From the following Receipts and Payments Account, prepare the Income and Expenditure Account for the year ended 31.3.2018:

Receipts and Payments Account for the year ended 31.03.2018.

| Receipts | Amount (₹) | Payments | Amount (₹) |
|---|---|---|---|
| To Balance | 60,000 | By

Question

From the following Receipts and Payments Account, prepare the Income and Expenditure Account for the year ended 31.3.2018:

Receipts and Payments Account for the year ended 31.03.2018.

| Receipts | Amount (₹) | Payments | Amount (₹) |
|---|---|---|---|
| To Balance | 60,000 | By Land | 10,000 |
| To Subscriptions | 35,000 | By Buildings | 40,000 |
| To Entrance Fee | 5,000 | By Furniture | 10,000 |
| To Sundry Receipts | 5,000 | By Sports Material | 5,000 |
| To Sale of old newspaper | 500 | By General Expenses | 8,000 |
| | | By Magazines | 500 |
| | | By Balance c/d | 32,000 |
| Total | 1,05,500 | Total | 1,05,500 |

Additional Information:
1. Capitalize 50% of entrance fee.
2. Subscriptions still outstanding amount to ₹ 5,000.
3. Depreciate sports material by 10%.

Accepted Answer

>

> [!TLDR]
> From the Receipts and Payments Account we keep only revenue items, adjust subscriptions for ₹5,000 outstanding (→ ₹40,000), treat only 50% of the entrance fee as income (₹2,500), charge ₹500 depreciation on sports material, and exclude all capital payments (land, buildings, furniture). The result is a **surplus of ₹39,000**.
>
> This is a TS Intermediate 2nd-year Accountancy not-for-profit organisation problem: convert the cash-based Receipts & Payments Account into an accrual-based Income & Expenditure Account.
>
> **Adjustments:**
> 1. Entrance fee ₹5,000 — capitalise 50% (₹2,500 to Capital Fund), so only ₹2,500 is revenue income.
> 2. Subscriptions received ₹35,000 + outstanding ₹5,000 = ₹40,000 income.
> 3. Depreciation on sports material = 10% of 5,000 = ₹500 (expense). (The ₹5,000 purchase itself is a capital payment, not shown in I&E.)
> 4. Land, Buildings, Furniture and the cash balances are capital/cash items — excluded from the Income & Expenditure Account.
>
> **Income and Expenditure Account for the year ended 31.03.2018**
>
> | Dr — Expenditure | Amount (₹) | Cr — Income | Amount (₹) |
> |---|---|---|---|
> | To General Expenses | 8,000 | By Subscriptions (35,000 + 5,000 o/s) | 40,000 | …

Receipts	Amount (₹)	Payments	Amount (₹)
To Balance	60,000	By Land	10,000
To Subscriptions	35,000	By Buildings	40,000
To Entrance Fee	5,000	By Furniture	10,000
To Sundry Receipts	5,000	By Sports Material	5,000
To Sale of old newspaper	500	By General Expenses	8,000
		By Magazines	500
		By Balance c/d	32,000
Total	1,05,500	Total	1,05,500

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