Question

Following is the Receipt and Payment Account of Literacy Club for the year ended 31-3-2016 :

$\begin{array}{ccccc}\text{Receipts}& & \text{Rs}& \text{Payment}& \text{Rs}\\ \text{Balance b/d}& & 19,550& \text{Salary}& 3,000\\ \text{Subscriptions :}& & & \text{Newspapers}& 2,050\\ \text{2014-15}& 1,200& & \text{Electricity Bill}& 1,000\\ \text{2015-16}& 26,500& & \text{Fixed deposit}& \\ \text{2016-17}& \underset{–}{500}& 28,200& \text{(on 1-7-2015 @}9\%\text{p.a)}& 20,000\\ \text{Sale of old newspapers}& & 1,250& \text{Books}& 10,600\\ \text{Government Grants}& & 10,000& \text{Rent}& 6,800\\ \text{Sale of old furniture}& & & \text{Furniture}& 10,500\\ \text{(Book value Rs 7,000)}& & 5,700& \text{Balance c/d}& 11,200\\ \text{Interest on fixed deposits}& & 450& & \\ & & \underset{–}{\overline{65,150}}& & \underset{–}{\overline{65,150}}\end{array}$

Additional Information :

(i) Subscriptions outstanding as on 31-3-2015 were Rs 2,000 and on 31-3-2016 Rs 2,500.

(ii) On 31-3-2016 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 1-4-2015.

Prepare Income and Expenditure Account of the Club for the year ended 31-3-2016 and ascertain 'Capital Fund' on 31-3-2015. Also prepare a Balance Sheet as at 31st March, 2016.

Answer 1

Balance Sheet
as at 31st March, 2015
$\begin{array}{cccc}\text{Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Capital Fund (Balancing figure)}& 43,550& \text{Cash in Hand}& 19,550\\ & & \text{Subscription Outstanding}& 2,000\\ & & \text{Furniture}& 15,000\\ & & \text{Books}& 7,000\\ & \underset{–}{\overline{43,550}}& & \underset{–}{\overline{43,550}}\end{array}$

Income and Expenditure Account
for the year ending 31st March, 2016
Dr. Cr.
$\begin{array}{cccccc}\text{Expenditure}& & \text{Rs}& \text{Income}& & \text{Rs}\\ \text{Salary}& 3,000& & \text{Subscriptions}& 26,500& \\ \text{Add : Outstanding}& \underset{–}{600}& 3,600& \text{Add : Outstanding for}& & \\ \text{Newspapers}& & 2,050& {\text{2015-16}}^{\ast }& \underset{–}{1,700}& 28,200\\ \text{Electricity Bill}& & 1,000& \text{Sale of old newspapers}& & 1,250\\ \text{Rent}& 6,800& & \text{Government Grants}& & 10,000\\ \text{Add : Outstanding}& \underset{–}{1,200}& 8,000& \text{Interest on Fixed Deposit}& 450& \\ \text{Loss on sale of furniture}& & & \text{Add : Accrued Interest}& \underset{–}{900}& 1,350\\ \text{(Rs 7,000 - Rs 5,700)}& & 1,300& & & \\ \text{Excess of Income over}& & & & & \\ \text{Expenditure}& & 24,850& & & \\ & & \underset{–}{\overline{40,800}}& & & \underset{–}{\overline{40,800}}\end{array}$

$\ast$ Subscription outstanding on 31-3-2016 is Rs 2,500 which includes the subscription outstanding for the year 2014-15 Rs 800 (i.e. Rs 2,000 - Rs 1,200 received during 2015-16). Hence, the subscription outstanding for 2015-16 is Rs 1,700 (i.e. Rs 2,500 - Rs 800). It should be noted that there is a difference between subscription outstanding on 31-3-2016 and subscription outstanding for 2015-16 (which indicates subscription outstanding only for 2015-16).

Balance Sheet
as at 31st March, 2016
$\begin{array}{cccccc}\text{Liabilities}& & \text{Rs}& \text{Assets}& & \text{Rs}\\ \text{Salary Outstanding}& & 600& \text{Cash in Hand}& & 11,200\\ \text{Rent Outstanding}& & 1,200& \text{Subscription Outstanding :}& & \\ \text{Subscription Received in}& & & \text{for 2014-15}& & \\ \text{Advance}& & 500& \text{(Rs 2,000 - 1,200)}& 800& \\ \text{Capital Fund (31-3-2015)}& 43,550& & \text{for 2015-16}& \underset{–}{1,700}& 2,500\\ \text{Add : Excess of Income}& & & \text{Fixed Deposit}& & 20,000\\ \text{over Expenditure}& \underset{–}{24,850}& 68,400& \text{Accrued Interest on Fixed Deposit}& & 900\\ & & & \text{Furniture (Rs 15,000 - 7,000}& & \\ & & & \text{+ 10,500)}& & 18,500\\ & & & \text{Books (Rs 7,000 + 10,600)}& & 17,600\\ & & \underset{–}{\overline{70,700}}& & & \underset{–}{\overline{70,700}}\end{array}$