Question 3 OR (a)
Club: Income and Expenditure Account and Balance Sheet
12 marks
- Time to write
- About 24 minutes
- Notes
- Crux notes
Question
Question 3 OR (a) · 12 marksGiven below is the receipt and payment account of Riverbend Club for the year ended 31st March 2024:
Receipt and Payment Account for the Year ending 31st March, 2024
| Receipts | ₹ | Payments | ₹ | |
|---|---|---|---|---|
| Cash (1-04-2023) | 54,000 | Bank Overdraft (1-04-2023) | 1,11,600 | |
| Subscriptions | Sofa purchased on (104-2023) | 52,200 | ||
| Honorarium | 1,08,000 | |||
| 2022-2023 | 10,800 | Salaries | 1,04,400 | |
| 2023-2024 | 5,83,200 | |||
| 2024-2025 | 5,400 | 5,99,400 | Sundry Expenses | 1,18,800 |
| Donations | 10,440 | Drama Expenses | 32,040 | |
| Life Membership Fees | 24,120 | Stationery | 51,120 | |
| Interest on Securities | 17,280 | Cash in Hand (31-03-2024) | 19,800 | |
| Sale proceeds on Old Cupboard. (NIL Book value) | 4,320 | Cash at Bank (31-03-2024) | 1,11,600 | |
| 7,09,560 | 7,09,560 |
Having due regard to the additional information given below, prepare the club's Income and Expenditure Account for the year that ended 31st March 2024 and its Balance sheet as at that date:
The stock of stationery on 31st March 2023 was ₹4500, and on 31st March 2024 it was ₹3132.
Outstanding salaries for the year amounted to ₹19800.
The club has 2160 members paying an annual subscription of ₹300 each.
Prepaid Sundry Expenses on 31st March 2023 were ₹4752.
As on 31st March 2023, Building stood at ₹8,82,000 Computer at ₹36,000 and Investments at ₹2,34,000.
Depreciate building, sofa and computer at 6%.
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
- prepare … AccountProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.
- ComputerFormula first, then the working, then the answer with its unit (₹, %, units).
What the paper leaves open
- "Sofa purchased on (104-2023)" is read as bought on 1-04-2023, at the start of the year, so a full year's depreciation is charged on it.
- The old cupboard had no book value, so its sale proceeds are income.
- Life membership fees are added to the capital fund; the donations, given for no stated purpose, are income.
- The opening capital fund is the balancing figure of the opening balance sheet.
- The 2022-2023 subscriptions received in the year are taken as the subscriptions due at the start of the year; no subscription received in advance is given for that date, so none is taken.
Write it in this order
Working notes first: they feed the statements.
- Read the data; tick every adjustment as you plan it 2 min
- 1 Subscriptions, outstanding and prepaid items, stationery consumed 3 marks 5 min
- 2 Income and Expenditure Account 4 marks 7 min
- 3 Opening capital fund 2 marks 3 min
- 4 Closing Balance Sheet 3 marks 5 min
- Check: every adjustment used, both sides agree, dates in 2 min
Final answer
Check your own figures against these.
- Surplus
- ₹1,81,548
- Balance sheet total
- ₹13,45,320
Try it first. About 24 minutes for 12 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.
Basis of the answer
The Receipts and Payments Account summarises cash; the Income and Expenditure Account is a nominal account of the year's income and expenditure. So subscriptions are taken for the year at what members owe for it, expenses are adjusted for amounts outstanding and prepaid, stationery is taken as consumed, capital items (the sofa) go to the Balance Sheet, and depreciation is charged. Subscriptions received for the next year are a liability and the next year's income. Life membership fees are receipts of a non-recurring nature, not credited to the Income and Expenditure Account; they go to the capital fund.
Working notes
Working notes
- Subscriptions for 2023-24: 2,160 members × ₹300 = ₹6,48,000; received ₹5,83,200, so ₹64,800 is outstanding. The ₹10,800 for 2022-23 settles last year's dues, and the ₹5,400 for 2024-25 is received in advance.
- Salaries: 1,04,400 + outstanding 19,800 = ₹1,24,200. Sundry expenses: 1,18,800 + opening prepaid 4,752 = ₹1,23,552.
- Stationery consumed: opening stock 4,500 + bought 51,120 − closing stock 3,132 = ₹52,488.
- Depreciation at 6%: building 52,920; sofa 3,132; computer 2,160; total ₹58,212.
Income and Expenditure Account for the year ended 31st March 2024
4 marks| Expenditure | ₹ | Income | ₹ |
|---|---|---|---|
| To Honorarium | 1,08,000 | By Subscriptions (2,160 × 300) | 6,48,000 |
| To Salaries (1,04,400 + 19,800) | 1,24,200 | By Donations | 10,440 |
| To Sundry Expenses (1,18,800 + 4,752) | 1,23,552 | By Interest on Securities | 17,280 |
| To Drama Expenses | 32,040 | By Sale of old cupboard (nil book value) | 4,320 |
| To Stationery consumed | 52,488 | ||
| To Depreciation (52,920 + 3,132 + 2,160) | 58,212 | ||
| To Surplus | 1,81,548 | ||
| 6,80,040 | 6,80,040 |
Opening capital fund (1st April 2023)
2 marks| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Bank Overdraft | 1,11,600 | Cash | 54,000 |
| Capital Fund (balancing figure) | 11,14,452 | Building | 8,82,000 |
| Computer | 36,000 | ||
| Investments | 2,34,000 | ||
| Stock of stationery | 4,500 | ||
| Prepaid sundry expenses | 4,752 | ||
| Subscriptions due (2022-23) | 10,800 | ||
| 12,26,052 | 12,26,052 |
Balance Sheet as at 31st March 2024
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital Fund (11,14,452 + life membership fees 24,120 + surplus 1,81,548) | 13,20,120 | Cash in Hand | 19,800 |
| Outstanding salaries | 19,800 | Cash at Bank | 1,11,600 |
| Subscriptions received in advance | 5,400 | Building (8,82,000 − 52,920) | 8,29,080 |
| Sofa (52,200 − 3,132) | 49,068 | ||
| Computer (36,000 − 2,160) | 33,840 | ||
| Investments | 2,34,000 | ||
| Stock of stationery | 3,132 | ||
| Subscriptions outstanding (2023-24) | 64,800 | ||
| 13,45,320 | 13,45,320 |
Result: surplus ₹1,81,548; balance sheet total ₹13,45,320.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Subscriptions, outstanding and prepaid items, stationery consumed | 3 |
| 2 | Income and Expenditure Account | 4 |
| 3 | Opening capital fund | 2 |
| 4 | Closing Balance Sheet | 3 |
| Total | 12 |
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