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Exercises · Q12
Q.

From the following Receipts and Payments Account of Study Circle for the year ended 31st March 2024, prepare an Income and Expenditure Account for the year:

Receipts and Payments Account for the year ended 31.3.2024

Receipts₹Payments₹
To Balance b/d15,000By Stationery10,000
To Subscriptions60,000By Salaries30,000
To Entrance Fees8,000By Books purchased20,000
To Sale of old Sports Materials2,000By Balance c/d30,000
To General Donations5,000
Total90,000Total90,000

Additional information: (i) As per the rules of Study Circle, 50% of Entrance Fees is to be capitalised and the balance treated as revenue income. (ii) The old Sports Materials sold for ₹2,000 had a book value of ₹3,000. (iii) Subscription outstanding for the current year ₹4,000.

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Step 1 — Adjust Subscription. Received ₹60,000 + Closing outstanding ₹4,000 (no opening outstanding/advance given) = ₹64,000.

Step 2 — Split the Entrance Fees. Per the club's rule, 50% is capitalised and 50% is revenue: Revenue portion = 50% of ₹8,000 = ₹4,000 (credited to Income and Expenditure Account); Capitalised portion = ₹4,000 (added directly to the Capital Fund, not shown in the Income and Expenditure Account).

Step 3 — Loss on sale of old Sports Materials. Book value ₹3,000, sold for ₹2,000 → Loss on sale = 3,000 − 2,000 = ₹1,000, debited to the Income and Expenditure Account.

Step 4 — Exclude the capital item. Books purchased for ₹20,000 is capital expenditure (a fixed asset) and does not appear in the Income and Expenditure Account.

Step 5 — Prepare the Income and Expenditure Account.

Income and Expenditure Account for the year ended 31.3.2024

Expenditure₹Income₹
To Stationery10,000By Subscriptions64,000

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