Question

How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and expenditure account for the year ending 31.3.2007 and its Balance Sheet as on 31.3.2007:

		Rs
(a)	Donation received during the year for the construction of a permanent Pavilion	12,25,000
	Expenditure incurred up to 31.3.2007 on its construction	10,80,000
	The total estimated expenditure on construction of Pavilion being	25,00,000
(b)	Tournament Fund:
	Balance as on 1.4.2006	10,700
	Subscriptions for tournament received during the year	65,800
	Expenditure incurred during the year on conducting tournaments	72,400
(c)	Life Membership fee received during the year	28,000

Give reasons for your answers

Answer 1

(a)

Books of Bombay Women Cricket Club Balance Sheet as on March 31, 2007
Liabilities		Amount Rs	Assets	Amount Rs
Donation for Pavilion	12,25,000		Construction of Pavilion in Progress	10,80,000
Less: Exp. On construction of Pavilion	(10,80,000)	1,45,000
Capital
Add: Pavilion Construction	10,80,000	10,80,000

Reason

Donation for construction of Pavilion is a donation for specific purpose.

Expenses on construction on Pavilion is a capital expenditure.

(b)

Balance Sheet as on March 31, 2007
Liabilities		Amount Rs	Assets	Amount Rs
Tournament Fund	10,700
Add: Subscription for Tournament	65,800
76,500
Less: Tournament Expenses	(72,400)	4,100

Reason

All funds are treated as capital receipts and expenses related to any fund are deduced from the concerned funds.

(c)

Balance Sheet as on March 31, 2007
Liabilities	Amount Rs	Assets	Amount Rs
Life Membership Fees	28,000

Reason

Life Membership Fees are considered as capital receipts and are shown on the Liabilities side of the Balance Sheet, if nothing is specified about its treatment. But if it is to be treated as revenue item, then it is shown on the credit side of the Income and Expenditure Account.