Question 3 OR

Cultural society: Income and Expenditure Account and Balance Sheet

10 marks

Time to write
About 20 minutes

From an older CBCS paper

Question

Question 3 OR · 10 marks

A Cultural Society's Receipts and Payments Account for the year ended on 31 December, 2014 is below:

ReceiptsRs.PaymentsRs.
Cash in hand on Jan 13,000Bank Overdraft Jan6,200
Subscription:Investments in securities6,000
2013400Furniture2,900
201432,400Salary12,400
2015500Printing and Stationery1,780
Entertainment Proceeds4,000Entertainment Expenses3,420
Entrance Fees1,340Sundry Expenses2,840
Interest of securities960Balance on 31.12.2014
Sale of the Old Chairs (Book value: Nil)240Cash1,100
Bank6,200
42,84042,840

After considering the points below, prepare, for the year ended 31 December, 2014, the cultural society's income and expenditure account, and a Balance sheet as on the date:

  1. The society's 3,600 members each pay annual fees of Rs 10. Subscriptions of Rs 180 were still in arrears for the year 2013.

  2. The Stock of Stationery on 31 December, 2013 was Rs 250, and on 31 December, Rs 174.

  3. Entrance fees are to be capitalized.

  4. Salary of Rs 1,100 for December 2014 remains outstanding.

  5. Expenses outstanding, 31 December, 2013: Rs 264.

  6. The society had paid Rs 1,000 in 2013 for telephone charges, of which Rs 250 related to the year 2014.

  7. On 31 December, 2013 the books showed premises at Rs 49,000 and investments at Rs 13000.

  8. Depreciate fixed assets at 5% p.a. 10

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

What the paper leaves open

  1. "On 31 December, Rs 174" is read as 31 December, 2014.
  2. The furniture bought in the year has no purchase date; depreciation is charged at 5% for the full year and this is stated.
  3. "Interest of securities" is kept as printed.
  4. The old chairs had nil book value; the sale is a gain.

Write it in this order

  1. Read the data; note exactly what is asked 1 min
  2. 1 Workings and opening capital fund 2½ marks 5 min
  3. 2 Income and Expenditure Account 4 marks 7 min
  4. 3 Balance Sheet 3½ marks 6 min
  5. Check: arithmetic, units (₹, %), final answer underlined 1 min

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.

Basis. Only the current year's revenue items enter the Income and Expenditure Account; subscriptions for earlier years settle arrears, and those for later years are a liability. Readings (paper note): the closing stationery stock is at 31 December 2014; the furniture bought in the year is depreciated for a full year; the old chairs had nil book value, so their sale is a gain. The opening outstanding expenses (₹264) are taken as sundry expenses, paid in 2014.

Workings

ItemWorking₹
Subscriptions for 20143,600 members × 1036,000
Outstanding for 201436,000 − 32,4003,600
Arrears for 2013 at the start400 received + 180 still due580
Stationery consumed1,780 + 250 − 1741,856
Salary12,400 + 1,100 outstanding13,500
Sundry expenses2,840 − 264 (2013's)2,576
Net entertainment proceeds4,000 − 3,420580

Capital fund on 1 January 2014

Particulars₹
Cash in hand3,000
Subscriptions in arrears (2013)580
Stock of stationery250
Telephone charges prepaid250
Premises49,000
Investments13,000
Less: bank overdraft6,200
Less: outstanding expenses264
Capital fund59,616

Income and Expenditure Account for the year ended 31 December 2014

Expenditure₹Income₹
To Salary13,500By Subscriptions36,000
To Printing and Stationery1,856By Entertainment proceeds less expenses (4,000 − 3,420)580
To Sundry Expenses2,576By Interest on securities960
To Telephone charges (prepaid in 2013)250By Gain on sale of old chairs240
To Depreciation on premises (5%)2,450
To Depreciation on furniture (5%)145
To Surplus17,003
37,78037,780

Balance Sheet as at 31 December 2014

Liabilities₹₹Assets₹₹
Capital fund (1.1.2014)59,616Premises49,000
Add: Entrance fees capitalised1,340Less: Depreciation2,45046,550
Add: Surplus17,00377,959Furniture2,900
Subscriptions received in advance (2015)500Less: Depreciation1452,755
Salary outstanding1,100Investments (13,000 + 6,000)19,000
Subscriptions outstanding (2014 3,600 + 2013 180)3,780
Stock of stationery174
Cash in hand1,100
Cash at bank6,200
79,55979,559

Where the 10 marks sit

#ComponentMarks
1Workings and opening capital fund2.5
2Income and Expenditure Account4
3Balance Sheet3.5
Total10
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