question_answer

Following receipts and payments account was prepared from the cash book of Youth Club for the year ending receipts and payments account for the year ending 31st December, 2017. Receipts and Payments Account for the year ending 31st December, 2017

Receipts	Amt (Rs.)	Payments	Amt (Rs.)
Balance b/d		Charity	23,000
Cash in Hand	23,000	Rent and Taxes	6,400
Cash at Bank	25,200	Salary	12,000
Donation	18,000	Printing	1,200
Subscription	85,600	Postage	600
Legacies	36,000	Advertisements	9,000
Interest on Investment	9,000	Insurances	4,000
Sale of Old Newspapers	400	Furniture	42,000
		Investment	46,000
		Balance c/d
		Cash in Hand	19,800
		Cash at Bank	33,200
	1,97,200		1,97,200

Prepare income and expenditure account for the year ended 31st December, 2017 and a balance sheet on that date after the following adjustments:

(i) It was decided to treat \[\frac{1}{3}rd\] of the amount received on account of donation as income.

(ii) Insurance premium was paid in advance for 3 months.

(iii) Interest on investment Rs. 2,200 accrued was not received.

(iv) Rent Rs. 1,200, salary Rs. 1,800 and advertisement expenses Rs. 2,000 outstanding as on 31st December, 2017.

Answer:

Income and expenditure account = Rs. 43,000 (surplus) balance sheet total =Rs. 1,44,200; Capital Fund = Rs. 48,200