Question

From the following Receipts and Payments A/c of a club for the year ended 31st March, 2015 and from the informations supplied, prepare Income and Expenditure Account for the year ended 31st March, 2015 and the Balance Sheet as at that date :

$\begin{array}{cccc}\text{Receipts}& \text{Rs}& \text{Payments}& \text{Rs}\\ \text{Balance b/d}& 1,50,000& \text{Salaries}& 1,50,000\\ \text{Subscriptions :}& & \text{Entertainment Expenses}& 60,000\\ \text{2013-14}& 10,000& \text{Electric Charges}& 20,000\\ \text{2014-15}& 2,00,000& \text{General Expenses}& 30,000\\ \text{2015-16}& 20,000& \text{Investments}& 1,00,000\\ \text{Entertainment Receipts}& 1,00,000& \text{Printing and Stationery}& 20,000\\ \text{Sale of Old Furniture}& & \text{Newspapers}& 30,000\\ \text{(Costing Rs 10,000)}& 6,000& \text{Furniture}& 30,000\\ \text{Sale of Newspapers}& 4,000& \text{Miscellaneous Expenses}& 20,000\\ & & \text{Balance c/d}& 30,000\\ & \underset{–}{\overline{4,90,000}}& & \underset{–}{\overline{4,90,000}}\end{array}$

(i) The club has 250 members, each paying an annual subscription of Rs 1,000. Rs 5,000 are still in arrears for subscriptions of 2013-14. In 2013-14, 10 members had paid their subscriptions for 2014-15 as well.

(ii) Salaries paid include Rs 10,000 for 2013-14 and Rs 15,000 for 2015-16. Outstanding salaries for 2014-15 amounted to Rs 20,000.

(iii) On 1-4-2014 the club owned land and building valued at Rs 10,00,000 and furniture valued at Rs 1,10,000.

(iv) Interest for 3 months $6\%$ p.a. has accrued on investments.

Answer 1

Balance Sheet
as at 1st April, 2014
$\begin{array}{cccc}\text{Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Advance Subscriptions}& & \text{Cash in hand}& 1,50,000\\ \text{(10 members @ Rs 1,000}& & \text{Outstanding Subscriptions}& \\ \text{each)}& 10,000& \text{(Rs 10,000 + Rs 5,000)}& 15,000\\ \text{Outstanding Salaries}& 10,000& \text{Furniture}& 1,10,000\\ \text{Capital Fund (Balancing Figure)}& 12,55,000& \text{Land and Building}& 10,00,000\\ & \underset{–}{\overline{12,75,000}}& & \underset{–}{\overline{12,75,000}}\end{array}$

Income and Expenditure Account for the year ending 31st March, 2015
Dr. Cr.
$\begin{array}{cccccc}\text{Expenditure}& & \text{Rs}& \text{Income}& & \text{Rs}\\ & & & \text{Subscriptions}& & \\ \text{Salaries}& 1,50,000& & \text{Received}& 2,00,000& \\ \text{Less : Outstanding at}& & & \text{Add : Advance subscriptions}& & \\ \text{the beginning}& \underset{–}{10,000}& & \text{received in 2013-14 :}& & \\ & 1,40,000& & \text{10 members @}& & \\ \text{Less : Amount Prepaid}& & & \text{Rs 1,000 each}& \underset{–}{10,000}& \\ \text{in 2014-15}& \underset{–}{15,000}& & & 2,10,000& \\ & 1,25,000& & \text{Add : Outstanding Subscriptions}& & \\ \text{Add : Outstanding at}& & & {\text{of Current year}}^{\left(1\right)}& \underset{–}{40,000}& 2,50,000\\ \text{the end}& \underset{–}{20,000}& 1,45,000& \text{Entertainment receipts}& & 1,00,000\\ \text{Entertainment Expenses}& & 60,000& \text{Sale of Newspapers}& & 4,000\\ \text{Electric Charges}& & 20,000& \text{Accrued Interest on}& & \\ \text{General Expenses}& & 30,000& \text{Investment}6\%\text{on}& & \\ \text{Printing}\&\text{Stationery}& & 20,000& \text{Rs 1,00,000 for 3 months}& & 1,500\\ \text{Newspapers}& & 30,000& & & \\ \text{Miscellaneous Expenses}& & 20,000& & & \\ \text{Loss on Furniture}& & & & & \\ \text{(Rs 10,000 - Rs 6,000)}& & 4,000& & & \\ \text{Excess of Income over}& & & & & \\ \text{Expenditure}& & 26,500& & & \\ & & \underset{–}{\overline{3,55,500}}& & & \underset{–}{\overline{3,55,500}}\end{array}$

Balance Sheet
as at 31st March, 2015
$\begin{array}{cccccc}\text{Liabilities}& & \text{Rs}& \text{Assets}& & \text{Rs}\\ \text{Subscriptions received in}& & & \text{Cash in hand}& & 30,000\\ \text{Advance}& & 20,000& \text{Outstanding Subscriptions}& & \\ \text{Outstanding Salary}& & 20,000& {\text{(Rs 40,000 + Rs 5,000)}}^{\left(2\right)}& & 45,000\\ \text{Capital Fund}& & & \text{Accrued Interest}& & 1,500\\ \text{(1-4-2014)}& 12,55,000& & \text{Prepaid Salary}& & 15,000\\ \text{Add : Excess of Income}& & & \text{Investments}& & 1,00,000\\ \text{over Expenditure}& \underset{–}{26,500}& 12,81,500& \text{Furniture}& 1,10,000& \\ & & & \text{Add : Additions}& \underset{–}{30,000}& \\ & & & & 1,40,000& \\ & & & \text{Less : Sale of Furniture}& \underset{–}{10,000}& 1,30,000\\ & & & \text{Land and Building}& & 10,00,000\\ & & \underset{–}{\overline{13,21,500}}& & & \underset{–}{\overline{13,21,500}}\end{array}$

Note :

(1) The club has 250 members and each pays an annual subscription of Rs 1,000.

$\begin{array}{cccc}\text{As such, the total subscriptions receivable for}& & & \text{Rs}\\ \text{2014-15 will be}250\times 1,000& & =& 2,50,000\\ \text{Less : Amount received during the year 2014-15}& & =& \underset{–}{2,00,000}\\ \text{Balance}& & =& 50,000\\ \text{Less : Advance received during the previous year}& & =& \underset{–}{10,000}\\ \text{Therefore, outstanding subscription for 2014-15}& & =& \underset{–}{40,000}\end{array}$

(2) The outstanding subscription for the previous year Rs 5,000 is still in arrear at the end of current year also. As such, it will be shown on the assets side of both years' Balance Sheets.