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/d | 15,000 | By Stationery | 10,000 |
| To Subscriptions | 60,000 | By Salaries | 30,000 |
| To Entrance Fees | 8,000 | By Books purchased | 20,000 |
| To Sale of old Sports Materials | 2,000 | By Balance c/d | 30,000 |
| To General Donations | 5,000 | ||
| Total | 90,000 | Total | 90,000 |
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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Start your 14-day free trial to unlock the full solution →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 Stationery | 10,000 | By Subscriptions | 64,000 |
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