On the basis of the following Trial Balance and other information of Mahesh School for the year ended on 31st December, 2022, prepare Income and Expenditure Account and Balance sheet:

Trial Balance
Debit Balance | Amount (Rs.) | Credit Balance | Amount (Rs.)
Building | 6,25,000

Question

On the basis of the following Trial Balance and other information of Mahesh School for the year ended on 31st December, 2022, prepare Income and Expenditure Account and Balance sheet:

Additional Information: i) Outstanding fees of this year Rs. 25,000. ii) Outstanding salaries Rs. 30,000. iii) Furniture purchased of Rs. 40,000 on 1st October, 2021. iv) Furniture of book value Rs. 50,000 was sold on 1st April 2021. v) Charge depreciation on furniture @ 10% per year, 15% per year on library books, 5% per year on building. (5+5)

Accepted Answer

>

> [!TLDR]
> After removing the sold furniture (loss Rs.30,000), accruing Rs.60,000 interest and charging depreciation, the school shows a Surplus of Rs.2,98,750 and the Balance Sheet tallies at Rs.14,06,250. (Dates printed '2021' read as 2022; new furniture depreciated for 3 months.)
>
> Note on data: the adjustment dates are printed as 2021 though the year ends 31 Dec 2022; they are read as belonging to the current year (purchase on 1 Oct 2022, sale on 1 April 2022).
>
> Step 1 - Furniture and its sale: the Trial Balance Furniture Rs.1,00,000 still includes the furniture sold (book value Rs.50,000), while the Rs.20,000 proceeds appear separately as 'Sale of old furniture'. Remove the sold furniture: loss on sale = 50,000 - 20,000 = Rs.30,000. Furniture remaining = 1,00,000 - 50,000 = Rs.50,000 (new Rs.40,000 bought 1 Oct + old Rs.10,000).
> Furniture depreciation (10%): old 10,000 for the full year = 1,000; new 40,000 for 3 months = 1,000 -> Rs.2,000.
>
> Step 2 - Other depreciation: Library books 15% of 1,50,000 = 22,500; Building 5% of 6,25,000 = 31,250. Total depreciation = 2,000 + 22,500 + 31,250 = Rs.55,750.
>
> Step 3 - Accrued interest on investment: 12% of 5,00,000 = Rs.60,000 (income receivable, as no interest is shown received).
>
> Step 4 - Income and Expenditure Account (year ended 31 Dec 2022):
> Income: Tuition fees (5,00,000 + outstanding 25,000) 5,25,000; Entrance fees 12,500; Rent for school hall 10,000; Miscellaneous receipts 30,000; Government grants 3,50,000; Accrued interest on investment 60,000 = 9,87,500.
> Expenditure: Salaries (5,00,000 + outstanding 30,000) 5,30,000; Stationery 40,000; General expenses 18,000; Sports expenses 15,000; Depreciation 55,750; Loss on sale of furniture 30,000 = 6,88,750.
> Surplus = 9,87,500 - 6,88,750 = Rs.2,98,750. …

Trading and Profit & Loss Account of [Business Name] for the year ended [Date]
Particulars	Amount (₹)	Particulars
To Opening Stock	xxx	By Sales
To Purchases	xxx	Less: Sales Returns
Less: Purchase Returns	(xxx)	By Closing Stock
To Direct Expenses (Wages, Carriage, etc.)	xxx
To Gross Profit c/d	xxx
Total	xxx	Total

To Salaries	xxx	By Gross Profit b/d
To Rent & Taxes	xxx	By Commission Received
To Depreciation	xxx	By Discount Received
To Interest on Loan	xxx	By Miscellaneous Income
To Net Profit (transferred to Capital A/c)	xxx
Total	xxx	Total

Concept understanding — Meaning Of Financial Statements

Everyday Intuition

Precise Meaning (as per NCERT Class 12 Accountancy)

Why It Matters

Accounting Treatment: How They Are Prepared

Format: Trading and Profit & Loss Account (as per NCERT)

Part (a)

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