34. From the given Receipts and Payments Account and additional information
of Friends Club for the year ended 31st March, 2019, prepare Income and Expenditure
Account for the year ending 31st March, 2019.
Receipts and Payments Account of Friends Club
for the year ending 31st March, 2019
Recept :
-
Ponments
ToBalance 58
50,400 By Furniture
To Donations
44,000 (Purchased on 1.12.2018) 1.20.000
To Sale of old spons material 2.000 By Salaries
1,00,000
To Subscriptions
By Secretary honorarium
4.000
2017-18
1.600
By Books
44,000
2018-19
60,000
By Balance cld
15,000
2019-20
5.000 66,600
To Entrance Fees
1.20,000
2.83.000
2,83,000
Additional Information :
(1) On 1st April, 2018, the Club had the following balances of assets and
liabilities:
Furniture 1,00,000, Subscriptions in arrears 2,000 and Outstanding Salary
6,000
The club had 75 members each paying an annual subscription of 1,000
Charge depreciation on furniture @ 10% p.a.
Answers
While preparing an Income & Expenditure A/c from a Receipts and Payments A/c, all items on the Receipts side will be entered in the Income side and all items on the Payments will be entered in the Expenditure side.
Calculation of subscriptions:
As per the question, the club had 75 members, paying an annual subscription of Rs 1,000.
The total subscription would therefore be:
75 × Rs 1,000 = Rs 75,000
Calculation of salaries:
As per the question, there were outstanding salaries of Rs 6,000. The treatment of outstanding salary would be to subtract the outstanding amount from the salary amount for the year, i.e., Rs 1,00,000.
The total salary would therefore be:
Rs 1,00,000 - Rs 6,000 = Rs 94,000
Calculation of depreciation:
As per the question, the furniture's original amount was Rs 1,00,000. Charging depreciation on it at 10%,
Rs 1,00,000 × 10/100 = Rs 10,000
Additional furniture was purchased on the 1st of December, 2018 for Rs 1,20,000. Charging depreciation on it at 10%,
Rs 1,20,000 × 10/100 × 4/12 [∵ there were only 4 months left for the year to end] = Rs 4,000
The total depreciation would therefore be:
Rs 10,000 + Rs 4,000 = Rs 14,000
Assets aren't considered in an Income & Expenditure A/c [By Books - Rs 44,000 from the question.]
The Income & Expenditure A/c:
Explanation:
Dr. Income and Expenditure A/c Cr.
Particulars Amount Particulars Amount
To Salaries 94000 By Subscription 75000
To Depreciation 14000 By Entrance Fees 120000
To Secretary Honorarium 4000 By Donation 44000
To Surplus 129000 By Sale of old sports material 2000
Total 241000 Total 241000
Calculation of subscriptions:
Total Subscription to be received during the year 75000
(75 x 1000 = 75000)
Calculation of salaries:
Salary Paid during the year 100000
Less- Outstanding salary of the previous year (6000)
Salaries to be shown on the Expenditure side 94000
Calculation of depreciation on furniture :
- Depreciation of 10% on 100000 --------- 10000
- Depreciation of 10% on 120000 for 4 months --------- 4000
Depreciation of furniture to be shown on the Expenditure side 14000
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