question_answer

XYZ library showed the following position on 31st March, 2017 Balance Sheet as at 31st March, 2017            

Liabilities	Amt (Rs.)	Assets	Amt (Rs.)
Capital Fund	5,94,750	Electrical Fittings	1,12,500
Expenses Payable	5,250	Furniture	37,500
		Books	3,00,000
		Investment in Securities	1,12,500
		Cash at Bank	18,750
		Cash in Hand	18,750
	6,00,000		6,00,000

            The receipts and payments account for the year ended on 31st March, 2018 is given below: Receipts and Payments Account             Dr                                             for the year ending 31st March, 2018                                                         Cr

Receipts		Amt (Rs.)	Payments		Amt (Rs.)
To Balance b/f			By Electric Charges		5,400
Cash at Bank	18,750		By Postage and Stationery		3,750
Cash in hand	18,750	37,500	By Telephone Charges		3,750
To Entrance Fees		22,500	By Books Purchased		45,000
To Membership Subscription		1,50,00	By Outstanding Expenses Paid		5,250
To Sale Proceeds of Old Papers		1,125	By Rent		66,000
To Hire of Lecture Hall		15,000	By Investment in Securities		30,000
To Interest on Securities		6,000	By Salaries		49,500
			By Balance c/d
			Cash at Bank	15,000
			Cash in Hand	8,475	23,475
		2,32,125			2,32,125

You are required to prepare an income and expenditure account for the year ended 31st March, 2018 and a balance sheet as at 31st March, 2018 after making the following adjustments:

(i) Membership subscription included Rs. 7,500 received in advance.

(ii) Provide for outstanding rent Rs. 3,000 and salaries Rs. 2,250.

(iii) Books to be depreciated @ 10% including additions. Electrical fittings and furniture are also to be depreciated at the same rate.

(iv) 75% of the entrance fees is to be capitalised.

(v) Invested on securities is to be calculated @ 5% p.a. including purchases made on 1st October, 2017 for Rs. 30,000.

Answer:

Excess of expenditure over income = Rs. 12,525, Total of balance sheet = Rs. 6,11,850