700}& & & \overline{70,700}\end{array}$