Question 3 (a)
NPO restaurant: Trading Account with I&E and Balance Sheet extracts
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 3 (a) · 6 marksShimla Golf Club gives you the information below about its restaurant for the year ended 31st March, 2024:
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Opening stock of restaurant on 1.4.2023 | 12,000 | Closing stock of restaurant on 31.3.2024 | 15,000 |
| Restaurant takings | 7,20,000 | Restaurant purchases | 4,10,000 |
| Wages (including ₹ 96,000 for restaurant) | 2,40,000 | Fuel | 36,000 |
| China glass cutlery on 1.4.2023 | 8,000 | Depreciation to be charged on China glass cutlery @25% p.a. |
For the year ended 2023-24, prepare the Restaurant Trading A/c and show the extract of the Income and Expenditure A/c and the extract of the Balance Sheet.
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
Read from the question
- show … SheetProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.
What the paper leaves open
- Fuel is not said to be the restaurant's; it is read as a restaurant cost (it is listed with the restaurant's figures) and charged to the Restaurant Trading Account.
- Only the restaurant's share of wages goes to that account; the rest is a general expense of the club.
- Depreciation on the china, glass and cutlery is a cost of running the restaurant and is charged in its trading account.
Write it in this order
- Read the data; tick every adjustment as you plan it 1 min
- 1 Restaurant Trading Account 3 marks 5 min
- 2 Income & Expenditure Account extract 1½ marks 2 min
- 3 Balance Sheet extract 1½ marks 2 min
- Check: every adjustment used, both sides agree, dates in 2 min
Short on time? Step 1 carries 3 of the 6 marks: guard its minutes.
Final answer
Check your own figures against these.
- Profit on the restaurant
- ₹1,79,000
- Wages charged to I&E
- ₹1,44,000
- Restaurant stock
- ₹15,000 and china, glass and cutlery ₹6,000 in the Balance Sheet
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution and check your figures against the final answer.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
A club that runs a trading activity such as a bar or restaurant prepares a separate trading account for it, opening stock, purchases and the activity's own wages on the debit side, sales and closing stock on the credit side, and carries the resulting profit to the Income & Expenditure Account.
Restaurant Trading Account for the year ended 31 March 2024 (foots ✓)
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Opening Stock | 12,000 | By Restaurant Takings | 7,20,000 |
| To Purchases | 4,10,000 | By Closing Stock | 15,000 |
| To Wages (restaurant) | 96,000 | ||
| To Fuel | 36,000 | ||
| To Depreciation on china, glass and cutlery (8,000 × 25%) | 2,000 | ||
| To Profit on Restaurant → I&E A/c | 1,79,000 | ||
| 7,35,000 | 7,35,000 |
| Dr | ₹ |
|---|---|
| To Opening Stock | 12,000 |
| To Purchases | 4,10,000 |
| To Wages (restaurant) | 96,000 |
| To Fuel | 36,000 |
| To Depreciation on china, glass and cutlery (8,000 × 25%) | 2,000 |
| To Profit on Restaurant → I&E A/c | 1,79,000 |
| 7,35,000 | |
| Cr | ₹ |
| By Restaurant Takings | 7,20,000 |
| By Closing Stock | 15,000 |
| 7,35,000 |
Income & Expenditure Account for the year ended 31 March 2024 (extract)
| Expenditure | ₹ | Income | ₹ |
|---|---|---|---|
| To Wages (2,40,000 − 96,000 charged to the restaurant) | 1,44,000 | By Profit on Restaurant | 1,79,000 |
Depreciation and other revenue items of the year appear in the Income & Expenditure Account (here inside the restaurant's result); incomes go to the credit side and expenses to the debit side.
Balance Sheet as at 31 March 2024 (extract)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Restaurant stock | 15,000 | ||
| China, glass and cutlery 8,000 less depreciation 2,000 | 6,000 |
An asset such as china, glass and cutlery is not charged to the Income & Expenditure Account; it is shown in the Balance Sheet, with only its depreciation charged as an expense.
Reading. Fuel and the depreciation on china, glass and cutlery are costs of running the restaurant, so they go to its trading account; only the restaurant's ₹96,000 share of wages goes there, and the remaining ₹1,44,000 is a general expense of the club.
Result: profit on the restaurant ₹1,79,000 · wages charged to I&E ₹1,44,000 · restaurant stock ₹15,000 and china, glass and cutlery ₹6,000 in the Balance Sheet.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Restaurant Trading Account (profit ₹1,79,000) | 3 |
| 2 | Income & Expenditure Account extract | 1.5 |
| 3 | Balance Sheet extract | 1.5 |
| Total | 6 |
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