Home » Class 11 Accountancy » NCERT Solutions for Class 11 Accountancy Financial Accounting Part-2 Chapter 4 – Accounting for Not-for-Profit Organisation

NCERT Solutions for Class 11 Accountancy Financial Accounting Part-2 Chapter 4 – Accounting for Not-for-Profit Organisation


Short answers : Solutions of Questions on Page Number : 474


Q1 :State the meaning of ‘Not-for-Profit’ Organisations.
Answer : Not-for-Profit Organisations (NPO) are set up with the prime objective of providing services and not to earn profit thereby enhancing the welfare of society. Such organisations include schools, hospitals, trade unions, religious organisations, etc. The person/s or the groups of individuals who govern and manage the working of an NPO are known as trustees. NPO’s main sources of income are donations, subscriptions, life membership fees, grants etc. As these organisations are not set up with profit motive, they do not prepare Trading and Profit and Loss Account. Instead, they maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet.


Q2 :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 Receipts side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating 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 only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash position of an NPO.


Q3 :State the meaning of Income and Expenditure Account.
Answer :  Income and Expenditure Account (I&E) is similar to the Profit and Loss Account in the sense that while the former is prepared to ascertain surplus or deficit during an accounting period, the latter is prepared to ascertain net profit or net loss incurred during an accounting period. I&E Account is a nominal account and is prepared on the accrual basis. It records all transactions of revenue nature that are related to the current accounting period (whether outstanding or prepaid) for which the books are maintained. All expenses and losses are recorded on the debit side (Expenditure side) and all income and gains are recorded on the credit side (Income side) of I&E Account. The closing balance or the balancing figure of I&E Account is termed as surplus (or deficit), if the sum total of the Income side exceeds (is lesser than) the sum total of the Expenditure side.


Q4 :What are the features of Receipt and Payment Account?
Answer :
The following are the features of Receipt and Payment Account:
1. Nature: It is a Real Account. It is a summarised version of Cash Book.
2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period.


Q5 :What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
Answer :
The following steps are taken to prepare Income and Expenditure Account (I&E) from Receipts and Payment Account (R&P).
Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side of R&P to the Expenditure side of I&E.
Step 2: All the revenue receipts for the current accounting period are transferred from the Receipts side of R&P to the Income side of I&E.
Step 3: Expenses outstanding for the current period and expenses paid in advance (prepaid expenses) for the current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step 1.
Step 4: Income outstanding (accrued income) for the current period and income received in advance for the current period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.
Step 5: Non-cash items like depreciation, appreciation for the current accounting period are to be adjusted in the I&E.
Step 6: After adjusting all the revenue items for the current accounting period, the Income and the Expenditure sides are totaled. If the sum total of the Income side exceeds (or is lesser than) the sum total of the Expenditure side, then the balancing figure is termed as surplus (or deficit).


Q6 :What is subscription? How is it calculated?
Answer :
Subscription is the main source of income for an NPO besides entrance fees, donations, grants, etc. Subscriptions refer to the amount of money paid by the members on periodic basis for keeping their membership with the organisation alive. It is paid monthly, quarterly, half yearly or annually by the members.
It 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 to the previous and next accounting period.
While calculating subscription for the current period, advance subscription received for the current period in the previous period and outstanding subscription for the current period are added to the subscription received during the current period. Whereas, on the other hand, advance subscription received for the next accounting period during the current period and 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.


Q7 :What is Capital Fund? How is it calculated?
Answer :
Capital fund is the excess of NPOs’ assets over its liabilities. In other words, the excess of assets over the liabilities for a profit earning organisation is termed as capital and the same for an NPO is termed as capital fund. Any surplus or deficit ascertained from Income and Expenditure account is added to (deducted from) the capital fund. It is also termed as 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

***


Numerical questions : Solutions of Questions on Page Number : 474


Q1 :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

 


Q2 :The Receipt and Payment Account of Harimohan charitable institution is given:

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

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, 2007 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

NOTE: As per the solution, Excess of Income over Expenditure is Rs 1,500; however, as per the book, it is Rs 2,500.


Q3 :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

NOTE: As per the solution, Excess of Income over Expenditure is Rs 3,23,000 however, as per the book, it is Rs 3,07,000.


Q4 :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 1.4.2005

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

 


Q5 : 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 31.3.2007 and its Balance Sheet as on 31.3.2013:
Answer:

Rs

(a)

Donation received during the year for the construction of a permanent Pavilion

12,25,000

Expenditure incurred up to 31.3.2013 on its construction

10,80,000

The total estimated expenditure on construction of Pavilion being

25,00,000

(b)

Tournament Fund:

Balance as on 1.4.2012

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

Books of Bombay Women Cricket Club

Balance Sheet

as on March 31, 2013

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.

Balance Sheet

as on March 31, 2013

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

Balance Sheet

as on March 31, 2013

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.


Q6 : 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, 2013.

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 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 31.12.2005 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 :

Books of Adult Literacy Organisation

Income and Expenditure Account

as on Dec. 31, 2013

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 2013

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 2013

600

4,200

Interest received on F.D.

450

Add: Accrued Interest

450

900

Rent

6,500

Less: Prepaid for 2014 {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, 2012

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Fund on Dec. 31, 2012 (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, 2013

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 2014

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 2013

1,500

Add: Outstanding for 2012

800

2,300

61,950

61,950

NOTE: In order to match the answer with the book, Adjustment (i) – Subscription outstanding on 31.12.2012 Rs 2,000 has been taken as Subscription outstanding for 31.12.2012 Rs 2,000 and Subscription outstanding on December 31, 2013 Rs 1,500 has been taken as Subscription outstanding for December 31, 2013 Rs 1,500.


Q7 : The following is the account of cash transactions of the Nari Kalayan Samittee for the year ended December 31, 2013:

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 2007.
(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, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Rent

6,600

Subscription

32,500

Electric Charges

3,200

Add: Outstanding for 2013

750

Lecturer’s fee

730

33,250

Office Expenses

1,480

Less: Advance for 2014

(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, 2012

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Fund as Dec. 31, 2012

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, 2013

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 2014

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

 


Q8 : Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2013:

Receipt and Payment Account

for the year ending December 31, 2013

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, 2012 Rs 1,200 and Rs 3,200 on December 31, 2013. Locker rent outstanding on December 31, 2013 Rs 250. Salary outstanding on December 31, 2013 Rs 1,000.
On January 1, 2013, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).
* As per the question, the year should be 2013, i.e. 1.10.13
Answer:

Indian Sports Club

Income and Expenditure Account

as on Dec. 31, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Salary

11,000

Subscriptions

52,000

Add: Outstanding for 2013

1,000

12,000

Add: Outstanding for 2013

3,200

Electric Charges

5,500

55,200

Office Expenses

4,100

Less: Outstanding for 2012

(1,200)

54,000

Printing and Stationery

2,300

Repair of Ground

2,000

Locker Rent

1,250

Depreciation on:

Add: Outstanding for 2013

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, 2012

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, 2013

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

 


Q9 : From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account and Balance Sheet for the year ending December 31, 2013.

Receipt and Payment Account

for the year ending March 31, 2013

Receipts

Amount

Rs

Payments

Amount

Rs

Cash in hand as on 1.4.12

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 31.3.2013

1,800

86,800

86,800

Additional Information:

As on

1.04.2012

As on

31.03.2013

(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 2013

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 2012

(2,000)

Traveling Expenses

6,000

58,200

Stationery

2,300

Add: Outstanding for 2013

3,700

Add: Opening Stock

1,200

61,900

3,500

Add: Advance in 2012

1,000

Less: Closing Stock

(800)

2,700

62,900

Less: Advance in 2013

(3,200)

59,700

Repairs

700

Rent

16,000

Donation

3,000

Less: Outstanding for 2012

(1,000)

Entrance Fees

800

15,000

Interest on Investments

5,000

Add: Outstanding for 2013

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, 2012

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, 2013

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

 


Q10 : Receipt and Payment Account of Shankar Sports club is given below, for the year ended December 31, 2013

Receipt and Payment Account

for the year ending March 31, 2013

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, 2012 is Rs 1, 200 and Rs 2,300 on March 31, 2013, 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 April 01, 2012 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500
The club took a loan of Rs 20,000 (@ 10% p.a.) in 2005*.
* As per the question, this year should be 2012.
Answer:

Books of Shankar Sports Club

Income and Expenditure Account

as on 31 Dec. 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Rent

18,000

Entrance Fees

3,200

Add: Outstanding for 2013

1,500

Locker Rent

1,200

19,500

Profit from Entertainment

3,000

Less: Outstanding for 2012

(1,500)

18,000

Subscription

40,000

Wages

7,000

Less: Outstanding for 2012

(1,200)

Depreciation on Furniture

2,500

38,800

Interest

2,000

Add: Outstanding for 2013

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, 2012

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, 2013

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, 2013 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, 2013 is Rs 53,500.
** NOTE 2:

Capital Fund

(2,400)

Add:

Life Membership Fees

7,000

Less:

Deficit

(6,100)

Net Deficit

(1,500)

 


Q11 : 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 March 31, 2013

Receipts

Amount

Rs

Payments

Amount

Rs

Opening cash balance

12,000

Furniture

4,000

Subscription

Telephone expenses

800

2011-2012

2,000

Salary

2012-2013

22,000

24,000

2011-2012

1,000

Entrance fees

2,800

2012-2013

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, 2012

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

Answer:

Books of Culture Club

Income and Expenditure Account

as on March 31, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Telephone Expenses

800

Subscription

22,000

Salary

4,000

Add: Advance Received in 2012

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 2012

200

1,200

Government Grants

11,000

38,000

38,000

 

Balance Sheet

as on March 31, 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Fund

36,800

Subscription Still Outstanding for 2012

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 2005

1,000

Land

20,000

Loan

10,000

Building

35,000

Cash in Hand

2,500

80,500

80,500

 


Q12 : From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2013.

Receipt and Payment Accounts

for the year ending March 31, 2013

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

2012–13

18,000

General expenses

18,000

2013–14

60,000

Electric charges

12,000

2014–15

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, 2012

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 31.3.2013 salaries outstanding amounted to Rs 1,200 and salaries paid included Rs 6,000 for the year 2011-12.
3.Provide 5% depreciation on Land and Building.
Answer:

Books of Unity Club

Income and Expenditure Account

as on March 31, 2013

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 2012–13

1,200

Profit from Entertainment

44,000

73,200

Rent

84,000

Less: Outstanding for 2011–12

(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 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Advance Subscription (for 2014–15)

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

As per the solution, Deficit is Rs 200 and the total of the Balance Sheet as on March 31, 2013 is Rs 7,07,000. However, the Surplus given in the book is Rs 14,000 and the total of the Balance Sheet as on March 31, 2013 is Rs 7,27,000


Q13 : 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, 2005

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, 2014

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Interest on General Fund Investments

20,000

 

Balance Sheet

as on March 31, 2014

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

 


Q14 : 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, 2014.
The additional information was as under:
1. Subscription Outstanding as on March 31, 2005 were Rs 6,500,
2. Subscription received in advance as on March 31, 2005 were Rs 4,100,
3. Subscription Outstanding as on March 31, 2006 were Rs 5,400,
4. Subscription received in advance as on March 31, 2006 were Rs 2,500.Show how that above information would appear in the final accounts for the year ended on March 31, 2014 of Maitrey Sports Club.
Answer :

Books of Maitrey Sports Club

Income and Expenditure Account

as on March 31, 2014

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Subscription

68,500

Less: O/s on Mar. 31, 2013

(6,500)

62,000

Add: Advance on Mar. 31, 2013

4,100

Add: O/s on Mar. 31, 2014

5,400

71,500

Less: Advance on Mar. 31, 2014

(2,500)

69,000

 

Balance Sheet

as on March 31, 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Subscription in Advance

4,100

Subscription Outstanding

6,500

Balance Sheet

as on March 31, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Subscription in Advance

2,500

Subscription Outstanding

5,400

 


Q15 : Following is the Receipt and Payment account of Rohatgi Trust :

Receipt and Payment Account

for the year ending December 31, 2013

Receipts

Amount

Rs

Payments

Amount

Rs

Cash in hand

14,000

Rent

6,000

Cash at Bank

60,000

Salary

12,000

Subscriptions:

2012

2013

2014

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

repare Income and expenditure account for the year ended December 31, 2013, and a balance sheet as on that date after the following adjustments: Subscription for 2013, 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 2013 included Rs 400 from a life member. The total furniture on January 1, 2013 was worth Rs 12,000. Salary paid for the year 2014 is Rs 2,000.
Answer:

Books of Rohatgi Trust

Income and Expenditure Account

as on December 31, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Rent

6,000

Subscription

83,000

Add: Outstanding

1,000

7,000

Add: Outstanding for 2013

7,000

90,000

Salary

12,000

Less: Life Membership Fees

(400)

89,600

Less: Advance for 2014

(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, 2012

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, 2013

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.


Q16 : Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2013.

Receipt and Payment Account

for the year ending December 31, 2013

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, 2012, 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, 2013.
* As per the question, this year should be 2013 as Receipt and Payment Account is provided for the year ending December 31, 2013.
Answer:

Books of Delhi Charitable Trust

Income and Expenditure Account

as on December 31, 2013

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, 2012

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, 2013

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.

As 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, 2012; however, the solution has been prepared according to the date of Receipt and Payment Account which is December 31, 2013.

 


Q17 : From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended December 31, 2013 and the Balance Sheet as on that date.

Receipt and Payment Account

for the year ending December 31, 2013

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

3,500

General expenses

900

Subscription:

2012

2013

2014

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 Rs900. Subscriptions outstanding on December 31, 2012 were Rs 3,600.
(b)On December 31, 2013 , salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000 for the year 2012.
(c) On January 1, 2013 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, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

General Expenses

900

Subscription

70,000

Salary

16,000

Add: Outstanding for 2013

20,000

90,000

Add: Outstanding for 2013

1,000

(100 members at Rs 900 each)

17,000

Rent from use of hall

17,000

Less: Outstanding for 2012

(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 December 31, 2012

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 December 31, 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Advance Subscription

3,000

Subscription Outstanding

Salary Outstanding

1,000

2013

20,000

Add: 2012 (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

Note: As per the solution the total of Balance Sheet is Rs 1,23,600, however, answer provided in the book is Rs 1,23,800.


Q18 : Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2013

Receipt and Payment Account

for the year ending December 31, 2013

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:

01.01.2013

Rs

31.12.2013

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, 2013 and Balance Sheet as on that date.
Answer:

Books of Women Welfare Club

Income and Expenditure Account

as on December 31, 2013

Dr.

Cr.

Expenditure

Amount

Rs

Income

Amount

Rs

Salary

12,500

Subscriptions

81,750

Add: O/s on Dec. 31, 2013

1,800

Add: O/s on Dec. 31, 2013

2,500

14,300

84,250

Less: O/s on Dec. 31, 2012

(1,200)

13,100

Less: O/s on Dec. 31, 2012

(3,750)

80,500

Stationery

1,700

Add: Advance on Dec. 31, 2012

1,750

Add: Opening Stock

2,250

82,250

3,950

Less: Advance on Dec.31, 2013

(1,000)

81,250

Less: Closing Stock

(700)

3,250

Donations

3,000

Electric Charges

9,550

Grant from Government

15,000