solution for class 12 Accountancy Chapter 1 – Accounting For Not For Profit Organisation

Short Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

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

Organisations that are established with the aim of providing services to society and not profit earning are called as Not-for-profit Organisations (NPO). Some organisations that come under NPO are hospitals, religious organisations and trade unions. An NPO earns income from life membership fees, subscriptions, grants, donations etc.

2. State the meaning of Receipt and Payment Account.

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all the cash payments gets recorded in Payments side of the R & P Account. All the cash and bank transactions are recorded in Cash Book and this book is created on the basis of all these transaction. All cash and bank transactions that are of revenue and capital nature gets recorded. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of a Not-for-profit organisation or NPO.

3. State the meaning of Income and Expenditure Account.

Income and Expenditure (I & E) account is the equivalent of P & L account (Profit and Loss Account). In an income and expenditure account, surplus and deficit is determined during the accounting period while in a P& L account the net profit or loss is determined at the running of accounting period. It is nominal account and records transactions that are of revenue nature. The closing balance is called deficit or surplus based.

4. What are the features of Receipt and Payment Account?

The receipts and payments account has the following features:

1. It is known as cash book summary for NPO (Not-for-profit organisations) as it records all the cash and cash equivalents of the organisation.

2. This account shows cash transactions that are of revenue and capital nature

3. It does not follow the double entry bookkeeping system as it is a summary of transactions.

4. It does not include transactions that do not have cash or bank items.

5. It helps in revealing the cash position of the organisation

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

Following steps should be followed:

1. Exclude opening cash and bank balances and also do the same for closing cash and balances

2. Exclude income of the previous period and any such income that is received in advance

3. Exclude all items involving capital receipts and payments

4. Exclude expenditures that are of the previous or coming period

5. Include all incomes of the current period which are yet to be received

6. Include expenditures of current period which are yet to be paid.

7. Provision for bad debts and fixed assets depreciation should be taken into account and charged to the account (income and expenditure account)

6. What is subscription? How is it calculated?

For a not-for-profit organisation subscription acts as one of the main sources of income. It refers to money that the members pay periodically for maintaining their membership in active state. Subscription charges can be paid in flexible options like monthly, quarterly, half-yearly or yearly. It appears on the receipt side of R & P account.

For calculating subscription for current period, add subscription received in advance meant for current period during the previous year and outstanding subscription for current year to the subscription received for the current year and deducting subscription received in advance for next year and outstanding subscription from previous year from subscription received in the current year.

Calculation of Subscription

Subscription received during the year 

(+) Subscription received (in advance) during previous year

for current year

(+) Subscription outstanding at the end of the year(-) Subscription received in advance for the next year

(-) Subscription outstanding for the previous year

Subscription shown in Income and Expenditure Account


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7. What is Capital Fund? How is it calculated?

The scenario where value of assets of NPO are more than its liabilities, it is called as capital fund. This is similar to the concept of capital for an organisation working to earn profit. If any surplus amount is received from I & E account, it gets added to capital fund, likewise any deficit will be deducted from the same and is known as Accumulated Fund.

Calculating 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***

Long Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

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

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the R & P Account. All the cash and bank transactions are recorded in Cash Book and this book is created on the basis of all these transaction. All cash and bank transactions that are of revenue and capital nature gets recorded. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of a Not-for-profit organisation or NPO.

Here are some similarities between Cash Book and Receipts and Payments Account:

1. Both are real accounts.

2. Only transactions of cash and bank are recorded

3. There is no distinction between Revenue and Capital Items

4. Helps in assessing the cash position of an organisation

5. Starts with an opening balance consisting of cash and bank and concludes with closing balance of cash and bank.

Therefore, it can be said that Receipt and Payments Account is a summarised version of cash book.

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.

The account containing all expenses and losses for current accounting period prepared by a Not-for-profit organisation is called as Income and Expenditure (I & E) account, while a similar account prepared by profit earning organisation is called as Profit and Loss Account (P & L).

Here are some of the similarities between I & E and P & L accounts:

1. Accrual basis is followed for the preparation of both accounts.

2. Expenses and losses are recorded on Expenditure (debit) side and gains and income are recorded on Income (credit) side.

3. Records only revenue items related to current accounting period.

4. Both exhibit nature similar to nominal accounts

Therefore, it can be said that from the above statements that Income and Expenditure account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern.

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

Basis of ComparisonReceipts and Payments AccountIncome and Expenditure Account
NatureContains bank and cash transaction summary.Contains summary of income and expenses of current year
Revenue and CapitalBoth revenue and capital transactions are recordedOnly revenue transactions are recorded
Debit SideRecords cash and bank receipts are recordedRecords expenses and losses incurred for the current accounting year
Credit sideRecords payments received in form of cash and chequesRecords incomes and gains during the current accounting year
Account TypeReal AccountNominal Account
Accounting PeriodRecords receipts and payments made during the year which may be related to current, previous or next accounting yearRecords only the expenditure and income made during the current accounting year
ObjectShows the cash position of NPOShows the net results in terms of deficits or surplus
DepreciationNon-cash items like depreciation is not includedIncludes non-cash items like depreciation, bad-debts for determining net profit or loss.
AdjustmentBefore preparing financial statements the Payments and Receipts received during the year can be adjusted.Cash and non-cash transactions can be adjusted
SystemCash basisAccrual Basis

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

Income and Expenditure account is similar to the P & L account (Profit and Loss Account). In an income and expenditure account surplus and deficit is determined during the accounting period while in a P& L account the net profit or loss is determined during an accounting period. It is a nominal account and records transactions that are of revenue nature. The closing balance is called deficit or surplus based.

Basic Features of I & E Account are:

1. It is a nominal account

2. Prepared on the basis of R & P (Receipt and Payment Account). All revenue items irrespective of income or expenditure get transferred.

3. Transactions that are of capital nature are not included in the account.

4. It is similar to P & L account

5. Records only current accounting year items and excludes any other transactions

6. Items like prepaid expenses, depreciation, income received in advance can be adjusted.

7. Balancing figure is expressed as surplus or deficit based on the status of expenses and income.

A receipts and payments account is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the Receipts and Payments Account. This account is prepared on the basis of all the cash and bank transactions that are recorded in Cash Book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of an NPO.

Basic Features of R & P Account are:

1. It is a real account also known as summarised version of Cash Book

2. It records only bank and cash transactions.

3. Non-cash transactions like depreciation is not recorded

4. It begins with an opening balance of cash and bank and ends with closing balance of cash and bank.

5. Helps in assessing the cash position of an organisation

6. It does not distinguish between capital and revenue items

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

i) Annual Subscription

1. Subscriptions that are obtained during an accounting year (it may be related to current, previous or upcoming year) are reflected on the debit side of R & P Account.

2. Subscriptions related to the present year whether yet to be received or already received reflects on the credit side of I & E account (Income and Expenditure)

3. Advance subscriptions received for the following year are reflected on Liabilities side of balance sheet.

4. Subscriptions which are due but yet to be received are shown on Assets part of Balance Sheet.

5. Subscriptions that are due but yet to receive are reflected on asset side of balance sheet.

ii) Specific donation

1. Specific donation amount is reflected on Debit side of R & P Accounts.

2. Specific donation amount is shown on Liabilities side of Balance Sheet. Because it is used for that specific purpose for which it is received.

iii) Sale of fixed assets

1. Amount received recorded on debit side of R & P Account.

2. Profit/Loss is credited/debited to I & E Account.

3. Book value of asset deducted from the respective asset on Asset side of Balance Sheet

iv) Sale of old periodicals

1. Amount received reflects on the debit side of R & P Account.

2. Sale of old periodical is counted as revenue receipts, hence reflects on credit side of I & E Account.

v) Sale of sport Materials

1. Amount received is debited to R & P Account

2. Sport material sale is revenue earned, hence reflects on credit side of I & E Account.

vi) Life Membership Fees

1. It is considered as a receipt for a NPO. Hence, debited to R & P Account

2. It is one-time fee and hence treated as Capital receipts, hence, added to Capital Fund on liabilities side of Balance Sheet

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

A NPO (Not-for-Profit organisation) has different sources of receipts in the form of subscriptions, donations, government grants etc. Of these some receipts are general while some are specific. Specific receipts are used only for the purpose for which it is received while general receipts can be used for any purpose. The specific receipts are not considered as revenue income for the Not-for-Profit organisation and therefore are reflected in I & E account.

In a way, specific receipts are considered as liabilities to the Not-for-Profit organisation as these amounts are received for specific purpose and cannot be used elsewhere. These are reflected in Liabilities side of Balance Sheet, until and unless it is completely used for the purpose it was received. If such amount is invested in the form of shares or debentures, then it is known as funds such as prize funds, match funds etc. The interest earned on such investment are not credited to I & E Account, instead it is credited to the respective fund account.

Similarly, any expense that is incurred for such funds gets debited from respective fund account. Such funds are shown in the liabilities side of Balance Sheet. If the expenses exceed the receipts of the fund, the difference gets reflected in I & E Account.

Treatment for items received for specific purpose

(Tournament/Match/Prize, etc.) Fund Account
Dr.Cr.
DateParticularsL.F.AmountDateParticularsL.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.)
Balance c/d(see explanation)(a)Income and Expenditure A/c (see explanation)(b)

Explanation (a)

When receipts are more than expenses meant for specific purpose, that time the difference between receipts and expenses is shown on balance sheet in the liabilities side.

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

Explanation (b)

When expenses are more than receipts meant for specific purpose, that time the difference between expenses and receipts is shown in I & E account at the expenditure side.

Income and Expenditure A/c
ExpenditureAmountIncomeAmount
Expenses(I.e. Tournament, Match, Prize Expenses etc. except capital expenditure like, i.e.  expenses on construction of building)

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

A receipts and payments account is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the Receipts and Payments Account. This account is prepared on the basis of all the cash and bank transactions that are recorded in Cash Book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of an NPO.

Basis of ComparisonReceipts and Payments AccountIncome and Expenditure Account
NatureContains bank and cash transaction summary.Contains summary of income and expenses of current year
Revenue and CapitalBoth revenue and capital transactions are recordedOnly revenue transactions are recorded
Debit SideRecords cash and bank receipts are recordedRecords expenses and losses incurred for the current accounting period
Credit sideRecords payments received in form of cash and chequesRecords incomes and gains during the current accounting period
Account TypeReal AccountNominal Account
Accounting PeriodRecords receipts and payments made during the year which may be related to current, previous or next accounting yearRecords only the expenditure and income made during the current accounting year
ObjectShows the cash position of NPOShows the net results in terms of deficits or surplus
DepreciationNon-cash items like depreciation is not includedIncludes non-cash items like depreciation, bad-debts for determining net profit or loss.
AdjustmentBefore preparing financial statements the Payments and Receipts received during the year can be adjusted.Cash and non-cash transactions can be adjusted
SystemCash basisAccrual Basis

Numerical Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 1

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

Particulars
Opening balance:
Cash in Hand5,000
Cash at Bank25,000
Subscriptions1,65,000
Donations35,000
Investment Purchased80,000
Rent Paid20,000
General Expenses21,500
Postage and stationery2,000
Courier charges1,000
Sundry Expenses2,500
Closing Cash in Hand12,000

The solution for this question is as follows:

Books of Health ClubReceipt and Payment Account
Dr.Cr.
ReceiptsAmountPaymentsAmount
Balance b/dInvestment80,000
Cash in Hand5,000Rent20,000
Cash at Bank25,00030,000General Expenses21,500
Subscriptions1,65,000Postage and Stationery2,000
Donations35,000Courier Charges1,000
Sundry Expenses2,500
Balance c/d
Cash in Hand12,000
Cast at Bank91,0001,03,000
(Balancing figure)
2,30,0002,30,000

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

Receipt and Payment Account for the year ending March 31, 2015
ReceiptsAmount PaymentsAmount
Balance b/d:Furniture3,000
Cash at Bank22,000Investments55,000
Cash in Hand 8,800Advance for building20,000
Donations32,000Charities 60,000
Subscriptions50,200Salaries10,400
Endowment Fund 60,000Rent and Taxes4,000
Legacies24,000Printing1,000
Interest on Investment 3,800Postage300
Interest on Deposits 800Advertisements1,100
Sale of old newspapers500Insurance4,800
Balance c/d:
Cash at Bank32,000
Cash in Hand10,500
2,02,1002,02,100

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 ₹ 800; Salaries ₹ 1,200; advertisement ₹ 200.
(iii)₹ 2,000 due for interest on investment was not actually received.

 The solution for this question is as follows

Books of Harimohan Charitable InstitutionIncome and Expenditure Account
Dr.Cr.
ExpenditureAmountIncomeAmount
Rent and Taxes4,000Donations16,000
Add: Outstanding8004,800Legacies12,000
Subscriptions50,200
Salaries10,400Interest on Investment3,800
 Add: Outstanding1,20011,600Add: Accrued Interest2,0005,800
Advertisement1,100Interest on Deposits800
Add: Outstanding2001,300Sale of Old Newspapers500
Charities60,000
Printing1,000
Postage300
Insurance4,800
Surplus (Excess of Income over Expenditure)1,500
85,30085,300

3. From the following particulars, prepare Income and Expenditure account:

DetailsAmount ₹
Fees collected, including ₹ 80,000 on account of the previous year5,20,000
Fees for the year outstanding30,000
Salary paid, including ₹ 5,000 on account of the previous year68,000
Salary outstanding at the end of the year3,000
Entertainment expenses8,000
Tournament expenses25,000
Meeting Expenses18,000
Traveling Expenses7,000
Purchase of Books and Periodicals, including ₹ 31,000 for purchase of Books40,000
Rent15,000
Postage, telegrams and telephones6,000
Printing and Stationery18,000
Donations received25,000

 The solution for this question is as follows

Income and Expenditure Account
Dr.Cr.
ExpenditureAmountIncomeAmount
Salaries68,000Fees Collected5,20,000
Less: Previous year’s Outstanding(5,000)Less: Previous year’s Outstanding(80,000)
63,0004,40,000
Add: Current year’s Outstanding3,00066,000Add: Current year’s Outstanding30,0004,70,000
Entertainment Expenses8,000Donations25,000
Tournament Expenses25,000
Meeting Expenses18,000
Traveling Expenses7,000
Purchases of Periodicals (40,000 – 31,000)9,000
Postage, Telegrams and Telephone’s6,000
Rent15.000
Printing and Stationery18,000
Surplus (Excess of Income over Expenditure)3,23,000
4,95,0004,95,000

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

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
Sports Fund as on 1.4.2015 35,000
Sports Fund Investments35,000
Interest on Sports Fund4,000
Donations for Sports Fund15,000
Sports Prizes awarded10,000
Expenses on Sports Events4,000
General Fund80,000
General Fund Investments80,000
Interest on General Fund Investments8,000

 The solution for this question is as follows

Books of Sports ClubIncome and Expenditure Account
Dr.Cr.
ExpenditureAmountIncomeAmount
Interest on General Fund Investments8,000
Balance Sheet
LiabilitiesAmountAssetsAmount
Sports Fund35,000Sports Fund Investments35,000
Add: Interest on Sports Fund4,000General Fund Investments80,000
Add: Donations for Sports Fund15,000
54,000
Less: Expenses on Sports Event(4,000)
Less: Prize Awarded(10,000)40,000
General Fund80,000

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?

(a)Donation received during the year for the construction of a permanent Pavilion12,25,000
Expenditure incurred up to 31.3.2017 on its construction10,80,000
The total estimated expenditure on construction of Pavilion being25,00,000
(b)Tournament Fund:
Balance as on 1.4.201610,700
Subscriptions for tournament received during the year65,800
Expenditure incurred during the year on conducting tournaments72,400
(c)Life Membership fee received during the year28,000

Give reasons for your answers

The solution for this question is as follows

(a)

Books of Bombay Women Cricket ClubBalance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Donation for Pavilion12,25,000Construction of Pavilion in Progress10,80,000
Less: Exp. on construction of Pavilion(10,80,000)1,45,000
Capital 
Add: Pavilion Construction10,80,00010,80,000

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
LiabilitiesAmountAssetsAmount
Tournament Fund10,700
Add: Subscription for Tournament65,800
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
LiabilitiesAmountAssetsAmount
Life Membership Fees28,000

Reason

When there is no specific information on treatment of Life Membership fees, it is shown on liabilities side of Balance sheet as it is considered as capital receipt. On treated as revenue, it is shown in credit side of I & E Account.

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
ReceiptsAmountPaymentsAmount
Balance b/dGeneral Expenses3,200
Cash in hand4,000News paper1,850
Cash at Bank 15,550Electricity3,000
SubscriptionsFixed deposit with bank(on 31.06.2017) @ 10% p.a.18,000
20161,200
201726,500Books7,000
201850028,200Salary3,600
Sale of old newspapers1,250Rent6,500
Govt. grant12,000Postage charges300
Sale of old furniture (book value ₹ 5, 000) 3,700Furniture (purchased)10,500
Interest received on FD 450Balance c/d
Cash in Hand 3,000
Cash at Bank8,200
65,15065,150

Information:

(i)    Subscription outstanding as on 31.12.2016 ₹ 2,000 and on December 31, 2017 ₹ 1,500.

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

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

The solution for this question is as follows:

Books of Adult Literacy OrganisationIncome and Expenditure Account as on Dec. 31, 2017
Dr.Cr.
ExpenditureAmountIncomeAmount
Loss on Sale of Old Furniture1,300Subscription26,500
General Expenses3,200Add: Outstanding for 20171,50028,000
Newspapers1,850
Electricity3,000Sale of Old Newspapers1,250
Salary3,600Government Grant12,000
Add: Outstanding for 20176004,200Interest received on F.D.450
Add: Accrued Interest450900
Rent6,500
Less: Prepaid for 2018 {6,500×(1/13)}(500)6,000
Postages Charges300
Surplus (Excess of Income over Expenditure)22,300
42,15042,150
Balance Sheet as on Dec. 31, 2016
LiabilitiesAmountAssetsAmount
Capital Fund on Dec. 31, 2016 (Balancing Figure)38,550Subscription Outstanding2,000
Cash in Hand4,000
Cash at Bank15,550
Furniture12,000
Books5,000
38,55038,550
 Balance Sheet as on Dec. 31, 2017
LiabilitiesAmount AssetsAmount 
Capital38,550Prepaid Rent500
Add: Surplus22,30060,850Books5,000
Add: Purchases7,00012,000
Salary Outstanding600
Subscription  Received in Advance for 2018 500Furniture12,000

 
Add: Purchases10,500
22,500
Less: Sale(5,000)17,500
Fixed Deposit18,000
Add: Accrued Interest45018,450
Cash in Hand3,000
Cash at Bank8,200
Subscription Outstanding for 20171,500
Add: Outstanding for 20168002,300
61,95061,950

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

ReceiptsAmountPaymentsAmount
Balance from last year2,270Rent 6,600
Subscriptions32,500Electric charges3,200
Life membership fee3,250 Lecturer’s fee730
Donation2,500Office expenses1,480
Profit from entertainment7,250Printing and Stationery1,050
Sale of old Books (books value ₹ 1,000)750Legal fee1,870
Interest350Books6,500
Furniture purchased 8,600
Expenses on nukar drama1,300
Cash in hand8,040
Cash at bank9,500
48,87048,870

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

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

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

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

The solution for this question is as follows:

Books of  Nari Kalyan SamitteeIncome and Expenditure Account as on Dec. 31, 2017
Dr.Cr.
ExpenditureAmountIncomeAmount
Rent6,600Subscription32,500
Electric Charges3,200Add: Outstanding for 2017750
Lecturer’s fee73033,250
Office Expenses1,480Less: Advance for 2018(500)32,750
Printing and Stationery1,050Donation2,500
Legal Fee1,870Profit from Entertainment7,250
Depreciation on:Interest350
Books750
Furniture580
Building1,0002,330
Expenses on Nukar Drama1,300
Loss on Sale of Books250
Surplus24,040
42,85042,850
Balance Sheet as on Dec. 31, 2016
LiabilitiesAmountAssetsAmount
Capital Fund as Dec. 31, 201627,270Building20,000
(Balancing Figure)Furniture3,000
Books2,000
Cash and Bank2,270
27,27027,270
Balance Sheet as on Dec. 31, 2017
LiabilitiesAmountAssetsAmount
Capital Fund27,270Building20,000
Add: Life Membership Fees3,250Less: 5% Depreciation(1,000) 19,000
Add: Surplus24,040 54,560
Furniture3,000
Advance Subscription for 2018500Add: Purchases8,600
11,600
Less: 5% Depreciation58011,020
Books2,000
Add: Purchases6,500
 8,500
Less: Sales1,000
7,500
Less: 5% Depreciation7506,750
Cash in Hand8,040
Cash at Bank9,500
Subscription Outstanding750
55,06055,060

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
ReceiptsAmountPaymentsAmount
Balance b/d7,890Salary11,000
Subscriptions52,000Electric charges5,500
Life member ship fee2,200Billiard Table17,500
Entrance fee3,200Office expenses4,100
Tournament fund26,000Printing and Stationery 2,300
Locker Rent 1,250Tournament expenses18,500
Sale of old sports goods (Costing ₹ 2,200)2,500Repair of ground 2,000
Sale of Old Newspaper 750Furniture purchased 7,700
Legacy37,500Sports equipment’s12,000
Cash in Hand12,690
Cash at Bank 10,000
Fixed Deposit (on 1.10.17 for 10% p.a)30,000
1,33,2901,33,290

Other Information:

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

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

 

The solution for this question is as follows:

Indian Sports ClubIncome and Expenditure Account as on Dec. 31, 2017
Dr.Cr.
ExpenditureAmountIncomeAmount
Salary11,000Subscriptions52,000
Add: Outstanding for 20171,00012,000Add: Outstanding for 20173,200
Electric Charges5,50055,200
Office Expenses4,100Less: Outstanding for 2016(1,200)54,000
Printing and Stationery 2,300
Repair of Ground 2,000Locker Rent1,250
Depreciation on:Add: Outstanding for 2017250 1,500
Furniture1,970
Building3,600Entrance Fees 3,200
Sports Equipments2,730 8,300Profit on Sale of Sports
Surplus26,300Equipments (₹ 2,500 – ₹ 2,200)300
Sale of Old Newspapers750
Accrued Interest750
60,50060,500
Balance Sheet as on January 01, 2016
LiabilitiesAmountAssetsAmount
Capital Fund (Balancing Figure)74,590Subscription Outstanding1,200
Building36,000
Furniture12,000
Sports Equipments17,500
Cash and Bank7,890
74,59074,590
Balance Sheet as on Dec. 31, 2017
LiabilitiesAmountAssetsAmount
Salary Outstanding 1,000Subscripting Outstanding3,200
Tournament Fund26,000Locker Rent Outstanding250
Less: Tournament Expenses18,5007,500Building36,000
Less: 10% Depreciation(3,600)32,400
Capital fund74,590
Add: Life Membership Fee2,200Furniture12,000
Add: Legacy37,500Add: Purchases7,700
Add: Surplus26,3001,40,59019,700
Less: 10% Depreciation(1,970)17,730
Sports Equipments17,500
Add: Purchases12,000
29,500
Less: Sales(2,200)
27,300
Less: 10% Depreciation(2,730)24,570
Billiard Table 17,500
Cash in hand12,690
Cash at Bank10,000
Fixed Deposit30,000
Add: Accrued Interest75030,750
1,49,0901,49,090

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
ReceiptsAmountPaymentsAmount
Cash in hand as on 1.4.166,800Salaries24,000
Subscription60,200Traveling Expenses6,000
Donation3,000Stationery2,300
Sale of furniture (Book value ₹ 6000)4,000Rent16,000
Entrance fee800Repair700
Life membership fee7,000Books purchased 6,000
Interest on investment (@ 5% for full year)5,000Building purchased30,000
Cash in hand as 31.3.20171,800
86,80086,800

Additional Information:

As on1.04.2016As on31.03.2017
(i)Subscription received in advance1,000 3,200
(ii)Outstanding subscription2,0003,700
(iii)Stock of stationery 1,200 800
(iv)Books13,50016,500
(v)Furniture16,0008,000
(vi)Outstanding rent1,0002,000

 The solution for this question is as follows:

Books of Jan Kalyan ClubIncome and Expenditure Account as on 31 March 2017
Dr.Cr.
ExpenditureAmountIncomeAmount
Loss on Sale of Furniture (₹ 6,000 – ₹ 4,000)2,000Subscription60,200
Salaries24,000Less: Outstanding for 2016(2,000)
Traveling Expenses6,00058,200
Stationery2,300Add: Outstanding for 20173,700
Add: Opening Stock1,20061,900
3,500Add: Advance in 20161,000
Less: Closing Stock(800)2,70062,900
Less: Advance in 2017(3,200)59,700
Repairs700
Rent16,000Donation 3,000
Less: Outstanding for 2016(1,000)Entrance Fees800
15,000Interest on Investments  5,000
Add: Outstanding for 20172,00017,000
Depreciation on Books3,000
Depreciation on Furniture2,000
Surplus11,100
68,50068,500
Balance Sheet as on April 01, 2016
LiabilitiesAmountAssetsAmount
Advance Subscription1,000Cash in Hand6,800
Outstanding Rent1,000Investment {5,000 × (100/5)}1,00,000
Capital Fund (Balancing figure)1,37,500Subscription Outstanding2,000
Stock of Stationery1,200
Books13,500
Furniture16,000
1,39,5001,39,500
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Advance Subscription3,200Subscription Outstanding3,700
Outstanding Rent2,000Stock of Stationery800
Capital Fund1,37,500Investments1,00,000
Add: Life Membership Fees7,000
Add: Surplus11,1001,55,600Books13,500
Add: Purchases6,000
19,500
Less: Depreciation(3,000)16,500
Building30,000
Cash in Hand1,800
Furniture16,000
 Less: Sales6,000
10,000
 Less: Depreciation(2,000)8,000
1,60,8001,60,800

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
ReceiptsAmountPaymentsAmount
Opening Cash in hand2,600Rent18,000
Entrance fees3,200Wages7,000
Donation for building23,000Billiard table 14,000
Locker rent 1,200Furniture 10,000
Life membership fee7,000Interest 2,000
Profit from entertainment3,000Postage1,000
Subscription40,000Salary24,000
Cash in hand4,000
80,000 80,000

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

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

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

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

The solution for this question is as follows:

Books of Shankar Sports ClubIncome and Expenditure Account as on 31 Dec. 2017
Dr.Cr.
ExpenditureAmountIncomeAmount
Rent18,000Entrance Fees3,200
Add: Outstanding for 20171,500Locker Rent1,200
19,500Profit from Entertainment3,000
Less: Outstanding for 2016(1,500)18,000
Subscription40,000
Wages7,000Less: Outstanding for 2016(1,200)
Depreciation on Furniture2,50038,800
Interest2,000Add: Outstanding for 20172,30041,100
Postage1,000Deficit (Balancing Figure)6,100
Add: Opening Stock300
1,300
Less: Closing Stock(200)1,100
Salaries24,000
54,60054,600
Balance Sheet as on  December 31, 2016
LiabilitiesAmountAssetsAmount
Rent Outstanding1,500Cash in Hand2,600
10%  Loan20,000Subscription Outstanding1,200
Furniture15,000
Stock of Postage Stamps300
Capital fund Deficit (Balancing figure)2,400
21,50021,500
Balance Sheet as on December 31, 2017
ExpenditureAmountIncomeAmount
Rent Outstanding1,500Subscription Outstanding2,300
10%  Loan20,000Stock of Postage Stamps200
Donation for Building23,000Billiard Table14,000
Capital Fund(2,400)Furniture15,000
Add: Life Membership Fee7,000Add: Purchases10,000
Less: Deficit(6,100)25,000
Less: Depreciation(2,500)22,500
Cash in Hand4,000
Capital Fund (Deficit)1500
44,50044,500

* NOTE 1:

Capital Fund(2,400)
Add:Life Membership Fees7,000
Less:Deficit(6,100)
Net Deficit(1,500)

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
ReceiptsAmount(₹)PaymentsAmount(₹)
Opening cash balance12,000Furniture4,000
SubscriptionTelephone expenses800
2014-152,000Salary
2015-1622,00024,0002014-151,000
Entrance fees2,8002015-164,000
Locker rent1,000Newspapers700
Life membership fee1,200Sundry expenses 1,000
Government grant11,000Defence bonds18,000
Land20,000
Closing cash balance2,500
52,00052,000
Balance Sheet for the year ending March 31, 2016
LiabilitiesAmount(₹)AssetsAmount(₹)
Advance locker rent200Cash in hand12,000
Subscription received in Advance1,000Outstanding subscription3,000
Outstanding salary 2,000Building35,000
Loan10,000
Capital fund 36,800
50,00050,000

The solution for this question is as follows:

Books of Culture ClubIncome and Expenditure Account as on March 31, 2016
Dr.Cr.
ExpenditureAmountIncomeAmount
Telephone Expenses800Subscription22,000
Salary4,000Add: Advance Received in 20151,00023,000
Newspapers700
Sundry Expenses1,000Entrance Fees2,800
Locker Rent1,000
Surplus (Balancing figure)31,500Add: Advance Received in 20152001,200
Government Grants11,000
38,00038,000
Balance Sheet as on March 31, 2016
LiabilitiesAmountAssetsAmount
Capital Fund36,800Subscription Still Outstanding for 20151,000
Add: Life Membership Fees1,200(₹ 3,000 – ₹ 2,000)
Add: Surplus31,50069,500Furniture4,000
Defence Bonds18,000
Salary Still Outstanding for 20151,000Land 20,000
Loan10,000Building35,000
Cash in Hand2,500
80,50080,500

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
ReceiptsAmountPaymentsAmount
Balance b/d15,000Furniture18,000
Sale of Old furniture (costing ₹ 6,000)4,000Library books10,000
Subscriptions:Salaries 72,000
2015–16 18,000General expenses18,000
2016–1760,000Electric charges12,000
2017–1812,000 90,000Newspapers33,800
Sale of old newspapers10,800Postage 3,000
Profit from entertainment44,000Stationery 40,000
Rent84,000Audit fee 8,000
Balance c/d33,000
2,47,8002,47,800
Balance Sheet as on March 31, 2016
LiabilitiesAmountAssetsAmount
Outstanding Salary6,000Cash15,000
Capital Fund6,94,000Outstanding subscription18,000
Library Books30,000
Furniture37,000
Land and Building6,00,000
7,00,0007,00,000

Additional Information:

1.The Club had 500 members each paying an annual subscription of ₹ 150.
2.On 31.3.2016 salaries outstanding amounted to ₹ 1,200 and salaries paid included ₹ 6,000 for the year 2015–16.
3.Provide 5% depreciation on Land and Building.The solution for this question is as follows:
Books of Unity ClubIncome and Expenditure Account as on March 31, 2017
Dr.Cr.
ExpenditureAmount IncomeAmount
Loss on Sale of Old Furniture (4,000 – 6,000) 2,000Subscription
500 members at ₹ 150 each75,000
Salaries72,000Sale of Old Newspapers10,800
Add: Outstanding for 2015–161,200Profit from Entertainment44,000
73,200Rent84,000
Less: Outstanding for 2016–17(6,000)67,200
General Expenses18,000Deficit (Balancing figure)200
Electric Charges12,000
Newspapers33,800
Postage3,000
Stationery40,000
  Audit Fees8,000
Depreciation on Land and Building30,000
2,14,0002,14,000
Balance Sheet as on 31 March 2017
LiabilitiesAmount AssetsAmount 
Advance Subscription (for 2017–18)12,000Subscription Outstanding15,000
Salaries Outstanding1,200Furniture37,000
Capital Fund6,94,000Add: Purchases18,000
Less: Deficit(200)6,93,80055,000
Less: Sales(6,000)49,000
Library Books30,000
Add: Purchases10,00040,000
Land and Building6,00,000
Less: 5% Depreciation(30,000)5,70,000
Cash and Bank33,000
7,07,0007,07,000

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.

DetailsAmount
Sports Fund as on April 1, 201680,000
Sports Fund Investments80,000
Interest on Sports Fund Investments8,000
Donations for Sports Fund30,000
Sports Prizes awarded16,000
Expenses on Sports Events7,000
General Fund2,00,000
General Fund Investments2,00,000
Interest on General Fund Investments 20,000

 The solution for this question is as follows:

Income and Expenditure Account as on March 31, 2016
Dr.Cr.
ExpenditureAmountIncomeAmount
Interest on General Fund Investments20,000
Balance Sheet as on March 31, 2016
LiabilitiesAmountAssetsAmount
Sports Fund80,000Sports Fund Investments80,000
Add: Interest on Sports FundGeneral Fund Investments2,00,000
Investments8,000 
Add: Donation for Sports Fund30,000
1,18,000
Less: Sports Prizes Awarded(16,000)
Less: Expenses on Sports Events(7,000)95,000
General Fund 2,00,000

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ट्रेन के बीच में ही AC कोच क्यों लगाए जाते हैं? Rbse books for class 1 to 12 hindi medium 2021-22
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