Question 3 OR (c)
Stationery consumed for the Income & Expenditure Account
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 3 OR (c) · 6 marksHow will you deal with the items below while preparing the income and expenditure account for the year that ended 31st December 2024, and the balance sheet as on that date.
| Particulars | As at 31st December: 2024 (₹) | As at 31st December: 2025 (₹) |
|---|---|---|
| Creditors for stationery | 36,000 | 60,000 |
| Stock of stationery | 1,08,000 | 84,000 |
During 2024 payments made to the creditors for stationery amounted ₹3,60,000 and the cash purchases of stationary came to 20% of the total purchase.
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
- HowHow it works or is done, step by step.
What the paper leaves open
The paper asks about the year ended 31st December 2024 (our version) but gives balances at 31st December 2024 and 2025; the two columns are read as the opening and closing balances of the year being accounted for, and the figures are the same under either repair of the dates. "Total purchase" is read as the year's total stationery purchases, and the misspelling "stationary" is kept as printed.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Credit purchases and gross-up to total purchases 3 marks 5 min
- 2 Consumption charged to the Income & Expenditure Account not payment 2 marks 3 min
- 3 Balance-sheet extract creditors, stock 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Short on time? Step 1 carries 3 of the 6 marks: guard its minutes.
Final answer
Check your own figures against these.
- Stationery consumed
- ₹5,04,000 to the Income & Expenditure Account
- Creditors
- ₹60,000 and stock ₹84,000 to the Balance Sheet. The figures do not depend on how the paper's year labels are repaired (paper note)
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.
The charge to the Income & Expenditure Account is the stationery actually used in the year, not the amount paid to suppliers. The DU text's worked example finds it from the stock in hand at the start, the payments less those settling last year's creditors, the creditors still unpaid at the end, and the unused stock at the end. A non-trading body also prepares a Balance Sheet, and an amount still to be paid at the year end goes on its liabilities side; so the closing creditors are a liability and the unused stock an asset.
Creditors for Stationery Account (to find credit purchases)
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Bank (payments) | 3,60,000 | By Balance b/d | 36,000 |
| To Balance c/d | 60,000 | By Credit purchases (bal. fig.) | 3,84,000 |
| 4,20,000 | 4,20,000 |
| Dr | ₹ |
|---|---|
| To Bank (payments) | 3,60,000 |
| To Balance c/d | 60,000 |
| 4,20,000 | |
| Cr | ₹ |
| By Balance b/d | 36,000 |
| By Credit purchases (bal. fig.) | 3,84,000 |
| 4,20,000 |
Credit purchases = ₹3,84,000. Cash purchases are 20% of total purchases, so credit purchases are the other 80%: total purchases = 3,84,000 ÷ 80% = ₹4,80,000, of which cash purchases are ₹96,000.
| Purchases of stationery | ₹ |
|---|---|
| Cash purchases | 96,000 |
| Credit purchases (Creditors A/c balancing figure) | 3,84,000 |
| Total purchases | 4,80,000 |
Stationery Account (to find consumption)
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Balance b/d (opening stock) | 1,08,000 | By Income & Expenditure A/c (consumed) | 5,04,000 |
| To Purchases | 4,80,000 | By Balance c/d (closing stock) | 84,000 |
| 5,88,000 | 5,88,000 |
| Dr | ₹ |
|---|---|
| To Balance b/d (opening stock) | 1,08,000 |
| To Purchases | 4,80,000 |
| 5,88,000 | |
| Cr | ₹ |
| By Income & Expenditure A/c (consumed) | 5,04,000 |
| By Balance c/d (closing stock) | 84,000 |
| 5,88,000 |
Stationery consumed = ₹5,04,000, shown on the expenditure side of the Income & Expenditure Account.
Balance Sheet (extract) at the closing balance date
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors for stationery | 60,000 | Stock of stationery | 84,000 |
Result: stationery consumed ₹5,04,000 to the Income & Expenditure Account; creditors ₹60,000 and stock ₹84,000 to the Balance Sheet. The figures do not depend on how the paper's year labels are repaired (paper note).
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Credit purchases and gross-up to total purchases | 3 |
| 2 | Consumption charged to the Income & Expenditure Account (not payment) | 2 |
| 3 | Balance-sheet extract (creditors, stock) | 1 |
| Total | 6 |
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