Question

Receipt and Payment Account of Shankar Sports club is given below, for the year ended December 31, 2006

Receipt and Payment Account for the year ending December 31, 2006
Receipts	Amount Rs	Payments	Amount Rs
Opening Cash in hand	2,600	Rent	18,000
Entrance fees	3,200	Wages	7,000
Donation for building	23,000	Billiard table	14,000
Locker rent	1,200	Furniture	10,000
Life membership fee	7,000	Interest	2,000
Profit from entertainment	3,000	Postage	1,000
Subscription	40,000	Salary	24,000
Cash in hand	4,000
	80,000		80,000

Prepare Income and Expenditure Account and Balance Sheet with help of following Information:

Subscription outstanding on 31st December 2005 is Rs 1, 200 and Rs 2,300 on 31.12.2006, opening stock of postage stamps is Rs 300 and closing stock is Rs 200, Rent Rs 1,500 related to 2005 and Rs 1,500 is still unpaid.

On January 1, 2006 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500

On 31.12.2006. The club took a loan of Rs 20,000 (@ 10% p.a.) in 2005.

Answer 1

Books of Shankar Sports Club Income and Expenditure A/c as on 31 Dec. 2006
Dr.					Cr.
Expenditure		Amount Rs	Income		Amount Rs
Rent	18,000		Entrance Fees		3,200
Add: Outstanding for 2006	1,500		Locker Rent		1,200
	19,500		Profit from Entertainment		3,000
Less: Outstanding for 2005	(1,500)	18,000
			Subscription	40,000
Wages		7,000	Less: Outstanding for 2005	(1,200)
Depreciation on Furniture		2,500		38,800
Interest		2,000	Add: Outstanding for 2006	2,300	41,100
Postage	1,000		Deficit (Balancing Figure)		6,100
Add: Opening Stock	300
	1,300
Less: Closing Stock	(200)	1,100
Salaries		24,000
		54,600			54,600

Balance Sheet as on December 31, 2005
Liabilities	Amount Rs	Assets	Amount Rs
Rent Outstanding	1,500	Cash in Hand	2,600
10%Loan	20,000	Subscription Outstanding	1,200
		Furniture	15,000
		Stock of Postage Stamps	300
		Capital fund Deficit (Balancing figure)	2,400
	21,500		21,500

Balance Sheet as on December 31, 2006
Expenditure		Amount Rs	Income			Amount Rs
Rent Outstanding		1,500	Subscription Outstanding			2,300
10% Loan		20,000	Stock of Postage Stamps			200
Donation for Building		23,000	Billiard Table			14,000
Capital Fund	(2,400)		Furniture		15,000
Add: Life Membership Fee	7,000		Add: Purchases		10,000
Less: Deficit	(6,100)				25,000
			Less: Depreciation		(2,500)	22,500
			Cash in Hand			4,000
			** Capital Fund (Deficit)			1500
		44,500				44,500

NOTE 1: As per the solution, Deficit is Rs 6,100 and the total of the Balance Sheet as on Dec. 31, 2006 is Rs 44,500. However, as per the book, Deficit is Rs 8,100 and the total of the Balance Sheet as on Dec. 31, 2006 is Rs 53,500.

** NOTE 2:

Capital Fund		(2,400)
Add:	Life Membership Fees	7,000
Less:	Deficit	(6,100)
	Net Deficit		1,500