Question

From the following receipts and payments and information given below, Prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Organisation as on December 31, 2006.

Receipt and Payment Account for the year ending as on December 31, 2006
Receipts		Amount Rs	Payments	Amount Rs
Balance b/d			General Expenses	3,200
Cash in hand		4,000	News paper	1,850
Cash at Bank		15,550	Electricity	3,000
Subscriptions			Fixed deposit with bank (on 31.06.2006) @ 10% p.a.	18,000
2005	1,200
2006	26,500		Books	7,000
2007	500	28,200	Salary	3,600
Sale of old newspapers		1,250	Rent	6,500
Govt. grant		12,000	Postage charges	300
Sale of old furniture (book value Rs5000)		3,700	Furniture (purchased)	10,500
Interest received on FD		450	Balance c/d
			Cash in Hand	3,000
			Cash at Bank	8,200
		65,150		65,150

Information:

(i) Subscription outstanding as on 31.12.2005 Rs 2,000 and on December 31, 2006 Rs 1,500.

(ii) On December 31, 2006 Salary outstanding Rs 600, and one month Rent paid in advance.

(iii) On Jan. 01, 2005 organisation owned Furniture Rs 12,000, Books Rs 5,000.

Answer 1

Books of Adult Literacy Organisation Income and Expenditure Account as on Dec. 31, 2006
Dr.			Cr.
Expenditure		Amount Rs		Income		Amount Rs
Loss on Sale of Old Furniture		1,300		Subscription	26,500
General Expenses		3,200		Add: Outstanding for 2006	1,500	28,000
Newspapers		1,850
Electricity		3,000		Sale of Old Newspapers		1,250
Salary	3,600			Government Grant		12,000
Add: Outstanding for 2006	600	4,200		Interest received on F.D.	450
				Add: Accrued Interest	450	900
Rent	6,500
Less: Prepaid for 2007 {6,500×(1/13)}	(500)	6,000
Postages Charges		300
Surplus (Excess of Income over Expenditure)		22,300
		42,150				42,150

Balance Sheet as on Dec. 31, 2005
Liabilities	Amount Rs	Assets	Amount Rs
Capital Fund on Dec. 31, 2005 (Balancing Figure)	38,550	Subscription Outstanding	2,000
		Cash in Hand	4,000
		Cash at Bank	15,550
		Furniture	12,000
		Books	5,000
	38,550		38,550

Balance Sheet as on Dec. 31, 2006
Liabilities		Amount Rs	Assets		Amount Rs
Capital	38,550		Prepaid Rent		500
Add: Surplus	22,300	60,850	Books	5,000
			Add: Purchases	7,000	12,000
Salary Outstanding		600
Subscription Received in Advance for 2007		500	Furniture	12,000
			Add: Purchases	10,500
				22,500
			Less: Sale	(5,000)	17,500
			Fixed Deposit	18,000
			Add: Accrued Interest	450	18,450
			Cash in Hand		3,000
			Cash at Bank		8,200
			Subscription Outstanding for 2006	1,500
			Add: Outstanding for 2005	800	2,300
		61,950			61,950

NOTE: In order to match the answer with the book, Adjustment (i) - Subscription outstanding on 31.12.2005 Rs 2,000 has been taken as Subscription outstanding for 31.12.2005 Rs 2,000 and Subscription outstanding on December 31, 2006 Rs 1,500 has been taken as Subscription outstanding for December 31, 2006 Rs 1,500.