From the following Receipts and Payments Account of XYZ Club for the year ended 31.3.2025 and the additional information given, prepare the Income and Expenditure Account for the year ended 31.3.2025 and the Balance Sheet as on that date.

| Receipts | ₹ | Payments | ₹ |
|---|---

Question

From the following Receipts and Payments Account of XYZ Club for the year ended 31.3.2025 and the additional information given, prepare the Income and Expenditure Account for the year ended 31.3.2025 and the Balance Sheet as on that date.

| Receipts | ₹ | Payments | ₹ |
|---|---|---|---|
| To Balance b/d | 15,000 | By Salaries | 40,000 |
| To Subscriptions | 1,20,000 | By Rent and Taxes | 12,000 |
| To Entrance Fees | 8,000 | By Printing and Stationery | 5,000 |
| To Donations for Building | 50,000 | By Sports Equipment Purchased | 20,000 |
| To Sale of Old Furniture (book value ₹6,000) | 4,000 | By General Expenses | 8,000 |
| To Interest on Investments | 3,000 | By Investments Purchased | 60,000 |
| | | By Balance c/d | 55,000 |
| **Total** | **2,00,000** | **Total** | **2,00,000** |

Additional information:
(i) Subscriptions outstanding on 31.3.2025 ₹10,000; Subscriptions received in advance ₹4,000. Subscriptions outstanding on 1.4.2024 (already included in the year's receipts) ₹6,000.
(ii) Depreciation for the year: on Sports Equipment ₹6,000; on Furniture ₹2,000.
(iii) Rent outstanding on 31.3.2025 ₹2,000.
(iv) Donation for Building is to be capitalized.
(v) Balance Sheet as on 1.4.2024 showed: Cash and Bank ₹15,000; Furniture ₹30,000; Investments ₹50,000; Outstanding Subscription ₹6,000; no liabilities other than the Capital Fund.

Accepted Answer

**Step 1 — Opening Capital Fund (from the opening Balance Sheet, 1.4.2024).**
Assets: Cash and Bank 15,000 + Furniture 30,000 + Investments 50,000 + Outstanding Subscription 6,000 = 1,01,000.
No liabilities other than Capital Fund, so Capital Fund on 1.4.2024 = **₹1,01,000**.

**Step 2 — Subscription income for the year.**
Received during the year 1,20,000 + Outstanding at end 10,000 − Outstanding at beginning 6,000 − Advance at end 4,000 = 1,20,000 + 10,000 = 1,30,000; − 6,000 = 1,24,000; − 4,000 = **₹1,20,000**.

**Step 3 — Entrance fees.** Treated as revenue in the absence of any instruction to capitalize = ₹8,000, credited to income.

**Step 4 — Donation for Building.** To be capitalized as instructed — credited directly to a Building Fund shown as a liability of ₹50,000 in the Balance Sheet; it does not enter the Income and Expenditure Account.

**Step 5 — Sale of old furniture.** Book value 6,000, sale proceeds 4,000, so Loss on Sale of Furniture = 6,000 − 4,000 = **₹2,000**, debited to the Income and Expenditure Account; the furniture account is reduced by its book value of 6,000, not by the sale proceeds.

**Step 6 — Rent and Taxes.** Paid 12,000 + Outstanding at year end 2,000 = **₹14,000** debited as the year's rent expense; ₹2,000 shown as Outstanding Rent, a liability, in the closing Balance Sheet.

**Step 7 — Other revenue items,** taken as given since no adjustment is stated: Salaries 40,000; Printing and Stationery 5,000; General Expenses 8,000; Interest on Investments 3,000 (income).

**Step 8 — Depreciation.** Sports Equipment 6,000; Furniture 2,000 — both debited to the Income and Expenditure Account as non-cash expenses.

**Income and Expenditure Account for the year ended 31.3.2025**

| Expenditure | ₹ | Income | ₹ |
|---|---|---|---|
| To Salaries | 40,000 | By Subscriptions | 1,20,000 |
| To Rent and Taxes (12,000 + 2,000) | 14,000 | By Entrance Fees | 8,000 |
| To Printing and Stationery | 5,000 | By Interest on Investments | 3,000 |
| To Gene

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

Receipts	₹	Payments	₹
To Balance b/d	15,000	By Salaries	40,000
To Subscriptions	1,20,000	By Rent and Taxes	12,000
To Entrance Fees	8,000	By Printing and Stationery	5,000
To Donations for Building	50,000	By Sports Equipment Purchased	20,000
To Sale of Old Furniture (book value ₹6,000)	4,000	By General Expenses	8,000
To Interest on Investments	3,000	By Investments Purchased	60,000
		By Balance c/d	55,000
Total	2,00,000	Total	2,00,000

Expenditure	₹	Income	₹
To Salaries	40,000	By Subscriptions	1,20,000
To Rent and Taxes (12,000 + 2,000)	14,000	By Entrance Fees	8,000
To Printing and Stationery	5,000	By Interest on Investments	3,000
To General Expenses	8,000
To Depreciation on Sports Equipment	6,000
To Depreciation on Furniture	2,000
To Loss on Sale of Furniture	2,000
To Surplus (transferred to Capital Fund)	54,000
Total	1,31,000	Total	1,31,000

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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