NON PROFIT ORG. (HOTS) SOLUTION ANSWERS 1. No. Both hospitals will have to prepare Income and Expenditure Account. 2. Depreciation is non cash Expenditure. 3. The amount of capital fund is the capital. 4. (I) Specific donations. 5. (ii) Tournament Funds/Life membership Free. 6. Legacy is the money which NFPO gets because of the will of a person it is recorded in Balance sheet. 7. An Extract of Balance sheet Liabilities Rs. Assets Rs. Capital fund 5,50,000 (+) Expenditure 3,60,000 On construction Pavilion Fund 3,10,000 (+) donations 4,20,000 Received 7,30,000 (-) Expenditure on construction 3,60,000 9,10,000 Pavilion construction in progress 3,60,000 Total 3,70,000 3,60,000 8. Income from subscription of the current year : Rs.28,750 Where, outstanding subscription as on 31-03-2007 = Rs. 2,250 9. Total of liabilities: Rs.1,62,000 (1,50,000+18,000+6000-12,000) Total of Assets: Rs.1,56,000 (1,50,000+6000) 11. Surplus = Rs.13000 Capital Fund = Rs.93,210 Balance sheet Total = Rs.1,12,840 [Hint : (i) Subscription Rs.23,920 (ii)Rent of Hall Rs.23,920 (iii)Investment to be a shown closing balance sheet at4550 65000 7 100 ´ = 12. Surplus = Rs.1,21,225 Capital Fund = Rs.2,77,310 Balance sheet Total = Rs.4,98,855 [Hint : (i) Subscription Rs.2,54,100 (ii)Investment to be a shown closing balance sheet at 16500 100 165000 ´ 10 = 688 100 12 13750 10 6 = ´ ´ ´ 17188 Entertainment Material = Rs.33088. In closing balance sheet Donation for Building -Advance paid for Building investment = Rs.121000 Add purchases Rs. 11000 Total Rs.1,32,000 13. Surplus = Rs. 7872 Balance sheet Total = Rs.958272 [Hint : (i) Subscription is Rs.108480 (ii)Interest Rs. 10800 (9000+5400-3600=10800) Repairs Rs. 49200 Stationary Rs. 6600 Surplus = Rs. 21010 Capital Fund = Rs.1483240 Balance sheet Total = Rs.1505900 [Hint : (i) Subscription Rs. 46750 (ii)Profit on balance (Sale+Closing Stock-Purchase-Opening stock) (79200+4400-35800-3300=41800) (iii)Depreciation of building =55000 (825000-770000) (iv) Profit on sale of refreshment Sale of refreshment Rs.7040 Cost of refreshment (–) Rs.3960Total Rs.3080 15. Deficit Rs. 1670 Capital funds Rs.79300 Balance sheet Rs.81580 [Hint -(i) Subscription Rs.19000 (ii)Interest on securities (800+50) Rs. 850 Q II. Following is the receipts and payment account of a recreation club for the year ended 31st March 2007 RECEIPTS AND PAYMENTS ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007 Receipts Amount (Rs.) Payments Amount (Rs.) To cash in Hand To Subscriptions To Entrance Fees To Sale of refreshments To Sale of Dance Tickets To Interests on Investments @7% 8,320 26,000 3,900 9,880 5,850 4,550 By Rent of Hall By Salaries By Purchase of Sports Equipment By Dance Expenses By Supply of Refreshment By Honorarium By Sundry Expenses By Electricity changes By Cash at Bank 3,600 5,200 16,640 4,940 6,760 1,040 3,250 1,820 15,210 Total 58,500 Total 58,500 Following additional informations are also provided to you: (i) Following were the assets and liabilities on 31st March, 2006: Sports equipment Rs.6,760, subscription in arrears Rs.1,950, Furniture Rs. 12,480 Liabilities –Accrued rent Rs.780 and subscription received in advance Rs.520. (ii) Following were the assets and liabilities on 31st March 2007: Sports equipments Rs. 19,760, Subscription in arrear Rs. 1, 690, Furniture Rs. 11,180, Liabilities – Accrued rent Rs. 390, subscription received in advance Rs. 2, 340. (iii) Entrance Fees is to be capitalized. You are required to prepare income and expenditure account for the year ended 31st March, 2007 and balance-sheet as on that date. Solution: II INCOME AND EXPENDITURE ACCOUNT OF A RECREATION CLUB FOR THE YEAR ENDED 31ST MARCH, 2007 Dr Expenditure Amount (Rs) Income Amount (Rs) To Rent of Hall 3,640 Add: Accrued Rent (Current Year) +390 4,030 Less: Accrued Rent (Previous Year) 780 To Salaries To Honorarium To Sundry Expenses To Electricity charges To Supply of Refreshment To Dance expenses To Depreciation Rs. Furniture 1,300 Sports Equipment 3,640 To Excess of Income Over Expenditure (Surplus) Transferred to Capital Fund 3,250 5,200 1, 040 3,250 1,820 6,760 4, 940 4,940 13,000 By Subscription Rs. 26, 000 Add: Subscription in Advance in Previous Year 520 26,520 Add: Subscription in Arrear for Current Year 1,690 28,260 Less: Last Year’s arrear –1,950 26,260 Less: Subscription-received in Advance for next Year –2,340 By Sale of Refreshment By Sale of Dance Tickets By Interest on Investments 23,920 9,880 5,850 4,550 Total 44,200 44,200 BALANCE SHEET AS AT 31ST MARCH, 2007 Liabilities Amount (Rs.) Assets Amount (Rs.) Capital Fund* As at 1 April 2006 93,21 0Add: Entrance Fees 3,900 97,11 0Add: Surplus 13,000 Advance Subscription Accrued Rent 1,10,110 2,340 390 Furniture 12, 480 Less: Depreciation 1,300 Sports Equipment 6,760 Add: Purchases 16,640 23,400 Less: Depreciation – 3,640 Investments Subscription Arrear Cash at Bank 1,180 19,760 65,000 1,690 15,210 Total 1,12,840 1,12,840*MEMORANDUM BALANCE SHEET (OPENING) AS AT APRIL 1, 2006 Liabilities Amount (Rs.) Assets Amount (Rs.) Subscription Received in Advance Accrued Rent Capital Fund (Balancing Figure) 520 780 93,210 Furniture Sports Equipment Investments* 100 4,550 7 æ ´ ö çè ÷ø Cash at Bank Subscription Arrear 12,480 6,760 65,000 8,320 1,950 Total 94,510 94,510 Note: Value of Investment in the beginning of the year has been calculated as follow: Interest Investment ×100/Rate of investment 4,550 100 .65,000 7 æç ´ = Rs ö÷ è ø Q12. Prepare income and expenditure account for the year ended 31st March 2005 and the balance-sheet as at 31-3-2005 from the following informations related to Somnath welfare society. RECEIPTS AND PAYMENTS ACOUNT OF SOMNATH WELFARE SOCIETY FOR THE ENDED 31ST MARCH, 2005 Receipts Amount (Rs.) Payments Amount (Rs.) To Balance b/d To Subscriptions 2003-04 Rs. 8,910 2004-05 Rs. 2,31,000 2005-06 Rs. 2,750 To Legacies To Donations for Building To Sale of Old Furniture (at book value) To Miscellaneous Receipts 19,800 7,920 46,200 6,600 79,408 By Salaries and Wages By 10% Investments (Face value 13, 750) Purchased on 1-10-04 By Rates and Taxes By office Expenses By Entertainment Material By Telephone Charges By Advance for Building By Internet Charge By Balance c/d 1, 42,802 11,000 6,809 8,602 64,020 2,860 16,500 1,320 1,48,675 Total 4,02,588 4,02,588 Additional informations: (i) On 31st March 2004, the society has following assets and liabilities: Assets: 10% investment Rs. 1,21,000 (face value Rs. 1,65,000) Furniture Rs. 88,000; Musical instruments Rs. 13, 420, Machinery Rs. 61,600, Fax Machines Rs. 18,700, Subscription in arrears Rs. 17,600. Liabilities: (i) Creditors for entertainment material Rs. 5,500, subscription received in advance Rs. 2,310 and building fund Rs. 55,000. (ii) Charge depreciation @20% on furniture, machinery and fax machines. On 31st March, 2005 entertainment material was valued at Rs. 28,732. Internet charges was outstanding Rs. 1,650. (iii) Each year subscription is paid by 110 members, each paying Rs. 2,310. (iv) Payment for Entertainment material includes 2,200 for previous year. Solution: INCOME AND EXPENDITURE ACCOUTN IN THE BOOKS OF SOMNATH WELFARE SOCIETY FOR THE YEAR ENDED 31ST MARCH, 2005 Expenditure Amount (Rs.) Income Amount (Rs.) To Salaries and Wages To Rates and Taxes To Entertainment Material 64,020 Less: Payment for last year 2,200 61,820 - Less: Closing stock – 28,732 To Office Expenses To Telephone Charge To Internet Charges Rs. 1,320 Add: Outstanding 1,650 To Depreciation Furniture 88,000 Sale of Furniture 6,600 81,400 20 100´ = Machinery 61,600 20 100´ = 1,42802 6,809 33,088 8,602 2,860 2,970 16,280 12,320 By Subscriptions: Rs. 2,42,660 Less: Outstanding Subscription Received (2003-04) 8,910 2,33,750 Less: Received In Advance 2,750 2,31,000 Add: Subscription Received in 2003-04 As Advance 2,310 2,33,310 2,54,100Fax Machine 18,700 20 100´ = To Excess of Income Over Expenditure (Surplus) 3,740 1,21,225 Add: Outstanding Subscription for Current year 20,790 By Interest on Investments Rs. 1,65,00 10 16,500 100´ = 13,750 10 6 688 100 2 ´ ´ = ´ By Sunday Receipts 17,188 79,408 Total 3,50,696 3,50,696 BALANCE SHEET AS AT 31ST MARCH, 2005 Liabilities Amount (Rs.) Assets Amount (Rs.) Rs. *Capital Fund 2,77,310 Add: Legacies 7,920 2,85,230 Add: Surplus 1,21,225 Building Fund Rs. 55,000 Add: Donation for Building 46,200 1,01,200 Less: Advance for Building 16,500 Creditors for Entertainment Material (Rs. 5,500–Rs. 2,200) Prepaid Subscription Outstanding Internet Charges 4,06,455 84,700 3,300 2,750 1,650 Rs. Furniture 88,000 – Sale 7,200 –6,600 81,400 –Depreciation 16,280 Musical Instrument Rs. Machinery 61,600 –Depreciation 12,320 Fax Machines Rs. 18,700 –Depreciation –3,740 10% Investments Rs. 1,21,000 Add: Purchases 11,000 Outstanding Interest On Investments Entertainment Material Outstanding Subscription Rs. 2003-04 = 8,690 2004-05 =20,790 Cash 65,120 13,420 49,280 14,960 1,32,000 17,188 28,732 29,480 1,48,675 Total 4,98,855 4,98,855 * Interest on investment is always calculated on face value.MEMORANDOM BALANCE SHEET OR *BALANCE-SHEET AS AT 31ST MARCH, 2004 Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors for Entertainment Material Subscription Received In Advance Building Fund Capital Fund (Balancing Figure) 5,500 2,310 55,000 2,77,310 Cash Subscription Outstanding 10% Investments (Face value Rs. 1,65,000) Fax Machine Musical Instrument Machinery Furniture 19,800 17,600 1,21,000 18,700 13,420 61,600 88,000 Total 3,40,120 3,40,120 Q 13. MEMERANDUM BALANCE SHEET IS GIVEN Form the following receipts and payments accounts and with the help of given opening balance sheet of a Gandhi Welfare Society prepare income and expenditure account for the year ended 31st March, 2007 and balance sheet as at 31st March, 2007: BALANCE-SHEET AS AT 1ST APRIL 2006 Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors for Stationery Subscription in Advance Outstanding Salaries Capital Fund 4,800 46,800 12,000 9,18,000 Cash Accrued Interest Outstanding Subscription 3% Investments Computers Equipments Car Furniture 26,400 3600 12,000 3,60,000 54,000 36,000 4,80,000 9,600 Total 9,81,600 9,18,600 RECEIPTS AND PAYMENTS ACCOUNT FOR THE ENDED 31ST MARCH, 2007 Receipts Amount (Rs.) Payments Amount (Rs.)To Balance b/d Cash To Subscription Received To Donations To Life Membership Fees To Interest 26,400 66,000 9,960 24,000 9,000 By Repairs By Calculators By Printer By Stationary By Insurance Premium By Rent and Rates By Office Expenses By Balance c/d Cash 55,200 3,000 19,560 11,400 2,520 1,440 10,320 31,920 Total 1,35,360 1,35,360 Additional Informations: (1) Rs. 6,000 were unpaid for repairs as on 31st March 2007 (2) Subscriptions received during 2006-2007 includes Rs. 2,400 for year 2007-2008 and (3) Subscriptions due but not paid on 31st March 2007 were Rs. 10,080 (4) Rent and rates includes Rs. 240 for the year 2007-2008 (5) Depreciations which include additions also were as follows: (i) Car @5% p.a. (ii) Furniture @10% p.a. (iii) Equipments @20% p.a (iv) Computers @25% p.a (v) Printers @30% p.a. Solution:13 INCOME AND EXPENDITURE ACOUNT OF GANDHI WELFARE ASSOCIATION FOR THE YEAR ENDED 31ST MARCH, 2007 Dr. Cr. Expenditure Amount (Rs.) Income Amount (Rs.) To Repairs Rs. 55, 200 Add: Outstanding For Current Year 6,000 61,200 Less: Outstanding for Previous year 12,000 To Stationery Rs. 11,400 Less: Outstanding (1-4-06) 4,800 To Insurance Premium To Rent and Rates Rs. 1,440 49,200 6,600 2,520 1,200 By Subscription Rs. 66,000 Less: Outstanding For Previous year 12,000 54,000 Add: Advance Received Last Year 46,800 1,00,800 Less: Received in Advance Less: Prepaid –240 To office Expenses To Depreciation Rs. Car 4,80,000 5 24,000 100 ´ = Furniture 9,600 10 960 100´ = Equipments 36,000 20 7,200 100´ = Computers 54,000 25 13,500 100´ = Printers 14,560 30 5,868 100´ = To Excess of Income Over Expenditure (Surplus) 10,320 51,528 7,872 (2007-2008) 2,400 98,400 Add: Outstanding Current Year 10,080 By Donations By Interest 9,000 Less: For Previous year 3,600 5,400 Add: Accrued Interest 5,400 1,08,480 9,960 10,800 Total 1,29,240 1,29,240 BALANCE-SHEET AS AT 31ST MARCH, 2007 Liabilities Amount (Rs.) Assets Amount (Rs.) Rs. Capital Fund 9,18,000 Add: Life Membership Fees 24,000 9,42,000 Add: Surplus 7,872 Outstanding Repairs Subscriptions Received In Advance 9,49,872 6,000 2,400 Rs. Equipments 36,000 – Depreciation 7,200 Computers Rs. 54,000 – Depreciation 13,500 Printer Rs. 19,560 –Depreciation 5,868 Car Rs. 4,80,000 –Depreciation 24,000 Calculations Furniture Rs. 9,600 –Depreciation 960 Investments (3%) Outstanding Subscriptions Accrued Interest Prepaid Rent and Rates Cash 28,800 40,500 13,692 4,56,000 3,000 8,640 3,60,000 10,080 5,400 240 31,920 Total 9,58,272 9,58,272Q 14. Prepare the income and expenditure account for the year ended 31st March, 2007 and the balance sheet as on that date from the given receipts and payments accounts and additional information of a Theatre Club, Karnal: RECEIPTS AND PAYMENTS ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007 Receipts Amount (Rs.) Payments Amount (Rs.) To Balance b/d Cash in Hand To Sale Proceeds from Bar To Subscriptions To Dance Ticket Sales To Refreshment Sales 48,540 79,200 45,100 14,300 7,040 By Cost of Refreshment By Dance Expenses By Purchases for Bar By Auditorium By Sundry Expenses By Balance c/d Cash in Hand 3,960 11,000 38,500 13,200 16,940 1,10,880 Total 1,94,480 1,94,480 Additional Informations: (i) Subscriptions: Outstanding (Rs) Received in Advance (Rs) On April 1,2006 2,200 1,100 On March 31, 2007 4,400 1,650 (ii) Fixed Assets On 1st April 2006 (Rs.) On 31st March 2007 (Rs.) Building 22,00,000 22,00,000 Lesss: Depreciation 7,70,00 14,30,000 8,25,000 13,75,000 (iii) Depreciation is to be charged on the Auditorium at 15% on cost. (iv) On 1st April, 2006, Bar stock was valued at Rs. 3,300 and it was valued on 31st March, 2007 at Rs. 4,400 Solution:14 INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007Dr. Cr Expenditure Amount (Rs.) Income Amount (Rs.) To Depreciation Building (8,25,000–7,70,000) Auditorium (15% on 13,200) To Sundry Expenses To Excess of Income over Expenditure (Surplus) 55,000 1,980 16,940 21,010 By Subscriptions : Rs. 45, 100 Add: Advance at the end of Previous year 1,100 46,200 + Add: Arrear at the End of Current year 4,400 50,600 Less: Arrear in the Beginning of Previous year –2,200 Rs. 48,400 Less: Advance at the End of Current Year –1,650 By Profit on Bar (Sale + Closing Stock) – (Purchase + Opening Stock) Rs. ( 79,200 + 4,400) = 83,600 - ( 38,500 + 3,300) = 41,800 By Profit on Dance Sale of Dance Tickets Rs. 14,300 Less: Dance Expenses –11,000 By Profit on Sale of Refreshment Sale of Refreshment – 7,040 Less: Cost of Refreshment –3,960 46,750 41,800 3,300 3,080Total 94,930 94,930 BALANCE SHEET AS AT 31ST MARCH, 2007 Liabilities Amount (Rs.) Assets Amount (Rs.) *Capital Fund Rs. 14,83,240 Add: Surplus 21,010 Subscription Received in Advance 15,04,250 1,650 Building Rs. 22,00,000 Less: Depreciation 8,25,000 Auditorium Rs. 13,200 Less: Depreciation 1,980 Bar Stock Outstanding Subscription (Current Year) Cash in Hand 13,75,000 11,220 4,400 4,400 1,10,880 Total 15,05,900 15,05,900 MEMORANDUM BALANCE-SHEET OR BALANCE SHEET AS AT APRIL 1, 2006 Liabilities Amount (Rs.) Assets Amount (Rs.) Subscription Received in Advance Capital Fund (Balancing Figure) 1,100 14,83,240 Building 22,00,000 Less: Depreciation 7,70,000 Bar Stock Subscription Outstanding Cash in Hand 14,30,000 3,300 2,200 48,840 Total 14,84,340 14,84,340