Question

How will you deal with the following item while preparing the Income and Expenditure Account for the year ending on March 31, 2016, and a Balance sheet as on that date in cash of the following case?

$\begin{array}{ccc}& \text{As at 1-4-2015}& \text{As at 31-3-2016}\\ & \text{(Rs)}& \text{(Rs)}\\ \text{Creditors for sports materials}& 2,000& 1,300\\ \text{Stock of sports materials}& 3,000& 500\end{array}$

Answer 1

AN EXTRACT OF INCOME AND EXPENDITURE ACCOUNT

for the year ending on 31st March, 2016

Dr. Cr.
$\begin{array}{cccc}\text{Expenditure}& \text{Amount}& \text{Income}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Sports Material Consumed}& 12,000& & \end{array}$

AN EXTRACT OF BALANCE SHEET
as at 31st year March, 2016
$\begin{array}{cccc}\text{Liabilities}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Creditors for Sports Materials}& 1,300& \text{Stock of Sports Materials}& 500\end{array}$

Working Notes :
(i) CREDITORS FOR SPORTS MATERIALS ACCOUNT
Dr. Cr.
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Bank A/c}& 10,800& \text{Balance c/d}& 2,000\\ \text{Balance b/d}& 1,300& \text{Stock of sports Materials A/c}& \\ & & \text{(Credit purchases)}& \\ & & \text{(Balancing figure)}& \underset{–}{10,100}\\ & \overline{12,100}& & 12,100\end{array}$

(ii) STOCK OF SPORTS MATERIALS ACCOUNT
Dr. Cr.
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Balance b/d}& 3,000& \text{Income and Expenditure A/c}& \\ \text{Creditors for sports Materials}& 10,100& \text{(sports materials consumed)}& \\ \text{(transfer)}& & \text{(Balancing figure)}& 12,600\\ & & \text{Balance c/d}& \underset{–}{500}\\ & \overline{13,100}& & 13,100\end{array}$