Question

From the following Receipts and Payments Account of Sonic Club and from the given additional information, prepare Income and Expenditure Account for the year ending 31st March, 2015 and the Balance Sheet as at that date :

Receipts and Payments Account
for the year ending 31st March, 2015
Dr. Cr.
$\begin{array}{cccc}\text{Receipts}& \text{Rs}& \text{Payments}& \text{Rs}\\ \text{Balance b/d}& 1,90,000& \text{Salaries}& 3,30,000\\ \text{Subscriptions}& 6,60,000& \text{Sports Materials}& 4,00,000\\ \text{Interest on Investments}& & \text{Balance c/d}& 1,60,000\\ @8\%\text{p.a. for full year}& 40,000& & \\ & \underset{–}{\overline{8,90,000}}& & \underset{–}{\overline{8,90,000}}\end{array}$

Additional Information :

(i) The club had received Rs 20,000 for subscription in 2013-14 for 2014-15.

(ii) Salaries had been paid only for 11 months.

(iii) Stock of Sports Materials on 31st March, 2014 was Rs 3,00,000 and on 31st March, 2015 was Rs 6,50,000.

Answer 1

Balance Sheet
as at 31st March, 2014
$\begin{array}{cccc}\text{Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Subscription Received in Advance}& 20,000& \text{Cash in Hand}& 1,90,000\\ \text{Capital Fund (Balancing Figure)}& 9,70,000& \text{Investment (Note 1)}& 5,00,000\\ & & \text{Stock of Sports Materials}& 3,00,000\\ & \underset{–}{\overline{9,90,000}}& & \underset{–}{\overline{9,90,000}}\end{array}$

Note (1) Value of Investments has been calculated as below :

If Interest is 8, the value of Investments = 100

If Interest is 40,000, the value of Investments = $\frac{100}{8}\times 40,000=5,00,000$

Income and Expenditure Account for the year ending 31st March, 2015
Dr. Cr.
$\begin{array}{cccccc}\text{Expenditure}& & \text{Rs}& \text{Income}& & \text{Rs}\\ \text{Salaries}& 3,30,000& & \text{Subscription}& 6,60,000& \\ \text{Add : Outstanding for one}& & & \text{Add : Advance subscription}& & \\ \text{months salaries}& & & \text{received in 2013-14}& & \\ \text{(3,30,000}÷\text{11)}& \underset{–}{30,000}& 3,60,000& \text{for 2014-15}& \underset{–}{20,000}& 6,80,000\\ \text{Sports Materials Consumed :}& & & \text{Interest on Investments}& & 40,000\\ \text{Opening Stock}& 3,00,000& & & & \\ \text{Add : Purchases}& \underset{–}{4,00,000}& & & & \\ & 7,00,000& & & & \\ \text{Less : Closing Stock}& \underset{–}{6,50,000}& 50,000& & & \\ \text{Surplus (Excess of Income)}& & & & & \\ \text{over Expenditure)}& & 3,10,000& & & \\ & & \underset{–}{\overline{7,20,000}}& & & \underset{–}{\overline{7,20,000}}\end{array}$

Balance Sheet
as at 31st March, 2015
$\begin{array}{ccccc}\text{Liabilities}& & \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Salaries Outstanding}& & 30,000& \text{Cash in Hand}& 1,60,000\\ \text{Capital Fund}& 9,70,000& & \text{Investment (Note 1)}& 5,00,000\\ \text{Add : Surplus}& \underset{–}{3,10,000}& 12,80,000& \text{Stock of Sports Materials}& 6,50,000\\ & & \underset{–}{\overline{13,10,000}}& & \underset{–}{\overline{13,10,000}}\end{array}$