Visakha Town Club provided Receipts and Payments account for the year ended on 31-03-2013. Prepare Income and Expenditure account.

| Dr. Receipts | Amount (₹) | Cr. Payments | Amount (₹) |
| --- | --- | --- | --- |
| To Balance B/d (1-4-2012) | 11,500 | By Salaries | 8,000 |
| T

Question

Visakha Town Club provided Receipts and Payments account for the year ended on 31-03-2013. Prepare Income and Expenditure account.

| Dr. Receipts | Amount (₹) | Cr. Payments | Amount (₹) |
| --- | --- | --- | --- |
| To Balance B/d (1-4-2012) | 11,500 | By Salaries | 8,000 |
| To Subscriptions | 6,500 | By Rent | 1,500 |
| To Interest | 500 | By Stationery | 500 |
| To Sale of old furniture | 800 | By Government Bonds | 6,000 |
| To Entrance fee | 4,000 | By Balance c/d (31-3-2013) | 7,300 |
| | 23,300 | | 23,300 |

Adjustments :
(1) Subscription includes ₹ 500 received for last year.
(2) Rent includes ₹ 300 paid for last year.
(3) Book value of furniture sold ₹ 1,000.

Accepted Answer

>

> [!TLDR]
> We convert the Receipts and Payments Account of Visakha Town Club into an Income and Expenditure Account. Only revenue items of the year 2012-13 are considered. Subscriptions are reduced by Rs 500 (last year's), rent by Rs 300 (last year's), and a Rs 200 loss on the sale of furniture is recorded (book value Rs 1,000 sold for Rs 800). Government Bonds and the opening/closing cash balances are excluded as capital items. The result is a surplus of Rs 600.
>
> **Adjustments worked out**
>
> - Subscriptions received Rs 6,500 include Rs 500 of last year → current-year subscription income = 6,500 − 500 = Rs 6,000.
> - Rent paid Rs 1,500 includes Rs 300 for last year → current-year rent expense = 1,500 − 300 = Rs 1,200.
> - Furniture of book value Rs 1,000 was sold for Rs 800 → loss on sale = 1,000 − 800 = Rs 200 (only this loss enters the account; the Rs 800 proceeds are a capital receipt).
> - Government Bonds Rs 6,000 is the purchase of an investment (capital expenditure) → excluded.
> - Opening balance Rs 11,500 and closing balance Rs 7,300 are cash balances → excluded.
>
> **Income and Expenditure Account for the year ended 31-03-2013**
>
> | Dr — Expenditure | Amount (Rs) | Cr — Income | Amount (Rs) |
> | --- | --- | --- | --- |
> | To Salaries | 8,000 | By Subscriptions | 6,000 |
> | To Rent | 1,200 | By Interest | 500 |
> | To Stationery | 500 | By Entrance Fee | 4,000 | …

Adjustment	Treatment
Subscriptions received	+ outstanding for this year, − received in advance, − last year's arrears now received
Expenses paid	+ outstanding, − prepaid
Depreciation on assets	Debit (non-cash expense)
Bad debts / provisions	Debit

Receipts	Amount	Payments	Amount
Cash in hand	150	Ground man's Fee	1,125
Balance at Bank as per Pass Book :		Moving Machine	2,250
– Deposit Account	3,345	Ground Rent	375
– Current Account	900	Cost of Teas	375
Bank Interest	45	Fares	600
Donations and Subscriptions	3,900	Printing & Office Expenses	420
Receipts from teas	450	Repairs to Equipment	750
Contribution to fares	150	Honorarium to Secretary and Treasurer of 2024	600
Sale of Equipment	120	Balance at Bank as per Pass Book:
Net proceeds of Variety Entertainment	1,170	– Deposit Account	4,635
Donation for forthcoming Tournament	1,500	– Current Account	225
		Cash in hand	375
Total	11,730	Total	11,730

Particulars	April 1, 2024	March 31, 2025
Subscription due	225	150
Amount due for printing, etc.	150	120
Cheques unpresented being payment for repairs	450	390
Estimated value of machinery and equipment	1,200	2,625
Interest not yet entered in the Pass book		30
Bonus to Ground man outstanding		450

Liabilities	Amount ₹	Assets	Amount ₹
Trade Creditors	19,275	Land and Building	37,500
Outstanding Liabilities	2,250	Furniture	9,750
General Reserve	9,750	Closing Stock	17,625
Capital :		Sundry Debtors	8,250
A 18,000		Cash and Bank balance	1,650
B 18,000
C 7,500	43,500
Total	74,775	Total	74,775

Particulars	₹
Opening estimated value	1,200
Add: Mowing machine purchased	2,250
Less: Sale proceeds of equipment	(120)
Less: Closing estimated value	(2,625)
Depreciation (balancing figure)	705

Concept understanding — Income and Expenditure Account

How it differs from Receipts & Payments

Preparing it (the adjustments)

Part (a) — Income & Expenditure A/c and Balance Sheet (12 Marks)

Step 1 — Working notes (accrual adjustments)

Step 2 — Opening Balance Sheet (1 April 2024) → the Capital Fund

Step 3 — Income & Expenditure Account for the year ended 31 March 2025

Dr. Receipts	Amount (₹)	Cr. Payments	Amount (₹)
To Balance B/d (1-4-2012)	11,500	By Salaries	8,000
To Subscriptions	6,500	By Rent	1,500
To Interest	500	By Stationery	500
To Sale of old furniture	800	By Government Bonds	6,000
To Entrance fee	4,000	By Balance c/d (31-3-2013)	7,300
	23,300		23,300

Dr — Expenditure	Amount (Rs)	Cr — Income	Amount (Rs)
To Salaries	8,000	By Subscriptions	6,000
To Rent	1,200	By Interest	500
To Stationery	500	By Entrance Fee	4,000

Liabilities	₹	Assets	₹
Creditors for printing	150	Cash in hand	150
Honorarium outstanding (2024)	600	Bank — Deposit A/c	3,345
Capital Fund (bal. fig.)	4,620	Bank — Current A/c (900 − 450)	450
		Subscription due	225
		Machinery & equipment	1,200
Total	5,370	Total	5,370

Expenditure	₹	Income	₹
To Ground man's fee (1,125 + 450)	1,575	By Subscriptions & Donations (W1)	3,825
To Ground rent	375	By Bank interest (W3)	75
To Cost of teas	375	By Receipts from teas	450
To Fares	600	By Contribution to fares	150
To Printing & office exp. (W2)	390	By Net proceeds of variety entertainment	1,170
To Repairs to equipment (W7)	690
To Honorarium (W4)	900
To Depreciation (W6)	705
To Surplus (excess of income over exp.)	60

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