Question 2 OR

Cricket club: Income and Expenditure Account and Balance Sheet

10 marks

Time to write: About 20 minutes

From an older CBCS paper

Question

Question 2 OR · 10 marks

From a Cricket Club's Receipts and Payments Account below and the further information, prepare, for the year ended 31st March, 2015, the Income and Expenditure Account and a Balance Sheet on that date:

Receipts		₹	Payments made	₹
To Balance b/d:			By Purchase of Balls	78,000
Cash	12,240		By Tournament Fees	12,000
Bank	36,000		By Affiliation Fee for five years	2,400
To Subscriptions		2,94,000	By Rent of Playground	7,200
To Interest on Investment		2,160	By Travelling Expenses	24,000
To Sale of ticket for Variety Programme		24,000	By Expenses of Variety Programme	18,000
To Sale of furniture (30-09-2014)		10,800	By Refreshment Expenses	4,800
To Donation for Building		60,000	By Furniture bought on (1-10-2014)	6,000
To Legacy		13,200	By Advance to Building Contractor	60,000
			By Repairs	6,000
			By Salary	18,000
			By Telephone bill	1,800
			By Miscellaneous Exps	9,600
			By 12% Investments (F.V. ₹ 2,04,000) 1-1-2015	1,80,000
			By Balance: Cash	10,200
			Bank	14,400
		4,52,400		4,52,400

Further Information:

The Miscellaneous expenses include ₹ 3,600 of honorarium.
The Subscriptions received include ₹ 10,800 of subscription outstanding for the year 2013-14. For the year 2014-15, subscription of ₹ 19,200 is still outstanding. Some members have already paid the subscription for the 2015-16, ₹ 9,600, which is included in the subscription received.
The 12% investment's Face value on 31st March 2014 was ₹ 18,000 (Cost price ₹ 14,400).
The book value of the furniture sold on 1-4-2014 was ₹ 14,400, depreciation being 20% p.a. Depreciate the new furniture at the same rate.
The Telephone bill for one quarter, ₹ 360, is outstanding. Each quarter's charge is the same in both 2013-14 and 2014-15.
Cheques for repairs to building not yet presented: ₹ 4,800 for 2013-14 and ₹ 14,400 for 2014-15.
The Bank balance is the 'Balance as per Bank Pass Book'.
On 31st March, 2015 the club held a Stock of balls of ₹ 7,200.

Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

20 minfor 10 marks

Read from the question

prepare, … AccountProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.

What the paper leaves open

"Unpresented cheques" for repairs: the bank balance is as per pass book, so the cheques issued but not presented are deducted to reach the cash book balance.
The furniture sold on 30-09-2014 (note (d) says book value on 1-4-2014): depreciation for six months before sale.
The legacy is not earmarked and is treated as capital; the donation for building goes to a building fund.
The affiliation fee covers five years; one-fifth is the year's expense.

Write it in this order

Read the data; tick every adjustment as you plan it 1 min
1 Readings, subscription and opening capital fund 2½ marks 5 min
2 Income and Expenditure Account 4 marks 7 min
3 Balance Sheet 3½ marks 6 min
Check: every adjustment used, both sides agree, dates in 1 min

123

Try it first. About 20 minutes for 10 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Readings (paper note)

Bank as per pass book (note g). As in the DU text's worked example, payments presented are adjusted for cheques not presented: repairs for the year = 6,000 − 4,800 (2013-14 cheques presented this year) + 14,400 (this year's cheques not yet presented) = ₹15,600. The cash-book bank balance is the pass-book balance less unpresented cheques: 36,000 − 4,800 = 31,200 at the start, 14,400 − 14,400 = nil at the end.
Telephone: four quarters at ₹360 = ₹1,440 for the year; ₹360 is outstanding at the end, so the ₹1,800 paid includes ₹720 of 2013-14.
Furniture sold 30.9.2014 (book value ₹14,400 on 1.4.2014): six months' depreciation ₹1,440, book value ₹12,960, sold for ₹10,800, loss ₹2,160. New furniture: 20% × 6,000 × 6/12 = ₹600.
Legacy (not earmarked) to capital fund; donation for building to a building fund; affiliation fee for five years: ₹480 this year, ₹1,920 prepaid.
Interest: 12% on ₹18,000 face value (₹2,160, received) plus 12% on ₹2,04,000 for three months (₹6,120, accrued).

The Income and Expenditure Account takes only the revenue items of the year.

Subscription for 2014-15: 2,94,000 − 10,800 (2013-14) − 9,600 (2015-16) + 19,200 outstanding = ₹2,92,800.

Capital fund on 1 April 2014: cash 12,240 + bank (cash book) 31,200 + investments 14,400 + furniture 14,400 + subscriptions outstanding 10,800 − telephone outstanding 720 = ₹82,320.

Income and Expenditure Account for the year ended 31 March 2015

Expenditure	₹	Income	₹
To Balls used (78,000 − closing stock 7,200)	70,800	By Subscriptions	2,92,800
To Tournament fees	12,000	By Interest on investments (2,160 + 6,120 accrued)	8,280
To Affiliation fee (2,400 ÷ 5)	480	By Variety programme (tickets 24,000 − expenses 18,000)	6,000
To Rent of playground	7,200
To Travelling expenses	24,000
To Refreshment expenses	4,800
To Repairs (6,000 − 4,800 + 14,400)	15,600
To Salary	18,000
To Telephone (4 × 360)	1,440
To Miscellaneous expenses (9,600 − 3,600)	6,000
To Honorarium	3,600
To Loss on sale of furniture	2,160
To Depreciation on furniture (1,440 + 600)	2,040
To Surplus	1,38,960
	3,07,080		3,07,080

Balance Sheet as at 31 March 2015

Liabilities	₹	₹	Assets	₹	₹
Capital fund (1.4.2014)	82,320		Furniture	6,000
Add: Legacy	13,200		Less: Depreciation	600	5,400
Add: Surplus	1,38,960	2,34,480	12% Investments (14,400 + 1,80,000)		1,94,400
Building fund (donation)		60,000	Interest accrued on investments		6,120
Subscriptions received in advance (2015-16)		9,600	Advance to building contractor		60,000
Telephone bill outstanding		360	Subscriptions outstanding (2014-15)		19,200
			Affiliation fee prepaid		1,920
			Stock of balls		7,200
			Cash in hand		10,200
		3,04,440			3,04,440

(Bank: pass book ₹14,400 less cheques not presented ₹14,400 = nil in the cash book.)

Where the 10 marks sit

#	Component	Marks
1	Readings, subscription and opening capital fund	2.5
2	Income and Expenditure Account	4
3	Balance Sheet	3.5
	Total	10

Keyboard: ← → previous and next question, / search

Report a problemopens an email to admin@getkunji.com with the question ID1861-Q2ORalready filled in.