Question

Following is the Receipt and Payment account of Rohatgi Trust :

Receipt and Payment Account for the year ending December 31, 2006
Receipts		Amount Rs	Payments	Amount Rs
Cash in hand		14,000	Rent	6,000
Cash at Bank		60,000	Salary	12,000
Subscriptions: 2005 2006 2007	5,000 83,000 3,000	91,000	Postage Electricity charges Purchase of furniture Books	300 6,000 20,000 3,000
Sale of Investment		90,000	Defence Bonds	1,50,000
Interest on investment		2,000	Help to needy students	22,000
Sale of old furniture (book value Rs 3,000)		3,200	Cash in hand Cash at bank	10,900 30,000
		2,60,200		2,60,200

Prepare Income and expenditure account for the year ended December 31, 2006, and a balance sheet as on that date after the following adjustments: Subscription for 2006, still owing were Rs 7,000. Interest due on defence

bonds was Rs7,000, Rent still owing was Rs 1,000. The Book value of investment sold was Rs 80,000, Rs 30,000 of the investment were still in hand. Subscription received in 2006 included Rs 400 from a life member. The total furniture on January 1, 2006 was worth Rs 12,000. Salary paid for the year 2007 is Rs 2,000.

Answer 1

Books of Rohatgi Trust Income and Expenditure Account as on December 31, 2006
Dr.							Cr.
Expenditure			Amount Rs	Income		Amount Rs
Rent		6,000		Subscription	83,000
Add: Outstanding		1,000	7,000	Add: Outstanding for 2006	7,000
				90,000
Salary		12,000		Less: Life Membership Fees	(400)	89,600
Less: Advance for 2007		(2,000)	10,000
				Interest Accrued on Defence Bonds		7,000
Postage			300	Profit on Sale of Investment (Rs 90,000 – Rs 80,000)		10,000
Electricity Charges			6,000	Profit on Sale of Furniture (Rs 3,200 – Rs 3,000)		200
Help to Needy Students			22,000	Interest on Investments		2,000
Surplus (Balancing Figure)			63,500
			1,08,800			1,08,800

Balance Sheet as on December 31, 2005
Liabilities	Amount Rs	Assets	Amount Rs
Capital fund (Balancing Figure)	2,01,000	Subscription Outstanding	5,000
		Investment (Rs 80,000 + Rs 30,000)	1,10,000
		Furniture	12,000
		Cash in hand	14,000
		Cash at bank	60,000
	2,01,000		2,01,000

Balance Sheet as on December 31, 2006
Expenditure			Amount Rs	Income		Amount Rs
Advance Subscription			3,000	Subscription Outstanding		7,000
Rent Outstanding			1,000	Defence Bonds	1,50,000
Capital Fund		2,01,000		Add: Accrued Interest on Defence Bonds	7,000	1,57,000
Add: Surplus		63,500
Add: Life Membership Fees		400	2,64,900	Investment		30,000
				Advance Salaries		2,000
				Furniture	12,000
				Add: Purchases	20,000
				32,000
				Less: Sales	(3,000)	29,000
				Books		3,000
				Cash in Hand		10,900
				Cash at Bank		30,000
			2,68,900			2,68,900

NOTE: As per the solution, Surplus is Rs 63,500; however, as per the book, the Surplus is Rs 59,900.