NCERT Solutions For Class 12 Accountancy Chapter 1 Accounting for NPO Organization

NCERT Solutions

Class 12 Accountancy Chapter 1 Solutions – NPO Class 12th

NCERT Books Solutions For Class 12 Accountancy Accounting for NPO Organization

NCERT Solutions offer a broad variety of definitions and introduction to the topic for Class 12 Accounts, which includes all the questions provided in the NCERT books.

NCERT Solutions For Class 12 Accountancy Chapter 1 Accounting for NPO Organization
NCERT Solutions For Class 12 Accountancy Chapter 1 Accounting for NPO Organization

 

NCERT Solutions For Class 12 Accountancy Chapter 1 has been provided to ace up your preparation. Access and use the direct links available for Chapterwise Class 12 NCERT Solutions whenever you want. The detailed approach used to explain the NCERT Solutions of the 12th Std Accounts makes it easy for you to understand the concepts behind them.

NCERT Solutions For Class 12 Accountancy Chapter 1 Accounting for NPO Organization provides us with all-inclusive information on all concepts. As students would have to learn the basics about the subject in class 12, this curriculum for class 12 is a comprehensive study material, which explains the concepts in a great way.

 

Accountiong for NOT-FOR-PROFIT organisation

 

Page No 47:

Question 1:

State the meaning of ‘Not-for-Profit’ Organisations.

Answer:

Not-for-profit organizations (NPOs) have been set up with the main objective of providing services and not to earn profit thereby increasing the welfare of the society. Such organizations include schools, hospitals, trade unions, religious organizations, etc. The individual / group of individuals or individuals who manage and manage the functioning of an NPO are known as trustees. NPO’s main sources of income are donations, membership, life membership fees, grants etc. These organizations are not set up for profit purposes, they do not create trading and profit and loss accounts. Instead, they maintain receipts and payment accounts, income and expense accounts, and balance sheets.

 

Question 2:

State the meaning of Receipt and Payment Account.

Answer:

Receipts and payments account is a summary of the cash book. All cash receipts are recorded on the receipt side (ie debit side) and all cash payments are recorded on the payee side (ie credit side) of the payee and payment account. It is prepared on the basis of cash and bank transactions recorded in the cash book. It begins with the initial balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period. It records all cash and bank transactions both in capital and revenue nature. It not only records the cash and bank transactions related to the current accounting period, but also the cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.This account helps us to find only the closing balance of cash and bank and helps to assess the cash position of an NPO.

Question 3:

State the meaning of Income and Expenditure Account.

Answer:

The Income and Expenditure Account (I&E) is similar to the Profit and Loss Account in the sense that when the former is prepared to find a surplus or deficit during an accounting period, the latter is the net profit during an accounting period or Is prepared to detect net loss. . The I and E account is a nominal account and is prepared on accrual basis. It records all transactions of a revenue nature that relate to the current accounting period (whether outstanding or prepaid) for which the books are kept. All expenses and losses are recorded on the debit side (expense side) and all income and profits are recorded on the credit side (income side) of the I&E account. The closing balance or I and E account balance is termed as surplus (or deficit) if the total of the income side is greater (less) than the total amount of the expenditure side.

Question 4:

What are the features of Receipt and Payment Account?

Answer:

Following are the features of Receipt and Payment Account:1. Nature: This is a real account. It is an abbreviation for Cash Book.2. Nature of transaction: It records only cash and bank transactions. Transactions other than cash and bank such as depreciation, profit / profit on sale of property, etc. are not recorded in this account.3. No difference between capital and revenue items: It records all cash and bank receivables and payments of both capital and revenue nature.4. Opening and closing balance: It starts with the opening balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period.5. Purpose: It reveals the cash position of an organization. It helps to find out the total amount paid and received during an accounting period.

Question 5:

What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

Answer:

The following steps have been taken to prepare Income and Expenditure Account (I&E) from Receivables and Payments Account (R&P).Step 1: All revenue expenses paid for the current accounting period are transferred from the payment side of R&P to the expense side of I and E.Step 2: All revenue receipts for the current accounting period are transferred from the recipient side of R&P to the income side of I&E.Step 3: Amounts outstanding for the current period and expenses paid in advance accounting (preceding expenses) are to be added (adjusted) to their respective expenses in Phase 1 for the current period in the preceding accounting period.Step 4: The outstanding (earned income) for the current period and the income received in advance for the current period in the preceding accounting period are to be added (adjusted) to their respective income in Phase 2.Step 5: Non-cash items like depreciation, appreciation for current accounting period And to be adjusted in E.Step 6: After adjusting all revenue items for the current accounting period, the income and expense sides are totaled. If the total of the income side is greater than (or less than) the expenditure side, then the remaining amount is called the surplus (or deficit).

Question 6:

What is subscription? How is it calculated?

Answer:

Subscription is the main source of income for NPOs besides entry fees, donations, grants etc. Subscription refers to the amount paid by members on a periodic basis to keep their membership with the organization alive. It is paid by members monthly, quarterly, half-yearly or annually.This is shown in the debit side of the receipt and payment account, with the total amount received during the year that may be related to the current period and the previous and next accounting periods. When calculating Subscription for the current period, the advance Subscription received for the current period in the previous period and the outstanding membership for the current period are added to the Subscription received during the current period. On the other hand, the advance membership received for the next accounting period during the current period and the outstanding Subscription for the preceding period are deducted from the Subscription received during the current period.

Calculation of Subscription

Subscription received during the year ***
Add: Subscription received (in advance) during previous year for current year ***
Add: Subscription outstanding at the end of the year ***
***
Less: Subscription received in advance for the next year ***
Less: Subscription outstanding for the previous year *** ***
## Subscription shown in Income and Expenditure Account ***

*This subscription is related to the current accounting period and is shown in the Income side of the Income and Expenditure Account.

Question 7:

What is Capital Fund? How is it calculated?

Answer:

Capital fund is the excess of assets of NPOs more than their liabilities. In other words, assets in excess of liabilities are termed as capital for a profit making organization and capital as capital for NPOs. Any surplus or deficit from the Income and Expenditure account is added to the Capital Fund (by deduction). It is also called accumulated fund.

Calculation of Capital Fund

Capital Fund at the beginning of the year **
Add: Surplus from Income and Expenditure Account **
Add: Subscription Amount (Capitalised amount) **
Add: Life membership fee. ** **
Less: Deficit from Income and Expenditure Account **
Capital Fund at the end of the year ***

 

 

Page No 48:

Question 1:

Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.

Answer:

Receipts and payments account is a summary of the cash book. This account is prepared by organizations that maintain their books on a cash basis. All cash receipts are recorded on the receipt side (ie debit side) and all cash payments are recorded on the payee side (ie credit side) of the payee and payment account. It is prepared on the basis of cash and bank transactions recorded in the cash book. It begins with the initial balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period. It records all cash and bank transactions of both capital and revenue nature. It not only records cash and bank transactions related to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period. This account helps us to find only the closing balance of cash and bank and helps to assess the cash position of an NPO. It also forms the basis for preparation of income and expenditure account.

Similarities between Receipt and Payments Account and Cash Book

Following are the features of Receipt and Payment Account which are common for Cash Book:1. Nature: It is an abbreviation for Cash Book. Like the cash book, the receipt and payment account is also a real account.2. Nature of Transaction: It only records cash and bank transactions similar to a two-column cash book. Transactions other than cash and bank such as depreciation, profit / profit on sale of property, etc. are not recorded in this account.3. No distinction between capital and revenue items: It records all cash and bank receipts and payments, both of capital and revenue nature. Similarly, transactions recorded in the cash book are also of both capital and revenue nature.4. Opening and closing balance: It starts with the opening balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period.5. Purpose: It reveals the cash position of an organization. It helps to find out the total amount paid and received during an accounting period. Similarly, a cash book also helps us in assessing the cash position of an organization.Thus, based on the above points and similarities, the statement ‘Receipt and payment account is an abridged version of the cash book’ is appropriate.

Question 2:

“Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern”. Explain the statement.

Answer:

The Income and Expenditure Account (I&E) is similar to the Profit and Loss Account (P&L), in the sense that the former is created by for-profit organizations and the latter by profit-making organizations. Both accounts have been prepared on accrual basis.Similar to P&L, all expenses and losses related to the current accounting period are recorded on the debit side (expense side) and all profits and earnings of the current accounting period are recorded on the credit side (income side) of I and E. The balance figure of I&E is the surplus or deficit and the net profit or net loss of P&L. Both accounts only record revenue items that relate to the current accounting period.

Similarities between Income and Expenditure Account and Profit and Loss Account

The I&E account of the NPO is similar to the profit and loss account of a profit making business in the following etiquette.1. Nature of account: Both related accounts are nominal in nature.2. Basis of recording: Both accounts only record revenue expenditure and revenue income related to the current account period. Objects of capital nature are not ignored while preparing these accounts.3. Period: Transactions related to the current year are recorded in the Income and Expenditure Account in the same manner as the Profit and Loss Account. Transactions related to the previous year or the following year are excluded.4. Adjustment: Adjustments such as, arrears expenses, prepaid expenses, income received in advance, income due but not received, depreciation, bad debts etc. are in the profit and loss account. Thus, both accounts are prepared on a unitary basis.

Question 3:

Distinguish between Receipts and Payments Account and Income and Expenditure Account.

Answer:

Basis of Difference Receipts and Payments Account Income and Expenditure Account
1. Nature It is a summary of cash and bank transactions It is a summary of current year income and expenses
2. Revenue and Capital It records transactions related to both revenue and capital nature. It records transactions related to revenue nature only.
3. Debit Side Debit side of this account records cash and bank receipts during an accounting period. Debit side of this account records expenses and losses incurred in the current accounting period.
4. Credit side Credit side of this account records payments in cash and through cheques. Credit side of this account records income and gains earned in the current accounting period.
5. Type of account It is a Real Account It is a Nominal Account
6. Period It records receipts and payments made during the year that may be related to the current accounting period or the preceding period and the succeeding accounting period. It only records income and expenditure made during the current accounting period.
7. Object This account depicts the cash position of an NPO. This account shows the net result in terms of surplus or deficits due to the business activities during the year.
8. Opening Balance This account begins with the opening balance of cash in hand and cash at bank or overdraft. Usually, it has no opening balance but sometimes surplus or deficits forwarded from the last accounting period (if not added to the Capital Fund) can be shown as the opening balance of this account.
9. Closing balance The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft. The balancing figure is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes).
10. Depreciation It does not include non-cash items like depreciation, appreciation, etc. It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to ascertain the actual net profit or net loss.
11. Adjustment Receipts and Payments during the year can be adjusted before preparation of the financial statements. Adjustments regarding both cash and non-cash transactions can be made.
12. Transfer of Balance The opening balance of this account is brought forward from the last year’s Receipts and Payments Account and the closing balance of this account is carried forward to the subsequent year’s Receipts and Payments Account and is shown in the Balance Sheet of the current accounting period. If the closing balance of this account is surplus then it is added to the Capital Fund in the Balance Sheet. If the closing balance is deficit then it is deducted from the Capital Fund in the Balance Sheet.
13. System It is prepared on cash basis. It is prepared on accrual basis.

 

Question 4:

Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.

Answer:

The Income and Expenditure Account (I&E) account is a nominal account and is prepared on a contingency basis. It records all transactions of a revenue nature that relate to the current accounting period (whether outstanding or prepaid) for which the books are kept. All expenses and losses are recorded on the debit side (expense side) and all income and profits are recorded on the credit side (income side) of the I&E account. The closing balance or I and E account balance is termed as surplus (or deficit) if the total of the income side is greater (less) than the total amount of the expenditure side.Following are the basic features of income and expenditure account1. Nature: This is a nominal account. The debit side of I&E records all expenses and losses and the credit side records all income and profits related to the current accounting period.2. Aadhaar: It is prepared on the basis of Receipt and Payment Account (R&P). All revenue items whether income or expenses were transferred from R&P.3. Exclude Capital Transactions: Transactions which are capital in nature are excluded from this account. For example, only the profit or loss is recorded on the sale of immovable properties but the total amount of the sale is not recorded because the sale of the immovable property is considered as capital gain.4. Akin to Profit and Loss Account: The Income and Expenditure Account (I&E) is similar to the Profit and Loss Account in the sense that when the former is prepared to find a surplus or deficit, the accounting period During the latter the latter is prepared for net profit. Or net loss during an accounting period.5. Current year item records only: This account records only those transactions which are related to the current accounting year. In other words, transactions related to or succeeding before the accounting period are excluded, even if these transactions are realized in the current period.6. Adjustment: Various cash and non-cash items like, outstanding expenses, prepaid expenses, income received in advance, income payable but not received, depreciation, bad debts etc., can be adjusted in this account.7. Balance diagram: The balance figure of this account is expressed as surplus (if income> expenditure) or deficit (if expenditure> income). The surplus balance, if any, is added to the capital fund, while the balance of the deficit, if any, is deducted from the capital fund. Receipts and payments account is a summary of the cash book. All cash receipts are recorded on the receiving side (ie debit side) and all cash payments are recorded on the payee side (ie credit side) of the payee and payment account. It is prepared on the basis of cash and bank transactions recorded in the cash book. It begins with the initial balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period. It records all cash and bank transactions of both capital and revenue nature. It not only records cash and bank transactions related to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.

The following are the features of Receipt and Payment Account.

1. Nature: This is a real account. It is an abbreviation for Cash Book.2. Nature of transaction: It records only cash and bank transactions. Transactions other than cash and bank such as depreciation, profit / profit on sale of property, etc. are not recorded in this account.3. No difference between capital and revenue items: It records all cash and bank receivables and payments of both capital and revenue nature.4. Opening and closing balance: It starts with the opening balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period.5. Purpose: It reveals the cash position of an organization. It helps to find out the total amount paid and received during an accounting period.

Question 5:

Show the treatment of the following items by a Not-for-Profit Organisation:

(i) Annual subscription
(ii) Specific donation
(iii) Sale of fixed assets
(iv) Sale of old periodicals
(v) Sale of sports materials
(vi) Life membership fee

 

Answer:

  1. i) Annual Subscription

a) Subscription receipts received during an accounting year (related to the current year or previous and subsequent years) and payments are shown on the debit side of the account.

 

b) Only the Subscription amount related to the current accounting year, whether received or still, is shown on the credit side of the income and expenditure account.

 

C) Subscriptions received in advance for the subsequent year are shown on the liability side of the balance sheet.   D) Liabilities not received, but shown in the assets side of the balance sheet.

 

  1. ii) Specific donation

A) The amount received for specific donations is shown on the debit side of receipts and payment accounts.B) The amount received for a specific donation is shown on the liability side of the balance sheet because it is used for the specific purpose for which it has been received.iii) Sale of immovable propertiesa)      The amount received from the sale of immovable properties is recorded on the debit side of the receivables and payment account.b)     Profit (or loss) on the sale of immovable properties is credited (or debited) to the income and expense account.c)      The book-value of immovable assets sold is deducted from its respective assets on the assets of the balance sheet.

  1. iv) Sale of old periodicals

a) The amount received from the sale of old periodicals is shown on the debit side of receipts and payment account.B) Since the sale of old periodicals by an organization is treated as revenue receipts, it is shown in the credit side of the income and expenditure account.

  1. v) Sale of sport Materials

A) The amount received from the sale of sporting goods is debited to the receipt and payment account.B) The sale of sporting goods is treated as revenue income by any sport club, hence it is shown in the credit side of the income and expenditure account.

  1. vi) Life Membership Fees

a) The amount paid by a person to become a member of an organization is called a life membership fee. Since it is a receipt for an NPO, it is debited to the receipt and payment account.B) Life membership fee is not repetitive in nature and is received once for the entire life from a member. Thus, since life membership fees are capital receipts, these are added to the balance sheet’s liabilities capital fund.

Question 6:

Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.

Answer:

There are various sources of receipts such as donations, membership, government grants etc. to an NPO. Some receipts are specific while others are general. While the former can only be used for the specific purpose for which they are received, the latter can be used for any purpose. For example, if a donation is received for building construction, then this donation is a specific donation and can only be used for building construction. Specific receipts are not considered revenue income for NPOs and are therefore not shown in the income and expenditure account. In fact, such receivables are treated as liabilities for NPOs because these amounts are received for a specific purpose and cannot be used for any other purpose. Specific receipts are shown in the liability side of the balance sheet until they are fully set against the purpose for which they are received.On the other hand, if these amounts are invested outside the organization (in the form of shares, debentures, etc.), these are called funds, such as match funds, prize funds, etc. The interest and income earned on such investments is not deposited in the income and expenditure account, but is actually deposited in the respective fund account. Similarly, expenses incurred for such funds are not debited to the income and expenditure account, but are, in fact, debited to the respective fund account.These special funds are shown on the liability side of the balance sheet. In the case, if the related expenditure is more than the respective receipts of the fund, then this difference is shown in the income and expenditure account.

Treatment

(Tournament/Match/Prize, etc.) Fund Account
Dr. Cr.
Date Particulars L.F. Amount Date Particulars L.F. Amount
Expenses

(expenses incurred like, match expenses, tournament expenses)

Balance b/d
Incomes

(income or interest earned on funds invested in the form of donation, interests, dividends, etc.)

Balanace c/d

(see explanation)

(a) Income and Expenditure A/c (see explanation) (b)

Explanation (a)

If the receipts exceed the expenses for specific purpose then the difference between the two is shown in the Liabilities side of the Balance Sheet

Balance Sheet
Specific Fund (i.e. Tournament, Match, Prize Fund, etc.) Tournament Fund Investment

Explanation (b)

If the expenses exceed the receipts for the specific purpose then the difference between the two is shown in the Expenditure side of the Income and Expenditure Account.

Income and Expenditure A/c
Expenditure Amount Income Amount
Expenses

(i.e. Tournament, Match, Prize Expenses etc. except capital expenditure like, i.e.  expenses on construction of building)

 

Question 7:

What is Receipt and Payment Account? How is it different from Income and Expenditure Account?

Answer:

Receipts and payments account is a summary of the cash book. All cash receipts are recorded on the receiving side (ie debit side) and all cash payments are recorded on the payee side (ie credit side) of the payee and payment account. It is prepared on the basis of cash and bank transactions recorded in the cash book. It begins with the initial balance of cash and bank and ends with the closing balance of cash and bank (balance figure) at the end of the accounting period. It records all cash and bank transactions both in capital and revenue nature. It not only records cash and bank transactions related to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.

Distinguish between Receipts and Payments Account and Income and Expenditure Account

Basis of Difference Receipts and Payments Account Income and Expenditure Account
1. Nature It is a summary of cash and bank transactions It is a summary of current year income and expenses
2. Revenue and Capital It records transactions related to both revenue and capital nature. It records transactions related to revenue nature only.
3. Debit Side Debit side of this account records cash and bank receipts during an accounting period. Debit side of this account records expenses and losses incurred in the current accounting period.
4. Credit side Credit side of this account records payments in cash and through cheques. Credit side of this account records income and gains earned in the current accounting period.
5. Type of account It is a Real Account It is a Nominal Account
6. Period It records receipts and payments made during the year that may be related to the current accounting period or the preceding period and the succeeding accounting period. It only records income and expenditure made during the current accounting period.
7. Object This account depicts the cash position of an NPO. This account shows the net result in terms of surplus or deficits due to the business activities during the year.
8. Opening Balance This account begins with the opening balance of cash in hand and cash at bank or overdraft. Usually, it has no opening balance, but sometimes surplus or deficits forwarded from the last accounting period (if not added to the Capital Fund) can be shown as the opening balance of this account.
9. Closing balance The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft. The balancing figure is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes).
10. Depreciation It does not include non-cash items like depreciation, appreciation, etc. It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to ascertain the actual net profit or net loss.
11. Adjustment Receipts and Payments during the year can be adjusted before preparation of the financial statements. Adjustments regarding both cash and non-cash transactions can be made.
12. Transfer of Balance The opening balance of this account is brought forward from the last year’s Receipts and Payments Account and the closing balance of this account is carried forward to the subsequent year’s Receipts and Payments Account and is shown in the Balance Sheet of the current accounting period. If the closing balance of this account is surplus then it is added to the Capital Fund in the Balance Sheet. If the closing balance is deficit then it is deducted from the Capital Fund in the Balance Sheet.
13. System It is prepared on the cash basis. It is prepared on the accrual basis.

 

Page No 48:

Question 1:

From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments Account.

Particulars Rs
Opening balance:  
Cash in Hand 5,000
Cash at Bank 25,000
Subscriptions 1,65,000
Donations 35,000
Investment Purchased 80,000
Rent Paid 20,000
General Expenses 21,500
Postage and stationery 2,000
Courier charges 1,000
Sundry Expenses 2,500
Closing Cash in Hand 12,000

 

Answer:

Books of Health Club

Receipt and Payment Account

Dr. Cr.
Receipts Amount

Rs

Payments Amount

Rs

Balance b/d Investment 80,000
Cash in Hand 5,000 Rent 20,000
Cash at Bank 25,000 30,000 General Expenses 21,500
Subscriptions 1,65,000 Postage and Stationery 2,000
Donations 35,000 Courier Charges 1,000
Sundry Expenses 2,500
Balance c/d
Cash in Hand 12,000
Cast at Bank 91,000 1,03,000
(Balancing figure)
2,30,000 2,30,000

 

 

Question 2:

The Receipt and Payment Account of Harimohan charitable institution is given:

Receipt and Payment Account for the year ending March 31, 2015
Receipts Amount

Rs

 Payments Amount

Rs

Balance b/d:   Furniture 3,000
Cash at Bank 22,000 Investments 55,000
Cash in Hand  8,800 Advance for building 20,000
Donations 32,000 Charities  60,000
Subscriptions 50,200 Salaries 10,400
Endowment Fund  60,000 Rent and Taxes 4,000
Legacies 24,000 Printing 1,000
Interest on Investment  3,800 Postage 300
Interest on Deposits  800 Advertisements 1,100
Sale of old newspapers 500 Insurance 4,800
    Balance c/d:  
    Cash at Bank 32,000
    Cash in Hand 10,500
  2,02,100   2,02,100
       

Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after considering the following:

(i) It was decided to treat Fifty per cent of the amount received on account of Legacies and Donations as income.
(ii) Liabilities to be provided for are:
  Rent Rs 800; Salaries Rs 1,200; advertisement Rs 200.
(iii) Rs 2,000 due for interest on investment was not actually received.

 

Answer:

Books of Harimohan Charitable Institution

Income and Expenditure Account

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Rent and Taxes 4,000 Donations 16,000
Add: Outstanding 800 4,800 Legacies 12,000
Subscriptions 50,200
Salaries 10,400 Interest on Investment 3,800
 Add: Outstanding 1,200 11,600 Add: Accrued Interest 2,000 5,800
Advertisement 1,100 Interest on Deposits 800
Add: Outstanding 200 1,300 Sale of Old Newspapers 500
Charities 60,000
Printing 1,000
Postage 300
Insurance 4,800
Surplus (Excess of Income over Expenditure) 1,500
85,300 85,300

Question 3:

From the following particulars, prepare Income and Expenditure account:

Details Amount Rs
Fees collected, including Rs 80,000 on account of the previous year 5,20,000
Fees for the year outstanding 30,000
Salary paid, including Rs 5,000 on account of the previous year 68,000
Salary outstanding at the end of the year 3,000
Entertainment expenses 8,000
Tournament expenses 25,000
Meeting Expenses 18,000
Traveling Expenses 7,000
Purchase of Books and Periodicals, including Rs 31,000 for purchase of Books 40,000
Rent 15,000
Postage, telegrams and telephones 6,000
Printing and Stationery 18,000
Donations received 25,000

 

Answer:

Income and Expenditure Account
Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Salaries 68,000 Fees Collected 5,20,000
Less: Previous year’s Outstanding (5,000) Less: Previous year’s Outstanding (80,000)
63,000 4,40,000
Add: Current year’s Outstanding 3,000 66,000 Add: Current year’s Outstanding 30,000 4,70,000
Entertainment Expenses 8,000 Donations 25,000
Tournament Expenses 25,000
Meeting Expenses 18,000
Traveling Expenses 7,000
Purchases of Periodicals (40,000 – 31,000) 9,000
Postage, Telegrams and Telephone’s 6,000
Rent 15.000
Printing and Stationery 18,000
Surplus (Excess of Income over Expenditure) 3,23,000
4,95,000 4,95,000

 

Question 4:

Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure Account and the Balance Sheet of the Club:

Particulars Rs
Sports Fund as on 1.4.2015  35,000
Sports Fund Investments 35,000
Interest on Sports Fund 4,000
Donations for Sports Fund 15,000
Sports Prizes awarded 10,000
Expenses on Sports Events 4,000
General Fund 80,000
General Fund Investments 80,000
Interest on General Fund Investments 8,000

 

Answer:

Books of Sports Club

Income and Expenditure Account

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Interest on General Fund Investments 8,000

 

Balance Sheet
Liabilities Amount

Rs

Assets Amount

Rs

Sports Fund 35,000 Sports Fund Investments 35,000
Add: Interest on Sports Fund 4,000 General Fund Investments 80,000
Add: Donations for Sports Fund 15,000
54,000
Less: Expenses on Sports Event (4,000)
Less: Prize Awarded (10,000) 40,000
General Fund 80,000

 

Question 5:

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 31.3.2017 and its Balance Sheet as on 31.3.2017:

  Rs
(a) Donation received during the year for the construction of a permanent Pavilion 12,25,000
  Expenditure incurred up to 31.3.2017 on its construction 10,80,000
  The total estimated expenditure on construction of Pavilion being 25,00,000
     
(b) Tournament Fund:  
  Balance as on 1.4.2016 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:

(a)

Books of Bombay Women Cricket Club

Balance Sheet 

as on March 31, 2017

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, 2017

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

(c)

Balance Sheet 

as on March 31, 2017

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.

Question 6:

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, 2017.

Receipt and Payment Account for the year ending 

as on December 31, 2017

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 31.06.2017) @ 10% p.a.

18,000
2016 1,200  
2017 26,500   Books 7,000
2018 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 Rs 5, 000)    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 31.12.2016 Rs 2,000 and on December 31, 2017 Rs 1,500.

(ii)  On December 31, 2017 Salary outstanding Rs 600, and one month Rent paid in advance.

(iii) On Jan. 01, 2016 organisation owned Furniture Rs 12,000, Books Rs 5,000.

Answer:

Books of Adult Literacy Organisation

Income and Expenditure Account 

as on Dec. 31, 2017

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 2017 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 2017 600 4,200 Interest received on F.D. 450
Add: Accrued Interest 450 900
Rent 6,500
Less: Prepaid for 2018 {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, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Capital Fund on Dec. 31, 2016 (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, 2017

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 2018  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 2017 1,500
Add: Outstanding for 2016 800 2,300
61,950 61,950

 

 

Question 7:

The following is the account of cash transactions of the Nari Kalayan Samittee for the year ended December 31, 2017:

Receipts Amount

Rs

Payments Amount

Rs

Balance from last year 2,270 Rent  6,600
Subscriptions 32,500 Electric charges 3,200
Life membership fee 3,250  Lecturer’s fee 730
Donation 2,500 Office expenses 1,480
Profit from entertainment 7,250 Printing and Stationery 1,050
Sale of old Books (books value Rs 1,000) 750 Legal fee 1,870
Interest 350 Books 6,500
    Furniture purchased  8,600
    Expenses on nukar drama 1,300
    Cash in hand 8,040
    Cash at bank 9,500
       
  48,870   48,870
       

You are required to prepare an Income and Expenditure Account after the following adjustments:

(a) Subscription still to be received are Rs 750, but subscription include Rs 500 for the year 2018.

(b) In the beginning of the year the Sangh owned building Rs 20,000 and furniture Rs 3,000 and Books Rs 2,000.

(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.

Answer:

Books of  Nari Kalyan Samittee

Income and Expenditure Account 

as on Dec. 31, 2017

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Rent 6,600 Subscription 32,500
Electric Charges 3,200 Add: Outstanding for 2017 750
Lecturer’s fee 730 33,250
Office Expenses 1,480 Less: Advance for 2018 (500) 32,750
Printing and Stationery 1,050 Donation 2,500
Legal Fee 1,870 Profit from Entertainment 7,250
Depreciation on: Interest 350
Books 750
Furniture 580
Building 1,000 2,330
Expenses on Nukar Drama 1,300
Loss on Sale of Books 250
Surplus 24,040
42,850 42,850

 

Balance Sheet 

as on Dec. 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Capital Fund as Dec. 31, 2016 27,270 Building 20,000
(Balancing Figure) Furniture 3,000
Books 2,000
Cash and Bank 2,270
27,270 27,270

 

Balance Sheet 

as on Dec. 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Capital Fund 27,270 Building 20,000
Add: Life Membership Fees 3,250 Less: 5% Depreciation (1,000)  19,000
Add: Surplus 24,040  54,560
Furniture 3,000
Advance Subscription for 2018 500 Add: Purchases 8,600
11,600
Less: 5% Depreciation 580 11,020
Books 2,000
Add: Purchases 6,500
 8,500
Less: Sales 1,000
7,500
Less: 5% Depreciation 750 6,750
Cash in Hand 8,040
Cash at Bank 9,500
Subscription Outstanding 750
55,060 55,060

 

 

Question 8:

Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017:

Receipt and Payment Account 

for the year ending December 31, 2017

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 1.10.17 for 10% p.a) 30,000
       
  1,33,290   1,33,290
       

Other Information:

Subscription outstanding was on December 31, 2016 Rs 1,200 and Rs 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 Rs 250. Salary outstanding on December 31, 2017 Rs 1,000.

On January 1, 2017, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).

Answer:

Indian Sports Club

Income and Expenditure Account 

as on Dec. 31, 2017

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Salary 11,000 Subscriptions 52,000
Add: Outstanding for 2017 1,000 12,000 Add: Outstanding for 2017 3,200
Electric Charges 5,500 55,200
Office Expenses 4,100 Less: Outstanding for 2016 (1,200) 54,000
Printing and Stationery  2,300
Repair of Ground  2,000 Locker Rent 1,250
Depreciation on: Add: Outstanding for 2017 250  1,500
Furniture 1,970
Building 3,600 Entrance Fees  3,200
Sports Equipments 2,730  8,300 Profit on Sale of Sports
Surplus 26,300 Equipments (Rs 2,500 – Rs 2,200) 300
Sale of Old Newspapers 750
Accrued Interest 750
60,500 60,500

 

Balance Sheet 

as on January 01, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Capital Fund (Balancing Figure) 74,590 Subscription Outstanding 1,200
Building 36,000
Furniture 12,000
Sports Equipments 17,500
Cash and Bank 7,890
74,590 74,590
Balance Sheet 

as on Dec. 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Salary Outstanding 1,000 Subscripting Outstanding 3,200
Tournament Fund 26,000 Locker Rent Outstanding 250
Less: Tournament Expenses 18,500 7,500 Building 36,000
Less: 10% Depreciation (3,600) 32,400
Capital fund 74,590
Add: Life Membership Fee 2,200 Furniture 12,000
Add: Legacy 37,500 Add: Purchases 7,700
Add: Surplus 26,300 1,40,590 19,700
Less: 10% Depreciation (1,970) 17,730
Sports Equipments 17,500
Add: Purchases 12,000
29,500
Less: Sales (2,200)
27,300
Less: 10% Depreciation (2,730) 24,570
Billiard Table 17,500
Cash in hand 12,690
Cash at Bank 10,000
Fixed Deposit 30,000
Add: Accrued Interest 750 30,750
1,49,090 1,49,090

 

Question 9:

From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account and Balance Sheet for the year ending March 31, 2017.           

Receipt and Payment Account 

for the year ending March 31, 2017

Receipts Amount

Rs

Payments Amount

Rs

Cash in hand as on 1.4.16 6,800 Salaries 24,000
Subscription 60,200 Traveling Expenses 6,000
Donation 3,000 Stationery 2,300
Sale of furniture (Book value Rs 6000) 4,000 Rent 16,000
Entrance fee 800 Repair 700
Life membership fee 7,000 Books purchased  6,000
Interest on investment (@ 5% for full year) 5,000 Building purchased 30,000
    Cash in hand as 31.3.2017 1,800
       
  86,800   86,800
       

Additional Information:

  As on

1.04.2016

As on

31.03.2017

(i) Subscription received in advance 1,000  3,200
(ii) Outstanding subscription 2,000 3,700
(iii) Stock of stationery  1,200  800
(iv) Books 13,500 16,500
(v) Furniture 16,000 8,000
(vi) Outstanding rent 1,000 2,000

 

Answer:

Books of Jan Kalyan Club

Income and Expenditure Account 

as on 31 March 2017

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Loss on Sale of Furniture (Rs 6,000 – Rs 4,000) 2,000 Subscription 60,200
Salaries 24,000 Less: Outstanding for 2016 (2,000)
Traveling Expenses 6,000 58,200
Stationery 2,300 Add: Outstanding for 2017 3,700
Add: Opening Stock 1,200 61,900
3,500 Add: Advance in 2016 1,000
Less: Closing Stock (800) 2,700 62,900
Less: Advance in 2017 (3,200) 59,700
Repairs 700
Rent 16,000 Donation  3,000
Less: Outstanding for 2016 (1,000) Entrance Fees 800
15,000 Interest on Investments 5,000
Add: Outstanding for 2017 2,000 17,000
Depreciation on Books 3,000
Depreciation on Furniture 2,000
Surplus 11,100
68,500 68,500
 

Balance Sheet 

as on April 01, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Advance Subscription 1,000 Cash in Hand 6,800
Outstanding Rent 1,000 Investment {5,000 × (100/5)} 1,00,000
Capital Fund (Balancing figure) 1,37,500 Subscription Outstanding 2,000
Stock of Stationery 1,200
Books 13,500
Furniture 16,000
1,39,500 1,39,500

 

 

Balance Sheet 

as on March 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Advance Subscription 3,200 Subscription Outstanding 3,700
Outstanding Rent 2,000 Stock of Stationery 800
Capital Fund 1,37,500 Investments 1,00,000
Add: Life Membership Fees 7,000
Add: Surplus 11,100 1,55,600 Books 13,500
Add: Purchases 6,000
19,500
Less: Depreciation (3,000) 16,500
Building 30,000
Cash in Hand 1,800
Furniture 16,000
 Less: Sales 6,000
10,000
 Less: Depreciation (2,000) 8,000
1,60,800 1,60,800

 

 

Question 10:

Receipt and Payment Account of Shankar Sports club is given below, for the year ended March 31, 2017

Receipt and Payment Account 

for the year ending March 31, 2017

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 March 31, 2016 is Rs 1, 200 and Rs 2,300 on March 31, 2017, opening stock of postage stamps is Rs 300 and closing stock is Rs 200, Rent Rs 1,500 related to 2015 and Rs 1,500 is still unpaid.

On April 01, 2016 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500

On March 31, 2017. The club took a loan of Rs 20,000 (@ 10% p.a.) in 2017.

Answer:

Books of Shankar Sports Club

Income and Expenditure Account 

as on 31 Dec. 2017

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Rent 18,000 Entrance Fees 3,200
Add: Outstanding for 2017 1,500 Locker Rent 1,200
19,500 Profit from Entertainment 3,000
Less: Outstanding for 2016 (1,500) 18,000
Subscription 40,000
Wages 7,000 Less: Outstanding for 2016 (1,200)
Depreciation on Furniture 2,500 38,800
Interest 2,000 Add: Outstanding for 2017 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, 2016

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, 2017

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:

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

 

 

Question 11:

Prepare Income and Expenditure Account and Balance Sheet for the year ended March 31, 2016 from the following Receipt and Payment Account and Balance Sheet of culture club:

Receipt and Payment Account 

for the year ending March 31, 2016

Receipts Amount

(Rs)

Payments Amount

(Rs)

Opening cash balance   12,000 Furniture 4,000
Subscription     Telephone expenses 800
2014-15 2,000   Salary  
2015-16 22,000 24,000 2014-15 1,000
Entrance fees 2,800 2015-16 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 March 31, 2016

Liabilities Amount

(Rs)

Assets Amount

(Rs)

Advance locker rent 200 Cash in hand 12,000
Subscription received in Advance 1,000 Outstanding subscription 3,000
Outstanding salary  2,000 Building 35,000
Loan 10,000    
Capital fund  36,800    
  50,000   50,000
       

Answer:

Books of Culture Club

Income and Expenditure Account 

as on March 31, 2016

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Telephone Expenses 800 Subscription 22,000
Salary 4,000 Add: Advance Received in 2015 1,000 23,000
Newspapers 700
Sundry Expenses 1,000 Entrance Fees 2,800
Locker Rent 1,000
Surplus (Balancing figure) 31,500 Add: Advance Received in 2015 200 1,200
Government Grants 11,000
38,000 38,000
Balance Sheet 

as on March 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Capital Fund 36,800 Subscription Still Outstanding for 2015 1,000
Add: Life Membership Fees 1,200 (Rs 3,000 – Rs 2,000)
Add: Surplus 31,500 69,500 Furniture 4,000
Defence Bonds 18,000
Salary Still Outstanding for 2015 1,000 Land 20,000
Loan 10,000 Building 35,000
Cash in Hand 2,500
80,500 80,500

 

Question 12:

From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2017.

Receipt and Payment Accounts 

for the year ending March 31, 2017

Receipts Amount

Rs

Payments Amount

Rs

Balance b/d   15,000 Furniture 18,000
Sale of Old furniture (costing Rs 6,000) 4,000 Library books 10,000
Subscriptions:     Salaries  72,000
2015–16  18,000   General expenses 18,000
2016–17 60,000   Electric charges 12,000
2017–18 12,000  90,000 Newspapers 33,800
Sale of old newspapers   10,800 Postage  3,000
Profit from entertainment   44,000 Stationery  40,000
Rent   84,000 Audit fee  8,000
      Balance c/d 33,000
    2,47,800   2,47,800
         

 

Balance Sheet 

as on March 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Outstanding Salary 6,000 Cash 15,000
Capital Fund 6,94,000 Outstanding subscription 18,000
    Library Books 30,000
    Furniture 37,000
    Land and Building 6,00,000
  7,00,000   7,00,000
       

Additional Information:

1. The Club had 500 members each paying an annual subscription of Rs 150.
2. On 31.3.2016 salaries outstanding amounted to Rs 1,200 and salaries paid included Rs 6,000 for the year 2015–16.
3. Provide 5% depreciation on Land and Building.

 

Answer:

Books of Unity Club

Income and Expenditure Account 

as on March 31, 2017

Dr. Cr.
Expenditure Amount 

Rs

Income Amount

Rs

Loss on Sale of Old Furniture (4,000 – 6,000)  2,000 Subscription
500 members at Rs 150 each 75,000
Salaries 72,000 Sale of Old Newspapers 10,800
Add: Outstanding for 2015–16 1,200 Profit from Entertainment 44,000
73,200 Rent 84,000
Less: Outstanding for 2016–17 (6,000) 67,200
General Expenses 18,000 Deficit (Balancing figure) 200
Electric Charges 12,000
Newspapers 33,800
Postage 3,000
Stationery 40,000
  Audit Fees 8,000
Depreciation on Land and Building 30,000
2,14,000 2,14,000
Balance Sheet 

as on 31 March 2017

Liabilities Amount 

Rs

Assets Amount 

Rs

Advance Subscription (for 2017–18) 12,000 Subscription Outstanding 15,000
Salaries Outstanding 1,200 Furniture 37,000
Capital Fund 6,94,000 Add: Purchases 18,000
Less: Deficit (200) 6,93,800 55,000
Less: Sales (6,000) 49,000
Library Books 30,000
Add: Purchases 10,000 40,000
Land and Building 6,00,000
Less: 5% Depreciation (30,000) 5,70,000
Cash and Bank 33,000
7,07,000 7,07,000

 

Question 13:

Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Details Amount

Rs

Sports Fund as on April 1, 2016 80,000
Sports Fund Investments 80,000
Interest on Sports Fund Investments 8,000
Donations for Sports Fund 30,000
Sports Prizes awarded 16,000
Expenses on Sports Events 7,000
General Fund 2,00,000
General Fund Investments 2,00,000
Interest on General Fund Investments  20,000

 

 

Answer:

Income and Expenditure Account 

as on March 31, 2016

Dr. Cr.
Expenditure Amount

Rs

Income Amount

Rs

Interest on General Fund Investments 20,000
Balance Sheet 

as on March 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Sports Fund 80,000 Sports Fund Investments 80,000
Add: Interest on Sports Fund General Fund Investments 2,00,000
Investments 8,000
Add: Donation for Sports Fund 30,000
1,18,000
Less: Sports Prizes Awarded (16,000)
Less: Expenses on Sports Events (7,000) 95,000
General Fund  2,00,000

 

 

Question 14:

Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of subscriptions for the year ended on March 31, 2017.

The additional information was as under:

  1. Subscription Outstanding as on March 31, 2016 were Rs 6,500,
  2. Subscription received in advance as on March 31, 2016 were Rs 4,100,
  3. Subscription Outstanding as on March 31, 2017 were Rs 5,400,
  4. Subscription received in advance as on March 31, 2017 were Rs 2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.

Answer:

Books of Maitrey Sports Club

Income and Expenditure Account 

as on March 31, 2017

Dr. Cr.
Expenditure Amount

 Rs

Income Amount

Rs

Subscription 68,500
Less: O/s on Mar. 31, 2016 (6,500)
62,000
Add: Advance on Mar. 31, 2016 4,100
Add: O/s on Mar. 31, 2017 5,400
71,500
Less: Advance on Mar. 31, 2017 (2,500) 69,000
Balance Sheet 

as on  March 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Subscription in Advance 4,100 Subscription Outstanding 6,500

 

Balance Sheet 

as on March 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Subscription in Advance 2,500 Subscription Outstanding 5,400

 

Question 15:

Following is the Receipt and Payment account of Rohatgi Trust :

Receipt and Payment Account 

for the year ending December 31, 2017

Receipts Amount

Rs

Payments Amount

Rs

Cash in hand   14,000 Rent 6,000
Cash at Bank   60,000 Salary 12,000
Subscriptions:

2016

2017

2018

 

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 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, 2017, and a balance sheet as on that date after the following adjustments: Subscription for 2017, 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 2017 included Rs 400 from a life member. The total furniture on January 1, 2017 was worth Rs 12,000. Salary paid for the year 2018 is Rs 2,000.

Answer:

Books of Rohatgi Trust

Income and Expenditure Account 

as on December 31, 2017

Dr. Cr.
Expenditure Amount

 Rs

Income Amount

 Rs

Rent 6,000 Subscription 83,000
Add: Outstanding 1,000 7,000 Add: Outstanding for 2017 7,000
90,000
Salary 12,000 Less: Life Membership Fees (400) 89,600
Less: Advance for 2018 (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, 2016

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, 2017

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

 

 

Question 16:

Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017

Receipt and Payment Account 

for the year ending December 31, 2017

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, 2017, 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, 2017.

 

Answer:

Books of Delhi Charitable Trust

Income and Expenditure Account 

as on December 31, 2017

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, 2016

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, 2017

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

 

Question 17:

From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended March 31, 2017 and the Balance Sheet as on that date.

Receipt and Payment Account 

for the year ending March 31, 2017

Receipts Amount

Rs

Payments Amount

Rs

Balance b/d   3,500 General expenses 900
Subscription:

2015-16

2016-17

2017-18

 

2,000

70,000

3,000

75,000 Salary

Postage

Electricity charges

Furniture

16,000

1,300

7,800

26,500

Sale of old Books   2,000 Books 13,000
(Costing Rs 3,200)     Newspapers 600
Rent from use of hall   17,000 Meeting expenses 7,200
Sale of newspapers   400 T.V. set 16,000
Profit from entertainment   7,300 Balance c/d 15,900
         
    1,05,200   1,05,200
         

Additional Information:

(a) The club has 100 members each paying an annual subscription of Rs 900. Subscriptions outstanding on March 31, 2016 were Rs 3,600.
(b) On March 31, 2017, salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000 for the year 2012.
(c) On April 1, 2017 the club owned land and building Rs 25,000, furniture Rs 2,600 and books Rs 6,200.

 

Answer:

Income and Expenditure Account 

as on December 31, 2017

Dr. Cr.
Expenditure Amount

 Rs

Income Amount

 Rs

General Expenses 900 Subscription 70,000
Salary 16,000 Add: Outstanding for 2017 20,000 90,000
Add: Outstanding for 2017 1,000 (100 members at Rs 900 each)
17,000 Rent from use of hall 17,000
Less: Outstanding for 2016 (1,000) 16,000 Sale of Old News Papers 400
Profit from Entertainment 7,300
Loss on Sale of Old Books 1,200
Electricity Charges 7,800
Newspapers 600
Meeting Expenses 7,200
Postage 1,300
Surplus (Balancing figure) 79,700
1,14,700 1,14,700

 

Balance Sheet as on March 31, 2016

 

Liabilities Amount

Rs

Assets Amount

Rs

Salary Outstanding 1,000 Subscription Outstanding 3,600
Capital Fund (Balancing figure) 39,900 Furniture 2,600
Books 6,200
Cash and Bank 3,500
Building 25,000
40,900 40,900

 

Balance Sheet 

as on March 31, 2017

Liabilities Amount

 Rs

Assets Amount

 Rs

Advance Subscription 3,000 Subscription Outstanding
Salary Outstanding 1,000 2017 20,000
Add: 2016 (Still Outstanding) 1,600 21,600
Capital Fund 39,900 Building 25,000
Add: Surplus 79,700 1,19,600 Furniture 2,600
Add: Purchases 26,500 29,100
Books 6,200
Add: Purchases 13,000
19,200
Less: Sales 3,200 16,000
T.V. Set 16,000
Cash and Bank 15,900
1,23,600 1,23,600

 

 

Question 18:

Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:

Receipt and Payment Account 

for the year ending December 31, 2017

Receipts Amount

Rs

Payments Amount

Rs

Balance b/d 7,250 Salary 12,500
Subscriptions 81,750 Stationery 1,700
Donations  3,000 Electricity charges 9,550
Grant from Government 15,000 Insurance 7,500
Sale of newspapers 300 Equipments 30,000
Proceeds of charity show 16,500 Petty expenses 500
Interest on investments @ 10% for full year 7,000 Expenses on charity show 12,900
Sundries income 400 Newspapers 1,000
    Lectures fee 16,500
    Honorarium to Secretary 12,000
    Balance c/d 27,050
  1,31,200   1,31,200
       

Additional Information:

  01.01.2017

Rs

31.12.2017

Rs

Outstanding salaries 1,200 1,800
Insurance prepaid 700 300
Subscription outstanding 3,750 2,500
Subscription received in advanced 1,750 1,000
Electricity charges outstanding 1,250
Stock of stationery 2,250  700
Equipments 25,600 50,200
Building 1,20,000 1,14,000

Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on that date.

Answer:

Books of Women Welfare Club

 Income and Expenditure Account 

as on December 31, 2017

Dr. Cr.
Expenditure Amount

Rs

Income Amount

 Rs

Salary 12,500 Subscriptions 81,750
Add: O/s on Dec. 31, 2017 1,800 Add: O/s on Dec. 31, 2017 2,500
14,300 84,250
Less: O/s on Dec. 31, 2016 (1,200) 13,100 Less: O/s on Dec. 31, 2016 (3,750)
80,500
Stationery 1,700 Add: Advance on Dec. 31, 2016 1,750
Add: Opening Stock 2,250 82,250
3,950 Less: Advance on Dec.31, 2017 (1,000) 81,250
Less: Closing Stock (700) 3,250
Donations 3,000
Electric Charges 9,550 Grant from Government 15,000
Add: O/s on Dec. 31, 2017 1,250 10,800 Sale of Newspapers 300
Profit from Charity show (16,500–12,900) 3,600
Insurance 7,500 Interest on Investments 7,000
Add: Prepaid in 2016 700 Sundries Income 400
8,200
Less: Prepaid in 2017 (300) 7,900
Depreciation on Equipments 5,400
Petty Expenses 500
Newspapers 1,000
Lectures Fee 16,500
Honorarium to Secretary 12,000
Depreciation on Building 6,000
Surplus (Balancing Figure) 34,100
1,10,550 1,10,550

 

Balance Sheet 

as on December 31, 2016

Liabilities Amount

Rs

Assets Amount

Rs

Outstanding Salaries 1,200 Insurance Prepaid 700
Subscription in Advance 1,750 Subscription Outstanding 3,750
Stock of Stationery 2,250
Capital Fund (Balancing Figure) 2,26,600 Equipments 25,600
Building 1,20,000
Cash and Bank 7,250
Investments {7,000 × (100/10)} 70,000
2,29,550 2,29,550

 

Balance Sheet 

as on December 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Outstanding Salaries 1,800 Equipments 25,600
Subscription in Advance 1,000 Add: Purchases 30,000
Electricity Charges Outstanding 1,250 55,600
Capital Fund 2,26,600 Less: Depreciation (5,400) 50,200
Add: Surplus 34,100 2,60,700
Insurance Prepaid 300
Subscription Outstanding 2,500
Stock of Stationery 700
Building 1,20,000
Less: Depreciation (6,000) 1,14,000
Cash and Bank 27,050
Investments 70,000
2,64,750 2,64,750

 

 

Question 19:

As at March 31, 2017 the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31, 2017 (3) and a Balance Sheet as at that date.

Debit Balances Rs Credit Balances Rs
Stock-in-hand 1170 Receipts Dining Room 87,660
Purchases 24,660 Subscriptions 9,450
Dining Room 32,370 Billiard’s Receipts 7,300
Rent 10,470 Sunday Receipts 410
Wages 18,690 Interest on Fixed Deposit 270
Repairs and Renewals 5,400 Sundry Creditors  5310
Fuel and Light 5,280 Grant from Institute (permanent) 42,000
Misc. Expenses 4,050 Income and Exp. A/c (1.4.16) 1,380
Cash in hand 560 Suspense A/c (See note) 60
Cash at bank 2,760    
Fixed Deposit 8,500    
Sundry Debtors 2,250    
China glass, cutlery and linen 600    
Billiard Table 2,070    
Fixtures and Fittings 870    
Furniture 4,140    
Club Premises 30,000    
  1,53,840   1,53,840
       

On March 31, 2016 stock of restaurant consisted of Rs 900 and Rs 60 respectively. Provide depreciations Rs 60 on fixtures and fittings, Rs 390 on billiard table and Rs 560 on furniture.

Answer:

 

Books of Indian Chartered Accountants Recreation Club

Restaurant Trading Account

Dr. Cr.
Particulars Amount

Rs

Particulars Amount

Rs

Opening Stock 1,170 Receipts from Dining Room 87,660
Purchases 24,660 Closing Stock 960
Dining Room Exp. 32,370
Profit from Restaurant 30,420
88,620 88,620
Income and Expenditure Account 

as on March 31, 2017

Dr. Cr.
Expenditure Amount

 Rs

Income Amount

Rs

Rent 10,470 Subscriptions 9,450
Wages 18,690 Sundry Receipts 410
Repairs an Renewals 5,400 Interest on Fixed Deposits 270
Fuel and Light 5,280 Profit from Restaurant 30,420
Misc. Expenses 4,050 Billiards Receipts 7,300
Depreciation on
Fixtures and Fittings 60
Billiards Table 390
Furniture 560 1,010
Surplus (Excess of Income over Expenditure) 2,950
47,850 47,850

 

Balance Sheet 

as on March 31, 2017

Liabilities Amount

Rs

Assets Amount

Rs

Sundry Creditors 5,310 Cash in Hand 560
Grant from Institute 42,000 Cash at Bank 2,760
Suspense 60 Fixed Deposit 8,500
Capital Fund (Income and Exp. A/c

as on Apr.01, 2016)

1,380 Sundry Debtors 2,250
Add: Surplus 2,950 4,330 China Glass, Cutlery and Linen 600
Billiards Table 2,070
Less: Depreciation (390) 1,680
Fixture and Fittings 870
Less: Depreciation (60) 810
Furniture 4,140
Less: Depreciation (560) 3,580
Club Premises 30,000
Stock of Restaurant 960
51,700 51,700

 

 

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