Karim Nagar Youth Club gives you their Receipts and Payments account and other information and request you to prepare their Income and Expenditure account for the year ended 31-03-2018.

Receipts and Payments Account for the year ended 31-03-2018.

| Receipts | Amount (Rs.) | Pay

Question

Karim Nagar Youth Club gives you their Receipts and Payments account and other information and request you to prepare their Income and Expenditure account for the year ended 31-03-2018.

Receipts and Payments Account for the year ended 31-03-2018.

| Receipts | Amount (Rs.) | Payments | Amount (Rs.) |
|---|---|---|---|
| To Balance b/d | 3,800 | By Salaries | 20,000 |
| To Subscriptions | 90,000 | By Purchase of furniture | 1,55,000 |
| To Donations received for mineral water | 80,000 | By Purchase of shares | 20,000 |
| To Sale of old furniture | 42,000 | By Stationery and Printing | 22,000 |
| To Interest on investments | 10,200 | By General Expenses | 4,000 |
| | | By Balance c/d | 5,000 |
| | 2,26,000 | | 2,26,000 |

Additional Information :
(1) Outstanding subscriptions on 31-3-2018 Rs. 1,500.
(2) Subscriptions received in advance on 31-03-2018 Rs. 500.
(3) Value of old furniture sold is Rs. 45,000.

Accepted Answer

>

> [!TLDR]
> Subscriptions are adjusted to Rs. 91,000 (90,000 + 1,500 outstanding - 500 advance). Interest on investments Rs. 10,200 is income. The Rs. 80,000 donation for mineral water is a specific-purpose donation and is capitalised (not income). Old furniture of book value Rs. 45,000 sold for Rs. 42,000 gives a loss of Rs. 3,000. Surplus = Rs. 52,200.
>
> **Working notes**
> - Subscriptions: 90,000 + 1,500 (outstanding on 31-3-2018) - 500 (received in advance) = Rs. 91,000.
> - Donation for mineral water Rs. 80,000 is received for a specific purpose, so it is treated as a capital receipt (shown on the liabilities side of the Balance Sheet), not revenue income.
> - Sale of old furniture: book value Rs. 45,000, sold for Rs. 42,000, so loss on sale = Rs. 3,000 (charged to Income and Expenditure A/c).
> - Purchase of furniture Rs. 1,55,000 and purchase of shares Rs. 20,000 are capital expenditure and are excluded.
>
> **Income and Expenditure Account for the year ended 31-03-2018**
> …

Receipts	Amount (Rs.)	Payments	Amount (Rs.)
To Balance b/d	3,800	By Salaries	20,000
To Subscriptions	90,000	By Purchase of furniture	1,55,000
To Donations received for mineral water	80,000	By Purchase of shares	20,000
To Sale of old furniture	42,000	By Stationery and Printing	22,000
To Interest on investments	10,200	By General Expenses	4,000
		By Balance c/d	5,000
	2,26,000		2,26,000

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