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Question

Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2007

Receipt and Payment Account for the year ending December 31, 2007

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

Charity

11,500

Cash in Hand

11,500

Rent and taxes

3,200

Cash at Bank

12,600

Salary

6,000

Donation

9,000

Printing

600

Subscription

42,800

Postage

300

Legacies

18,000

Advertisements

4,500

Interest on investment

4,500

Insurances

2,000

Sale of old newspapers

200

Furniture

21,600

Investment

23,000

Balance c/d:

Cash in Hand

9,900

Cash at Bank

16,000

98,600

98,600

Prepare Income and expenditure account for the year ended December 31, 2006, and a balance sheet as on that date after the following adjustments:

(a)

It was decided to treat one-third of the amount received on account of donation as income.

(b)

Insurance premium was paid in advance for three months.

(c)

Interest on investment Rs1,100 accrued was not received.

(d)

Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on December 31, 2007.

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Solution

Books of Delhi Charitable Trust

Income and Expenditure Account as on December 31, 2007

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Insurance

2,000

Donation {9,000 × (1/3)}

3,000

Less: Prepaid {2,000 × (3/15)}

(400)

1,600

Interest on Investments

4,500

Add: Accrued Interest

1,100

5,600

Charity

11,500

Rent and Taxes

3,200

Subscription

42,800

Add: Outstanding

600

3,800

Sale of Old Newspapers

200

Salary

6,000

Add: Outstanding

900

6,900

Printing

600

Postage

300

Advertisements

4,500

Add: Outstanding

1,000

5,500

Surplus (Balancing figure)

21,400

51,600

51,600

Balance Sheet as on December 31, 2007

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Fund (Balancing figure)

24,100

Cash in Hand

11,500

Cash at Bank

12,600

24,100

24,100

Balance Sheet as on December 31, 2007

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Fund

24,100

Prepaid Insurance {2,000 × (3/15)}

400

Add: Donation {9,000 × (2/3)

6,000

Investment

23,000

Add: Legacies

18,000

Add: Accrued Interest

1,100

24,100

Add: Surplus

21,400

69,500

Furniture

21,600

Rent Outstanding

600

Cash in Hand

9,900

Salary Outstanding

900

Cash at Bank

16,000

Advertisement Expenses Outstanding

1,000

72,000

72,000

Note:

i.

per the solution, Surplus and the total of the Closing Balance Sheet are Rs 21,400 and Rs 72,000 respectively; however as per the answer given in the book is Rs 21,500 and Rs 72,100. Thus, in order to match the answer with that of the book, Rent paid of Rs 2,000 is assumed for 12 months instead of 15 months.

ii.

question asks us to prepare Income and Expenditure Account for the year ended December 31, 2006; however, the solution has been prepared according to the date of Receipt and Payment Account which is December 31, 2007.


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Q.

Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2006:

Receipt and Payment Account for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount Rs

Balance b/d

7,890

Salary

11,000

Subscriptions

52,000

Electric charges

5,500

Life member ship fee

2,200

Billiard Table

17,500

Entrance fee

3,200

Office expenses

4,100

Tournament fund

26,000

Printing and Stationery

2,300

Locker Rent

1,250

Tournament expenses

18,500

Sale of old sports goods (Costing Rs 2,200)

2,500

Repair of ground

2,000

Sale of Old Newspaper

750

Furniture purchased

7,700

Legacy

37,500

Sports equipments

12,000

Cash in Hand

12,690

Cash at Bank

10,000

Fixed Deposit (on 1.10.06 for 10% p.a)

30,000

1,33,290

1,33,290

Other Information:

Subscription outstanding was on December 31, 2005 Rs 1,200 and Rs 3,200 on December 31, 2006. Locker rent outstanding on December 31, 2006 Rs 250. Salary outstanding on December 31, 2006 Rs 1,000.

On January 1, 2006, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).

Q.

Prepare Income and Expenditure Account and Balance Sheet for the year ended December 31, 2006 from the following Receipt and Payment Account and Balance Sheet of culture club:

Receipt and Payment Account for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Opening cash balance

12,000

Furniture

4,000

Subscription

Telephone expenses

800

2005

2,000

Salary

2006

22,000

24,000

2005

1,000

Entrance fees

2,800

2006

4,000

Locker rent

1,000

Newspapers

700

Life membership fee

1,200

Sundry expenses

1,000

Government grant

11,000

Defence bonds

18,000

Land

20,000

Closing cash balance

2,500

52,000

52,000

Balance Sheet for the year ending December 31, 2005

Liabilities

Amount

Rs

Assets

Amount

Rs

Advance locker rent

200

Cash in hand

12,000

Subscription Received in Advance

1,000

Outstanding Expenses

3,000

Outstanding salary

2,000

Building

35,000

Loan

10,000

Capital fund

36,800

50,000

50,000

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