The Receipts and Payments Account of Holkar Aushadhalaya, Maheshwar for the year
ending 30th June, 2017 is as under -
Receipts
Amount
Payments
Amount
to 656
To Cash balance 1-7-2016
To Membership fee
To Non Member fees
To Aid from Municipality
To Donation for building
To Interest
2,010 By Salaries of nurses
1,115 By Boarding and Laundry
270 By Rent and rates
1,000 By Cost of Car
1,560 By Expenses of Car
38 By Expenses of medicine
By Cash balance c/f
5,993
380
200
2,000
840
670
1,247
5,993
The Nursing Home owns freehold land of 8,000 for building purposes. A donation
for Building 100 was wrongly included in subscription. A bill of * 129 for the
purchase of medicines was outstanding.
You are to convert the Receipts and Payments Account into Income and Expenditure
Account and prepare Balance Sheet as on that date. Donation for building is capital
funds.
Answers
Answer:
Profit and Loss Account for the year ended 31st March 2013 and Balance sheet as on that date.
Balance Sheet as on 31st March 2013
Debit Balance Amount (₹) Credit Balance Amount (₹)
Purchases 220000 Partners' Capital
Sundry Debtors 45000 Satish 120000
Discount 4000 Pradeep 90000
Opening stock 25000 Sales 430000
Wages and salaries 23000 Sundry Creditors 85000
Manufacturing expenses 25500 Discount 3500
Factory Building 175000
Plant and Machinery 75000
Advertisement (for 2 yrs w.e.f. 1.1.13) 10000
Salary and wages 45000
Cash in hand 15000
10 % Govt. Bonds (purchased on 01.07.2012) 60000
Warehouse Rent 6000
728500 728500
Adjustments :
(1) The closing stock was valued at the market price at ₹ 92000, which is 15 % above its cost price.
(2) Depreciation machinery at 10 % p.a.
(3) Outstanding wages were ₹ 2500
(4) Maintain R.D.D. at 5 % on sundry debtors.
SOLUTION
In the books of M/s Satish and Pradeep
Tradind A/c for the year ended 31.3.2013
Dr. Cr.
Particulars
Amount
Amount
Particulars
Amount
Amount
To Opening stock
25000
By Sales
430000
To Purchases
220000
To Wages and Salaries
23000
25500
By Closing Stock 80000
Add: Outstanding
2500
To Manufacturing expenses
25500
To Gross Profit C/d 214000
510000
510000
Profit and Loss A/c
for the year ended 31.3.2013
Dr. Cr.
Particulars
Amount
Amount
Particulars
Amount
Amount
To Discount
4000
By Gross Profit C/d
214000
To Advertisement
10000
1250
By Discount
3500
Less: Prepaid
8750
By Interst on Govt. Bond
4500
To Salaries and Wages
45000
To Warehouse Rent
6000
To Depreciation on Machinery
7500
To R.D.D.
2250
To Net Profit Transferred to Partners Capital A/c
Satish Capital A/c
78000
Pradeep Capital A/c
78000
156000
222000
222000
Partners’ Capital A/c
Dr. Cr.
Particulars
Satish
Pradeep
Particulars
Satish
Pradeep
By Balance b/d
120000
90000
By Profit and Loss A/c
78000
78000
To Balance C/d
198000
168000
198000
168000
198000
168000
M/s Satish and Pradeep
Balance Sheet as on 31.3.13
Liabilities
Amount
Amount
Assets
Amount
Amount
Capital :
Sundry Debtors
45000
Satish
198000
Less: New R.D.D.
2250
42750
Pradeep
168000
366000
Factory Building
175000
Sundry Creditors
85000
Plant and Machinery
75000
Outstanding Wages
2500
Less: Depreciation
7500
67500
Cash in Hand
15000
10% Govt. Bond
60000
Add: Interest on Bonds
4500
64500
Prepaid Advertisements
8750
Closing Stock
80000
453500
453500
Working Notes:
1) Closing Stock:
Since market price is 15% above cost price, we value stock at cost price which is calculated as
cost =
Market price115×100=Rs.80000
2) Depreciation = Rs. 70000 x 10% = Rs. 7000
3) RDD = 5% x Debtors = Rs. 45000 = Rs. 2250
4) Interest accrued on Government Bond
=10%×Rs.60000×912=Rs.4500
5) Deferred Advertisement:
Since the advertisement has been paid for 2 years but only 1 quarter is in the current year, expenditure of 7 quarters is deferred Deferred expenditure = Rs.
10000×78 = Rs. 8750
6) Distribution of Profit:
Mohini = Rs.
155000×12 = Rs. 77500
Rohini = Rs.
155000×12 = Rs. 77500