NON-PROFIT ORGANISATION

SAI KRIPA
Non-profit organisation
By: - CA RAKESH KALRA

Topics to be covered
 Preparation of Receipts and payment account.
 Preparation of Income and Expenditure account.
 Income and Expenditure adjustment.
 Preparation of income and expenditure from receipt and payment account

TOPIC – 1
Preparation of Receipts and Payment Account

Steps in the preparation of receipts and payment account

a. Take the opening balance of cash in hand and cash at bank and enter them on the debit side. In
case there is bank overdraft at the beginning of the year enter the same on the credit side of
this account.
b. Show the total amount of the all receipts on its debit side irrespective of their nature and
whether they pertain to past, current and future period.
c. Show the total amount of all payment on its credit side irrespective of their nature and whether
they pertain to past, current and future period.
d. None of receivable income and payable expanses is to be entered in this account as they do not
involve inflow and outflow of cash.
e. Find out the difference the total of debit side and the total of credit side of the amount enter
the same of the credit side as the closing balance of cash/bank. In the case the total of the credit
side is more than of the total of the debit side show the difference on the debit as bank
overdraft at the closing the account.

Format of Receipt and Payment Account

Receipt and Payment A/C

Receipt Amount Payment Amount
To Balance b/d By Balance b/d (bank xxxx
- Cash in hand : overdraft) xxxx
xxxx xxxx By Wages and salaries xxxx
- Bank : xxxx By Rent xxxx
xxxx xxxx By Rates and taxes xxxx
To Subscription xxxx By Insurance xxxx
To General Donation xxxx By Printing and stationery xxxx
To Sale of newspaper xxxx By Waste paper xxxx
To Sale of old sport materials By Postage and courier xxxx
To Interest on fixed deposit xxxx By Advertisement xxxx
To Interest/Dividend on general xxxx By Sundry expanses xxxx
investment xxxx By Telephone charge xxxx
To Locker rent xxxx By Entertainment expanses xxxx
To Sale of scraps xxxx By Audit expanses xxxx
To Honorarium received xxxx By Honorarium xxxx
To Proceeds from charity show xxxx By Repair and renewals xxxx

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To Miscellaneous receipts xxxx By Upkeep of ground xxxx

To Grant-in-aid xxxx By Conveyance xxxx
To Legacies xxxx By Newspaper and periodicals xxxx
To Specific donation xxxx By Purchases of assets xxxx
To Sale of investment xxxx By Purchases of investment
To Sale of fixed assets xxxx
To Life membership fees By Balance c/d
To Entrance fees xxxx - Cash in hand: xxxx
To Receipts on account of xxxx
specific purpose fund xxxx - Cash at bank:
To Interest on specific fund xxxx
investment xxxx

To Balance b/d (bank overdraft) xxxxx xxxxx

Important Terms

a. Subscription: - Subscription is an annual membership fees which is paid by all members and
it is an Income of the Non-Profit Organisation. It is the basic source of earning of a NPO.

b. Donation: - Donation is an amount which is received to the NPO from outsiders which are
not its member. Donation received by the NPO can be a General Donation or Specific
Donation. General donation can be used for any purpose and that’s why it treated as
“Income“ of the NPO. However in case of specific donation the donor specified the purpose
for which it has to be use such as Match Fund, Sports Fund, Building Fund etc. the amount
received for specific donation will be treated as “Liability” of the NPO.

c. Honorarium: -Honorarium is paid/ received for any special service such as guest lecture,
guest appearance, Chief Guest etc. if it is paid by NPO than it is a Expense and NPO received
it than it become an Income of NPO.

d. Legacies: - Legacy is an amount which is received under any will. Sometime some peoples
remit their income/ money to NPO under their Will and it became an Income of NPO.

e. Life Membership Fees: - If NPO received a Life membership fees from its member than it
became a Liability of a NPO.

f. Entrance Fees: - Entrance Fees is paid by the member during his admission into the NPO.
This amount is capitalised by NPO and became a Liability of NPO.

Example – 1
From the following particular relating to Silver point, prepare a receipts and payment account for the
year ending 31.3.2010.

Particular Amount Particular Amount

Opening cash bal. 1000 Sport materials purchase 4800
Sale of old sport materials 7200 Purchase of refreshment 600
Subscription: Expanses for maintenance of
2009 tennis court 2000
500 Salaries paid 2500

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2010 9000 Tournament expanses 2400

7600 1000 Furniture purchases 1500
2011 1000 Office expanses 1200
900 4600 Cash in hand 400
Sale of the refreshment 3000
Entrance fees received
Donation received from pavilion
Rent paid
Solution
Receipt and Payment A/C
In the books of Silver Point as on 31st March 2010
Receipt Amount Payment Amount

TOPIC – 2
Preparation of Income and Expenditure Account

Steps in the preparation of income and expenditure account

a. Prepare the receipts and payment account thoroughly.
b. Exclude the opening balance of cash and bank as they are not an income.
c. Exclude the capital receipts and capital payment as these are to be shown in the balance
sheet.
d. Consider only the revenue receipts to be shown on the income side of the income and
expenditure account. Some of this need to be adjusted by excluding the amount relating to
the preceding and the succeeding period and including the amount related to the current
year not yet received.
e. Take the revenue expanses to the expenditure side of the income and expenditure account
with due adjustment as per the additional information provided relating to the amount
received in the advance and those yet not received.
f. Consider the following item not appearing in the receipts and payment account that need to
be taken in to account for determine the surplus/deficit for the current year:

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-
Depreciation of the fixed assets.
- Provision for doubtful debts.
- Profit and loss sale of fixed assets.
Distinction between income and expenditure account and receipts and payment account

Basis of distinction Income and expenditure account Receipts and payment account

Nature It is like as profit and loss account. It is the summery of the cash book.
Nature of item It record income and expenditure of It is record receipts and payment of
revenue nature. revenue as well as capital nature.
Period Income and expenditure item relate Receipts and payment may also
only to the current period. relate to preceding and succeeding
Debit side Debit side of this account record periods.
expanses and losses. Debit side of this account record the
Credit side Credit side of this account record receipts.
income and gain. Credit of this account record the
Depreciation Includes depreciation. payment.
Opening balance There is not opening balance. Does not include depreciation.
Balance at beginning represent cash
in hand / cash at bank or overdraft
at the beginning.
Closing balance Balance at the end represents excess Balance at the end represent cash
of the income over expenditure or in hand and cash at bank balance or
vice-versa. bank overdraft.

Format of Receipt and Payment Account

Income and Expenditure A/C

Expenditure Amount Income Amount
To Printing and stationary Xxxx By Subscription xxxx
To Lighting xxxx By Entrance fees xxxx
To Rates and taxes xxxx By Interest on investment on
To Telephone charge xxxx government securities xxxx
To Postage and courier charger xxxx By Locker rent xxxx
To Wages and salaries xxxx
To Insurance premium xxxx By Deficits (Bal. Fig) xxxx

To Surplus (Bal. Fig) xxxx

xxxxx xxxxx
Example – 2
From the under mentioned Receipts and payment account for the year ending March 31.3.2009 of
Nagi club, prepare an income and expenditure account for the same period:
RECEIPTS AND PAYMENT ACCOUNT FOR THE YEAR ENDING MARCH 31.2009
Receipts Amount Payment Amount
To Balance b/d 25000 By Purchase of the furniture 5000
To Subscriptions 12000 By Salaries 2000
To Donation 2000 By Telephone expanses 300
To Hall rent 300 By Electricity charges 600

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To Interest on bank deposits 450 By Postage and stationery 150

To Entrance fees 1000 By Purchases of book 2500
By Entertainment expanses 900
By Purchases of 5% government
paper (1.7.08) 8000
By Miscellaneous expanses 600

By Balance c/d
Cash:
300 20700
Bank:
20400
40750 40750
The following additional information is available:
a. Salaries outstanding Rs 1500.
b. Bank interest receivable Rs 150.
c. Entertainment expanses outstanding Rs 500.
d. 50% of entrance fees is to be capitalized.
e. Furniture is be depreciated at 10% p.a.

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

TOPIC – 3
Income and Expenditure Adjustments

Subscription Treatment

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Example – 3
A club received Rs 20000 as subscription during the year 2005-06 of which Rs 3000 relate to year
2004-05 and Rs 2000 to 2006-07 and at the end year 2005-06 Rs 6000 are outstanding.

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Example – 4
As per receipts and payment accounts for the year ended on 31.3.2006 the subscription received
were Rs 250000. Additional information given as:
- Subscription outstanding on 1.4.2005 Rs 50000
- Subscription outstanding on 31.3.2006 Rs 35000
- Subscription received in advance as on 1.4.2005 Rs 25000
- Subscription received in advance on 31.3.2006 Rs 30000
As certain the amount of income and subscription for the year 2005-06 and show how to relevant
item of the subscription appear in opening and closing balance sheet.

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Closing Balance sheet

As on 31st March 2006
Liabilities Amount Assets Amount

Opening Balance sheet

As on 31st March 2005
Liabilities Amount Assets Amount

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Example – 5
Extracts of receipts and payment account for the year ended 31.3.2006 are given below:
Receipts
Subscription Rs
2004-05 2500
2005-06 26750
2006-07 1000
Total 30250

Additional information:
- Total no. of member is 230.
- Annual member fees 125.
- Subscription outstanding on 1.4.2005 is Rs 2750.

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Closing Balance sheet

As on 31st March 2006
Liabilities Amount Assets Amount

Opening Balance sheet

As on 31st March 2005
Expenditure Amount Income Amount

Example – 6

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From the following extract of receipts and payment account and the additional information given
below, compute the amount of income and shown as how ending 31.3.2007 and the balance sheet
on that date:

Receipts and payment account for the year ending 31.3.2007

Receipt Amount Payment Amount

Subscription
2005-06 7000
2006-07 30000
2007-08 5000 42000
Additional information:
1. Subscription outstanding 31.32006. Rs 8500
2. Total subscription outstanding 31.3.2007. Rs 17,500
3. Subscription received in advance as on 31.3.2006. Rs 2500

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Closing Balance sheet

As on 31st March 2006
Liabilities Amount Assets Amount

Opening Balance sheet

As on 31st March 2005
Liabilities Amount Assets Amount

Example – 7
From the following extract of receipts and payment account and the additional information given
below, compute the amount of expenditure in salaries and shown as how ending 31.3.2010 and the
balance sheet on that date:
Receipts and payment account for the year ending 31.3.2007
Receipt Amount Payment Amount
By Salaries 32,000

Outstanding For 2006-07 :- Rs 3000

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Outstanding For 2005-06 :- Rs 2500

Prepaid Of 2005-06 :- Rs 1500
Prepaid Of 2006-07 :- Rs 3500

Solution

Income & Expenditure A/C

Expenditure Amount Income Amount

Closing Balance sheet

As on 31st March 2011
Liabilities Amount Assets Amount

Opening Balance sheet

As on 31st March 2010
Liabilities Amount Assets Amount

Donation/ Fund Treatment

If a NPO receive a Specific donation or Fund than that same has to be kept by it in its Liabilities until
they has used for the said specified purpose. However NPO can invest such amount in F.D or bank to
earn interest than in such case “all the income from such Fund will be added in the fund and All the
Expenses will be deducted from Fund.”

Example – 8
Show how you would deal with following item in the final account of a club.
Details Dr Cr
Prize fund 80000
Prize fund investment 80000
Income from prize fund investment 8000
Prizes awarded 6000
Solution
Closing Balance sheet

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As on 31st March 2011

Liabilities Amount Assets Amount

Example – 9
Shown the following information in financial statement of a not-for-profit organization:
Details Amount (Rs.)
Match expanses 16000
Match fund 8000
Donation for match fund 5000
Sale of match tickets 7000
What will the effect, if match expanses go up by Rs.6000 other things remaining the same?

Solution
(Case - A)
Closing Balance sheet
As on 31st March 2011
Liabilities Amount Assets Amount

(Case - B)

Closing Balance sheet

As on 31st March 2011
Liabilities Amount Assets Amount

Income & Expenditure A/C

Expenditure Amount Income Amount

Consumption Treatment

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Sometime question provides opening and closing stock of some items than in such case we have to
calculate consumption for such item by using following formula, if the opening balance and closing
balance of creditor is also given than we have to prepare Creditor account for calculating Puchase.

Consumption of Medicine = Opening Stock of Medicine + Purchase – Closing Stock of Medicine

Example – 10
Extract of a receipts and payment account for the ended on March 31.2006.
Payment of stationery Rs 23000.
Additional information:
Details April 1.2005 March 31.2006
Stock of stationery 4000 3000
Creditor of the stationery 9000 2500

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Note – 1
Creditor Account
Creditor A/C
8Particular Amount Particular Amount

Note – 2
Consumption of Stationary

Example – 11
Find out the cost of medicines consumed during 2005-06 from the following information:
Details Amount
Payment for purchases of medicines 370000
Creditor for medicines purchase
On 1.4.2005 25000
On 31.3.2006 17000
Stock of medicines
On 1.4.20005 62000
On 31.3.2006 54000
Advance of suppliers of medicines
On 1.4.2005 11500
On 31.3.2006 18200

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Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

Note – 1
Creditor Account
Creditor A/C
Particular Amount Particular Amount

Note – 2
Advance Account
Advance to Supplier A/C
Particular Amount Particular Amount

Note – 3
Consumption of Medicine

Example – 12
Following is the Receipts and payment account of an Entertainment Club for the period 1.4.2006 to
31.3.2007.
Receipts and payment account for the ending year 31.3.2007
Receipts Amount Payment Amount
To Balance b/d By Salaries 24000
Cash 27500 By Electric bill 21000
Bank 60000 87500 By Food stuff for restaurant 60000
To Member’s subscription By Telephone bill 35000
2005-06 12500 By Subscription for periodicals 14500
2006-07 100000 By Printing and stationery 13000
2007-08 10000 122500 By Sport expanses 50000
To Sale of the furniture By Secretary honorarium 30000
(book value Rs.8000) 10000 By 8% investment (30.9.2006) 100000
To Sale of food stuffs 100000
By Balance c/d

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To Sale of old periodicals and 3200 Cash 21500

newspaper Bank 66500
To Hire of the ground used to for 48750 45000
marriage 25000
To Donation of sport fund 17050
To Locker rent

414000 414000

Additional information:
a) During 2006-07 the club had 225 member each paying annual subscription of Rs.500. out of
30 members who had not paid annual subscription during of 2005-06. 25 members cleared
their arrears in 2006-07 and the arrears of the remaining 5 member who left the club on
1.4.2006 were treated as irrecoverable.
b) During 2006-07 an amount of Rs.35000 was deposited with MTNL delhi for adjusted of the
telephone bills. On 31.3.2007 the following statement was received from the telephone
office:
- Amount deposited 35000
- Interest on deposited 3000
- Less: telephone rent and bills for 2006-07 22000
- Balance of deposited on 31.3.2007 16000
c) Stock of the foodstuff for restaurant run the club amount to Rs 16000 and Rs 18000 at the
ended of 2005-06 and 2006-07 respectively.
d) Advance payment of subscription for periodicals, magazines, newspaper amounted to Rs
3000 and Rs.2500 at the end of 2005-06and 2006-07 respectively.
e) On a April 1.2006 other balance were as under:
a. Furniture 100000
b. Building 650000
c. Sports fund 15200
f) Depreciate Furniture and building @12.5% and 5% respectively.
Prepare income and expenditure account and balance sheet as on 31.3.2007.

Solution
Income & Expenditure A/C
Expenditure Amount Income Amount

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Closing Balance sheet

As on 31st March 2007
Liabilities Amount Assets Amount

Working Notes
Note -1
Opening Balance sheet

Opening Balance sheet

As on 31st March 2006
Liabilities Amount Assets Amount

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Note – 2
Consumption of Food Stuff

TOPIC – 4
PREPARATION OF INCOME AND EXPENDITURE FROM RECEIPT AND PAYMENT ACCOUNT

Example – 13
On the basis of the following information, calculate the amount paid for stationary for the year ended
31st March, 2010.
Particulars Amount
Stock of stationery on April 1,2009 3,000
Advance given to creditor on April 1, 2009 1,200
Creditors for stationery on April 1,2009 3,000
Amount of Stationary shown in Income and Expenditure during the year 2009-10 15,500
Advance given to creditor on 31st March, 2010 2,500
Stock of stationery on 31st March,2010 700
Creditors for stationery on 31st March,2010 2,500

Solution

Creditor for refreshment

Particular Amount Particiular Amount

Advance for refreshment

Particular Amount Particular Amount

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Example – 14
Extracts of Income and Expenditure account for the year ended 31.3.2012 are given below:
Receipts
Income & Expenditure A/C
Expenditure Amount Income Amount
By Subscription A/C 500,000

Additional information:
- Total no. of member is 5000.
- Annual member fees Rs 100.
- Subscription outstanding on 1.4.2011 is Rs 30,000.
- Subscription received in advance on 1.4.2011 is Rs 50,000.
- Subscription received in advance on 31.3.2012 is Rs 65,000.
- Subscription Received during the year amounted to Rs 525,000

Solution

Example – 15
Following is the Income and Expenditure account of a “Cricket Sports Club” for the period 1.4.2009
to 31.3.2010.
Expenditure Amount Income Amount
To Cricket Match Exp over & By Subscription :-
above donation 5,000 145,000
To Salary (+) outstanding of P/Y
6000 12,000
(-) prepaid of C/Y 6,200 (-) outstanding of C/Y 140,000
(800) 12,500 (15,000) 80,000
(+) prepaid of P/Y 84,000 (+) Advance of P/Y 4,000
1000 15,500 5,000
To Electricity Bill 12,000

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To consumption of refreshment (-) Advance of C/Y

To Telephone Bill 5,700 (13,000)
To Printing and Stationary By Sale of refreshment
5500 By sale of old newspaper
(+) outstanding of C/Y 5,700 By Interest on Investment
1200 5,000 8,000
(-)outstanding of P/Y 96,400 (+) Acurred of C/Y
(1000) 4,000
To Depreciation
On Furniture
2700
On Machinery
3000
To Honorarium
To Surplus
244,000 244,000
Additional information:

- Following balances appears on the 31st march of each year:

Particulars 31.03.2009 31.03.2010
Outstanding Subscription 13,500 16,500
Subscription received in advance 5,000 13,000
Outstanding printing and stationary
exp. 1,000 1,200
Salary paid in advance 1,000 800
Creditor for refreshment 3,000 6,000
Stock of refreshment 22,000 6,000
12% Investment 100,000 100,000
Donation for cricket Match 8,000 -
Machinery 30,000 100,000
Cash 30,000 9000
Bank overdraft 5,500 ?

- Charge depreciation on Furniture and Machinery @12% and 10% respectively.

- Sale of old motor car for Rs. 25000 at cost.
- Furniture purchased on 1.10.2009 for Rs. 45,000
- Machinery purchased on 31.03.2009 for Rs. 70,000

Prepare receipts and payment account and balance sheet as on 31.3.2010.

Solution
Receipt and Payment A/C
Receipt Amount Payment Amount

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Closing Balance sheet

As on 31st March 2010
Liabilities Amount Assets Amount

Working Notes
Note -1
Opening Balance sheet
Opening Balance sheet
As on 31st March 2009
Liabilities Amount Assets Amount

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Note -2
Consumption of Refreshment
Creditor for refreshment
Particular Amount Particiular Amount

Note -3
Subscription Treatment

Note -4
Salary paid

Note -5
Printing and stationary paid

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Example – 16
From the following data, prepare an Income and Expenditure Account for the year ended 31st
December. 2005, and a statement of affairs as at that date of the Mayura Hospital:

Receipts and Payments Account for the year ended 31 December, 2005
To Balances Rs. By Salaries: (Rs. 3,600 for 2004) 15,600
Cash 400 Hospital Equipment 8,500
Bank 2,600 3,000 Furniture purchased 3,000
To Subscriptions: Additions to Building 25,000
For 2004 2,550 Printing and Stationery 1,200
For 2005 12,250 Diet expenses 7,800
For 2006 1,200 16,000 Rent and rates (Rs. 150 for 2006) 1,000
To Government Grant: Electricity and water charges 1,200
for building 40,000 office expenses 1,000
for maintenance 10,000 Investments 10,000
Fees from sundry patients 2,400 Balances:
To Donations (not to be capitalised) 4,000 Cash 700
To Net collections from benefit shows 3,000 Bank 3,400 4,100
78,400 78,400

Additional Information:
- Value of building under construction as on 31.12.2005 : 70,000
- Value of hospital equipment on 31.12.2005 : 25,500
- Building Fund as on 01.01.2005 : 40,000
- Subscriptions in arrears as on 31.12.2004 : 3,250
- Investments in 8% Govt, securities were made on 1" July, 2005.

Example – 17
The following is the Income and Expenditure Account o Gorakhpur Club for the year ended 31st
March, 2008:

Expenditure Amount Income Amount

To Salaries 15,750 By Subscription 55,000
To Stationery 1,250 By Donation 7,500
To Rates and Taxes 6,210 By Profit on annual meet 16,000
To Postage, Telephone etc. 2,520 By Sale of souvenirs 5,250
To Sundry Expenses 8,210 By Profit on sale of
To Repairs and Maintenance 5,260 Billiards table 1,410
To Table Tennis Balls 1,210
To Printing of Souvenir 2,500
To Affiliation Fee to Main Club till
31.3.2008 500
To Electricity 6,250
To Water Charges 1,210
To Billiard Room Expenditure 2,460
To Depreciation on Sundry Assets 1,560
To Surplus 30,270

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85,160 85,160

The following further information is available:

Particulars 1.04.2007 31.03.2008
Sundry Assets 46,500 47,650
Outstanding Subscriptions 1,560 2,610
Advance Subscriptions 2,500 1,600
Expenses Outstanding
Printing and Stationer 150 210
Telephone Bills 220 240
Electricity 125 225
Due towards purchase of Billiards Balls - 165
Office Bearers' Fund 3,465 4,260

The Billiard Table was used for six months during the year and its book value was Rs. 10,240 as on
30th Sep 2007.
The club is affiliated to the Main Club. It has paid-year's subscription in advance Rs. 1,000. Out of the
donation, a-sum of Rs. 1,000 announced at the Annual Meet was duly taken into account but had
not been received till 31st March, 2008.
All amounts received towards Office Bearers' Fund were credited to the Fund and the expenses
amounting Rs. 2,785 were also charged to the Fund directly.

From the above particulars prepare a Receipts and Payments Account for the year and draw the
Balance Sheet as on 31st March, 2008

Example – 18
Following is the Receipts and Payment Account of Mayur Club for the year ended 31 March, 2008:.

Receipts Amount Payments Amount

Opening balance (1.4.2007) 39,100 Sports materials 304,500
Cash on hand 50,000 Salaries 315,000
Cash at bank Equipment purchased 60,000
Subscriptions Bank fixed deposit on
For the year: 2006 - 07 : 31.3.2008 150,000
18,000 Rent
For the year: 2007 - 08 : 985,500 148,500
Ground maintenance 22,120
963,000
45,000 Insurance 38,400
For the year: 2008 - 09 :
Stationery 3,450
4500
Sundry expenses
Interest on bank Fixed deposits @ 5,880
Closing balance as on
10%
31.3.2008
Cash on hand :
31,700 71,700
Cash at bank :
11,19,600 40,000 11,19,600

Following additional information is provided to you:

- The Club has 220 members. The annual subscription is Rs 4,500 per member.
- Depreciation to be provided on furniture @ 10% and on sports equipment @ 5% p.a.

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- On 31st March, 2008, Stock of sports material in hand (after members use during the year) is
valued at Rs 78,000 and stock of stationer at Rs 3,150.
- Rent for 1 month is outstanding
- Unexpired insurance amounts to Rs. 9,600.
- On 31st March, 2007 the Club had the following Assets:
 Furniture : 270,000
 Sports equipment : 180,000
 Bank fixed deposit : 450,000
 Stock of stationery : 1,500
 Stock of sports material : 73,500
 Unexpired insurance : 8,400
 Subscription in arrear : 22,500

Note: there was no liability on 31.3.2007

Your are required to prepare:
i. Income and Expenditure Account
ii. Balance sheet as at 31st March 2008

Example – 19
From the following Income & Expenditure A/c of Premium Sports Club for the year ended 31st
March, 2012, you are required to prepare Receipts & Payment A/c for the year ended 31st March,
2012 and Balance Sheet

Expenditure Amount Income Amount

To Salaries 118,800 By Subscription 420,000
To Rent 216,000 By Entrance Fee 120,000
To Printing & Stationery 28,000 By Profit on sale of Sports
To Postage & Telephone 41,600 Material 5,500
To Membership Fee 3,200 By Interest on 8% Govt.
To Electricity Charges 38,500 Bonds 12,000
To Garden Upkeep 19,300 By Sale of Old Newspaper 11,600
To Sports Material Utilized
62,800
To Repairs & Maintenance
To Depreciation 18,700
13,000
To Miscellaneous Expenses
5,700
To Surplus
3,500

569,100 569,100

The following information is provided to you:

Particulars 1.04.2011 31.03.2012

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Fixed Assets 240,000 ?

Bank Balance 8,300 ?
Stock of Sports Material 43,450 35,670
Outstanding Subscription 10,200 5,700
Subscription received in advance 2,400 4,900
8% Government Bond 150,000 150,000
Outstanding Salaries 16,000 14,300
Outstanding Rent 21,000 15,000
Advance for Stationery 1,350 1,550
Outstanding Repairs & Maintenance 1,200 Nil
Creditors for purchase of Sports Material
3,400 4,200

- Some of Fixed Assets were purchased on 01.10.2011 and depreciation to be charged @5%
p.a.
- Sports Material worth 72,000 was purchased on credit during the year.
- The Club became member of State Table Tennis Association on 01.01.2012 when it paid fee
up to 31.12.2012.
- 50% of Entrance Fee is to be capitalized.
- Interest on 8% Government Bonds was received for two quarters only
- A fixed deposit of Rs 80,000 were made on 31st March 2012

Example – 20
The following is the Income and Expenditure Account of a charitable hospital for the year 2005:
Expenditure Rs Income Rs
Salaries 23,500 Subscriptions 22,000
Diet expenses 2,000 Donations 4,000
Rent 500 Interest on investments
Insurance 200 for one year @ 5% 9,000
Office expenses 800 Miscellaneous receipts 600
Surgery and Dispensary
Expenses 1,000
Depreciation on :
Building 3,750
Furniture 120
Instruments HQQ 4,670
Surplus 2,930
35,600 35,600
Additional Information:
Cash in hand on 31-12-2004 200
Cash at bank on 31-12-2004 5,400
Building on 31-12-2004 75,000
Furniture on 31-12-2004 2,000
Instruments on 31-12-2004 3,500
Subscriptions outstanding on 31-12-2004 1,500
Salaries outstanding on 31-12-2004 1,800
Subscriptions received in advance on 31-12-2004 600

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Subscriptions received in advance on 31-12-2005 800

Subscriptions outstanding on 31-12-2005 4,500
Salaries outstanding on 31-12-2005 2,000
Instruments purchased during the year 500
Cash in hand on 31-12-2005 150

You are required to prepare the Receipts and Payments Account for the year 2005 and a Balance
Sheet of the hospital as at 31 December 2005. Also show your workings.

Example – 21
From the following Income and Expenditure Account and the Balance Sheet of club. Prepare Its
Receipts and Payments Account and Subscriptions Account for the year ended 31-3-2005:
Income and Expenditure A/C
For the year 2004-05
Expenditure Amount Income Amount
To Upkeep of ground 10,000 By Subscription 17,320
To printing 1,000 By sale of old newspaper 260
To salaries 11,000 By lecture 1,500
To Depreciation of furniture 1,000 By Entrance fees 1,300
To Rent 600 By misc. income 400

By Deficit 2820

23,600 23,600

Balance sheet
31.03.2005
Liabilities Amount Assets Amount
Subscription in advance 100 Furniture 9,000
Prize Fund: Grounds and building 47,000
25,000 Prize Fund Investment 20,000
Add: Interest 24,000 Cash in hand 2,300
1,000 Subscription 700
Less: Prize awarded
(2,000) 53,600

Capital Fund : 1,300

56,420
Less: Deficit 79,000 79,000
(2820)

Entrance Fees

The following adjustments have been made in the above accounts:

i. Upkeep of ground Rs 600 and Printing Rs 240 relating to 2003-04 were paid in 2004-05
ii. One-half of entrance fees have been capitalised
iii. Subscriptions outstanding in 2003-04 were Rs 800 and for 2004-05 Rs 700.

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iv. Subscriptions received in advance in 2003-04 were Rs 200 and in 2004-05 for 2005-06 Rs
100.

Example – 22
The following are the Receipts and Payments Account and Income and Expenditure Account of a club
for the year ending December 31, 2005
Receipts and Payments A/C
31 December 2005
Particulars Amount Particulars Amount
To Balance b/d 7,600 By Salaries 4,800
To Entrance fees 5,200 By Insurance 1,000
To Subscriptions By Rates and taxes 1,400
(including for 2004 Rs 1,500) 17,000 By Addition to library on
To Proceeds from sale of old 31-12 2005 2,500
newspapers 120 By Payments of creditors of
To Rent of library hall last year 1,300
(including for 2004 Rs 700) 2,080 By Postage 100
To Proceeds from lectures and By Repairs 500
entertainment 6,000 By Printing and stationery 800
To sale of old furniture 300 By Electric installation
expenses 9000
By Sundry expenses (including
outstanding) 4,300
By Balance c/d 12,600

38,300 38,300

Income and Expenditure A/C

31st December 2005
Expenditure Amount Income Amount
To Salaries 4,800 By Entrance Fees 5,200
To Rates and Taxes 1,400 By Subscriptions 17,700
To Insurance 650 By Rent of Library Hall 2,130
To Repairs 500 By Sale of old newspapers 120
To Printing and Stationery 800 By Proceeds from lectures and
To Postage 100 entertainment 6,000
To Sundry expenses 1900
To Depreciation
Building @ 2.5% :
700
Library Books @ 10% : 4,570
3,370 50
Investment @ 5% :
500 16,380
To Loss on sale of old furniture
31,150 31,150
To Surplus

The club sold all its furniture during the year to replace them by new ones.

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Prepare opening and closing balance sheet.

Example – 23
The following particulars relate to Delhi Sports Club: Income and Expenditure Account for the Year
Ended 31 December, 2005 as follows:
Income and Expenditure A/C
31st December 2005
Expenditure Amount Income Amount
To Salaries 1,500 By Entrance Fees 10,500
To Stationery 2,200 By Subscriptions 15,600
To Advertising 1,600 By Rent 4,000
To Audit Fees 500
To Fire Insurance 1,000
To Depreciation on Sports 9,000

To Surplus 14,300

30,100 30,100

Receipts and Payments Account For the Year Ended 31 December, 2005
Particulars Amount Particulars Amount
To Balance B/D 4,200 By Salaries 1,000
To Entrance Fees 10,500 By Stationery
To Subscriptions 2004 :
2004 : 400 2,600
600 2005 : 1,600
2005 : 16,000 2,200 1,200
15,000 3,500 By Advertising 20,000
2006 : By Fire Insurance 7,800
400 By Investment
To Rent 34,200 By Balance C/D 34,200

The assets on 1 January 2005 included club grounds and pavilion Rs 44,000; Sports equipment Rs
25,000 and furniture Rs 4,000. Subscriptions in arrears on that date were Rs 800.

Prepare:
Balance Sheet as on 31 December, 2004.
Balance Sheet as on 31 December 2005.
Have you any suggestion regarding Club's Furniture Account?

Example – 24
From the given income and expenditure account and receipt and payment account. Prepare opening
and closing balance sheets.
Income and Expenditure A/C
31st December 2005
Expenditure Amount Income Amount
To Salaries By Subscriptions 8,000
11,000 12,000 By Medical Fees 14,000
Add: outstanding :
1000

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1,370
To Insurance
1,500 6,000
Less : prepaid :
(130) 2,630

To Medicines 22,000 22,000

To Surplus

Receipts and Payments Account For the Year Ended 31 December, 2005
Particulars Amount Particulars Amount
To Balance B/D 3,000 By Salaries 12,000
To Subscriptions 9,500 By Insurance 1,500
To Medical fees 14,000 By Medicines 6,000
To Donation 5,500 By Medical Equipment 5,000
By Investment 5,000
By Balance C/D 2,500

32,000 32,000

Opening balances as on 1-1-2005:

- Medical equipment 32000
- Furniture 5,000
- Cash 3,000
- Outstanding subscriptions 1,000
- Outstanding salary 1,000

Example – 25
From the following information relating to Young Boys Club. Prepare balance Sheet as on 1 April
2005 and as on 31 March 2006:
- Club's Assets as on 1-4-2005
- Club Grounds and Pavilion 50,000
- Sports Equipments 30,000
- Furniture 7,000
- Stock of stationery 1,000
- Subscriptions Receivable 1,200

Receipts and Payments Account For the Year Ended 31 March, 2006
Particulars Amount Particulars Amount
To Balance B/D 5,000 By Salaries 10,000
To Entrance Fees 12,000 By Stationery 3,000
To Subscriptions By Audit fees 1,000
2004 -2005 : By Advertising 2,000
900 By Fire Insurance 1,500
2005-2006 : 19,400 By Furniture 2,000
18,000 2,200 By Investment 18,000
2006-2007 : 300 By Balance C/D 1,400
500

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To Rent 38,900 38,900

To Sale of news paper

Income and Expenditure A/C

31st March 2006
Expenditure Amount Income Amount
To Salaries 11,000 By Entrance Fees 12,000
To Stationery 2,800 By Subscriptions 19,000
To Advertising 3,000 By Rent 2,400
To Audit Fees 1,500 By Sale of newspaper 300
To Fire Insurance 1,200
To Depreciation on Sports
equipment 5,000
To Depreciation on Furniture 800

To Surplus 8,400

33,700 33,700

Example – 26
The following are the items of receipts and payment account of bangali as summarised by the books
of accounts of the secretary:

Receipts and Payments Account For the Year Ended 31 December, 2005
Particulars Amount Particulars Amount
To Balance B/D 42,000 By Manager’s Salaries 10,000
To Entrance Fees By Printing & stationery 26,000
2004 : By Advertising 18,000
10,000 110,000 By Fire Insurance 12,000
2005 : By Investment 200,000
100,000 By Balance C/D 76,000
To Subscriptions
2004 : 160,000
6000 30,000
2005 :
150,000 342,000 342,000
2006 :
4,000
To Interest on Investment
It is ascertained from the enquiry that the following represented a fair picture of the income and
expenditure account for the year ended 2005 for audit purpose:

Income and Expenditure A/C

31st December 2005
Expenditure Amount Income Amount
To Manager’s Salaries 15,000 By Entrance Fees 105,000
To Printing & stationery : By Subscriptions 156,000
20,000 24,000 By Interest on investment 40,000
Add: outstanding : 16,000
4000 5,000

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To Advertising (Accrual nil) 10,000

To Audit Fees 49,400
To Fire Insurance
To Depreciation 181,600

To Surplus 301,000 301,000

You are required to prepare the Balance Sheet of the Club as on 31-12-2004 and 31-12-2005, it being
given that the value of the fixed assets as on 31-12- 2004 were: Building-440,000; Cricket
equipment-Rs 250,000 and Furniture Rs 40,000. The rates of depreciation are: Building @5%, Cricket
equipment @ 10%, Furniture @ 6%. You are entitled to make assumptions as may be justified.

Example – 27
Following are the Receipts and Payments and Income and Expenditure Account of Delhi Club for the
year ending 31 March, 2004.
Receipts and Payments A/c
Receipts Payments Rs
Balance Ltd 1,000 Ground Maintenance 1,200
Subscriptions Salary & Honorarium
2002-03 400 (including salary of
2003-04 10300 02-03 Rs 700/-) 1,800
2004-05 500 11,200 Water & Electricity 350
Legacy 800 Books out of Donation 3,000
Donation for Fixed Deposit out of
Library 7,000
Match Fund 3,300 Donation 4,000
Sale of Furniture 500 Match Expenses 2,200
Crockery 1,000
Food 2,000
Entertainment 2,000
Sports Materials 2,000
Balance Ltd 4,250
23,800 23,800

Income and Expenditure A/c for the year ending March, 2004
Expenditure Amount Income Amount
To Ground Maintenance 1,200 By Subscriptions 10,400
To Salary & Honorarium 1,800
To Entertainment 2,000
To Loss as Sale of Furniture 300
To Electricity & Water 350
To Sports Material used 75% of
total stock 2,010
To Food consumed 80% of total
stock 1,500

To Surplus 1,240
10,400
10,400

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Additional information:
- Subscription outstanding on 31-3-03 Rs 550 estimated at Rs 500.
- Subscription outstanding on 31-3-04 Rs 120.
- Furniture on 31-3-03 Rs 3,000.
- Crockery on 31-3-04 Rs 2,500.
You are required to prepare balance Sheet as on 1-4-03 and 31 March 2004.

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