From the following extract of Receipts and Payments Account of Sonic club
and the given additional information, show the Salaries items in the Income
and Expenditure Account for the year ending 31st Dec. 2006 and the Balance
Sheet as on 31st December, 2005 and 31st December, 2006.
An Extract of Receipts and Payments Account
for the year ending 31st December, 2006
Receipts Rs. Payment Rs.
By Salaries
2005
2006
2007
20,000
2,80,000
18,000
Additional Information: Rs.
(a) Salaries outstanding on 31.12.2005 25,000
(b) Salaries outstanding on 31.12.2006 45,000
(c) Salaries paid in advance on 31.12.2005 10,000
Answers
Income and expenditure account of year year ended 31st December 2006:
Dr. Cr.
Expenditure. Rs. Income. Rs.
To salaries 2,80,000
Add: salary received
in advance. 10,000
( LY 2005).
Add: Outstanding
(CY 2006). 40,000
3,30,000
Balance sheet as on 31st December,2005:
Liabilities. rs. asset rs
Salary salary
outstanding 25000 prepaid 10,000
Balance sheet as on 31st December 2006
Liabilities. rs asset. rs
Salary salary
outstanding:. Prepaid. 18000
2005. 5000
(25,000-20,000)
2006
(45,000-5000). 40,000
Notes:
- salaries outstanding as on 31st December 2006 appearing on the balance sheet amounted at rupees 45000.
- It includes salary outstanding for the year 2005 rupees 5000 (i.e.25,000-20,000) .
- salary outstanding for the year 2006 amounted only 40000.