Accounting - II 7.

Solutions to
Text Book Exercises
Chapter – 7

NON-TRADING CONCERNS

1. Receipts and Payments Account :

Solution – 1 :

Receipts and Payments a/c of Guntur Sports Club

for the year ended 31-12-2004
Date Receipts Rs. Rs. Date Payments Rs. Rs.
2004 To Opening 2004 By Salaries 16,800
Jan.1 Balances : Dec.31 By Rent 9,000
Cash in hand 520
Cash at bank 8,400 8,920
Dec.31 To Subscriptions 34,600 By Insurance 1,250
To Donations 26,000 By Electricity
expenses 2,400
To Legacies 28,000 By Furniture 2,000
To Entrance fee 2,000 By Sports equipment 3,800
To Entertainment 8,200 By Upkeep of 1,460
receipts grounds
By Additions to 14,000
Buildings
By Entertainment 4,400
Expenses
By Printing, 1,280
Stationery
By Balance c/d
Cash in hand 840
Cash at Bank 50,490 51,330
1,07,720 1,07,720

Solution – 2 :
Receipts and Payments a/c of Sachin Cricket Club
for the year ended 31-12-2003
Date Receipts Rs. Rs. Date Payments Rs.
2003 To Balance b/d 235 2003 By Salaries 290
Jan.1 Dec.31
To Entrance fee 150 By Stadium construction 6,500
expenses
To Subscriptions By Rent 550
2002 35
7.2 Non-Trading Concern

2003 840
2004 20 895
To Donations 8,000 By Newspapers 195
To Tournament receipts 1,060 By Land rent 60
To Interest received 48 By Tournament expenses 820
By Furniture 1,500
By Balance c/d 473
10,388 10,388
To Balance b/d 473

Notes :

1. Only receipts and payments during the year have place in this account. As such,
outstanding salaries and rent are not included.
2. Subscriptions for the previous year, present year and next year if received during the
year, are to be included in the account.
3. The excess of receipts over payments will be treated as closing balance.

Solution – 3 :
Income and Expenditure a/c of Rotary Club
for the year ended 31-12-2004

Expenditure Rs. Rs. Income Rs. Rs.

To Charities 7,250 By Donations 2,000
To Salaries 1,300 By Subscriptions 2,000
Add : Outstanding 150 1,450
To Printing & Stationery 150 By Legacies 1,500
To Rent and Taxes 600 By Interest on
Add : Outstanding 100 700 Investments 4,750
Add : Outstanding 250 5,000
To Postage 50 By Interest on deposits 75
To Advertisement 125
Add : Outstanding 25 150
To Excess of income
over expenditure 825
10,575 10,575

Solution – 4 :
Income and Expenditure a/c
for the year ended 31-12-2003

Expenditure Rs. Rs. Income Rs. Rs.

To Salaries 3,500 By Subscriptions 15,000
Add : Outstanding 500 4,000 Less : for 2002 2,000
To Insurance 1,500 13,000
Less : Prepaid Add : Outstanding 1,000 14,000
insurance 150 1,350 2006
Accounting - II 7.3

To Printing & Stationery 2,000 By Rent 1,800

To Postage 1,500 By Interest 1,200
Add : Accrued 600 1,800
To Excess of income 20,750 By Entry fees 2,000
over expenditure
By other receipts 10,000
29,600 29,600

Solution – 5 :
Income and Expenditure a/c
for the year ended 31-12-2003

Expenditure Rs. Rs. Income Rs. Rs.

To Salaries 39,000 By Subscriptions 38,400
Add : Outstanding 3,600 42,600 Less : for 2002 1,200
To Rent 7,200 37,200
To Printing & 1,080 Less : for 2004 2,400
Stationery 34,800
Add : Outstanding 240 1,320 Add : Outstanding 1,800 36,600
To Postage 300 By Interest on
Investments 15,000
To Loss on sale of 840 By Bank interest 300
furniture
By Excess of
expenditure over
income 360
52,260 52,260

Solution – 6 :
Income and Expenditure a/c
for the year ended 31-12-2003

Expenditure Rs. Rs. Income Rs. Rs.

To Charities 13,500 By Donations 3,500
To Staff Salaries 2,400 By Legacies 2,500
Add : Outstanding 200 2,600
To Rent, Rates 800 By Subscriptions 3,000
Add : Outstanding rent 100 900
To Printing & Stationery 200 By interest on 100
deposits
To Advertisement 150 By Interest on
Add : Outstanding 50 200 investments 8,500
Add : Accrued
interest 400 8,900
To Postage 100
7.4 Non-Trading Concern

To Excess of income
over expenditure 500
18,000 18,000

III. Income and Expenditure account, Balance Sheet :

Solution – 7 :
Income and Expenditure a/c of Ongole Sports Club
for the year ended 31-12-2004
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 3,000 By Subscriptions 6,000
Add : Outstanding 500 3,500 Add : Outstanding 4,000
To Rent 2,000 10,000
Add : Prepaid rent 300 1,700 Less : Subscriptions
received in advance 1,000 9,000
To Gardening 1,000 By sale of tickets 2,500
To Excess of income
over expenditure 5,300
11,500 11,500

Balance Sheet of Ongole Sports Club as on 31-12-2004

Liabilities Rs. Rs. Assets Rs.

Capital Fund 2,500 Cash 1,000
Add : Excess of Income 5,300 Bank 2,000
over expenditure
7,800 Sports equipment 5,000
Add : Legacies 2,000 Furniture 4,000
9,800 Investments 5,000
Add : Donations 10,000 19,800 Outstanding 4,000
subscriptions
Subscriptions received in 1,000 Prepaid rent 300
advance
Outstanding salaries 500
21,300 21,300

Solution – 8 :
Income and Expenditure a/c of Bhagyanagar Sports Club
Accounting - II 7.5

for the year ended 31-12-2003

Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 7,000 By Subscriptions 20,000
Add : Outstanding 2,000 9,000 Less : relating to 2,000
2002
To Telephone 1,000 18,000
To Duty newspapers, 5,000 Add : Outstanding for 4,000 22,000
sports, magazines etc. 2003
To Stationery 1,000 By Interest on fixed 1,600
deposits
To Excess of income 10,600 By sale of 3,000
over expenditure newspapers
26,600 26,600

Balance Sheet of Bhagyanagar Sports Club as on 1-1-2003

Liabilities Rs. Assets Rs.

Capital fund 42,000 Cash 5,000
(Balancing figure) Bank 35,000
Outstanding subscriptions 2,000
42,000 42,000

Balance Sheet of Bhagyanagar Sports Club as on 31-12-2003

Liabilities Rs. Rs. Assets Rs.

Outstanding Salaries 2,000 Cash 3,000
Tournament fund 10,000 Bank 35,000
Less : Tournament 7,000 3,000 Fixed deposits 16,000
expenses
Capital fund 42,000 Outstanding 4,000
subscriptions
Add : Expenses of Income 10,600 Outstanding interest 1,600
over expenditure
Add : Entrance fees 2,000 54,600
59,600 59,600

Solution – 9:
Income and Expenditure a/c of Vijayawada Sports Club
for the year ended 31-12-2002
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 2,300 By Subscriptions 4,200
Add : Outstanding 170 2,470 Less : Relating to 100
2003
To Cricket expenses 1,240 4,100
To Insurance 360 Add : relating to 2002 300 4.400
Less : Prepaid 270 90 By Rent 100
7.6 Non-Trading Concern

insurance
To Gardening 600 By Other receipts 700
To Excess of income 1,200 By Cricket fees 400
over expenditure
5,600 5,600

Balance Sheet of Vijayawada Sports Club as on 31-12-2002

Liabilities Rs. Rs. Assets Rs.

Capital fund Cash in hand 4,000
Donations 53,000 Investments 18,000
Add : Entrance fee 7,000 Prepaid insurance 270
Add : Excess of income 1,200 61,200 Furniture 3,000
over expenditure
Tournament Fund 13,000 Buildings 45,000
Less : Tournament 3,900 9,100 Subscriptions relating to 300
expenses 2002
Subscriptions relating to 100
2003
Outstanding salaries 170
70,570 70,570

Solution – 10 ;
Balance Sheet as on 1-1-2003

Liabilities Rs. Assets Rs.

Outstanding rent 300 Cash balance 11,500
Capital fund 61,700 Furniture 10,000
Sports equipment 15,000
Buildings 25,000
Outstanding subscriptions 500
62,000 62,000

Income and Expenditure a/c of

for the year ended 31-12-2003
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 8,000 By Subscriptions 6,500
To Rent 1,500 Less : relating to last
Less : relating to last 300 1,200 year 500 6,000
year
To Stationery 500 By Interest 500
To Loss on Sale of 200 By Excess of
furniture expenditure over 5,400
income
To Depreciation on
sports equipment 2,000
Accounting - II 7.7

11,900 11,900

Notes :

1. Entrance fee is considered as capital income.

2. Depreciation on Sports :

Rs.
Opening Balance 15,000
Add : Purchases during year 6,000
21,000
Less : Closing balance 19,000
Depreciation 2,000

Solution – 11 :
Income and Expenditure a/c of Peddi Krishna Prasad Memorial Club,
Guntur for the year ended 31-3-2004
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 25,000 By Subscriptions 50,000
Add : Outstanding 1,500 26,500 Add : Outstanding 2,800 52,800
To General expenses 5,000 By Receipts for 15,000
refreshments
To Electricity charges 4,000 Less : Paid 10,000 5,000
Add : Outstanding 600 4,600 By Interest on 3,000
investments
To Rates, taxes 2,500
Less : Prepaid 500 2,000
To Printing 4,500
Less : Prepaid 300 4,200
To Excess of income 18,500
over expenditure
60,800 60,800

Notes :

1. The Entrance fee and donations are capitalised. Hence they are not shown in
Income and Expenditure a/c.
2. Subscriptions relating to the year 2002-03 and 2004-05 through received during the
current year (2003-04), they are not the income of the current year. Hence they are
not shown in the Income and Expenditure a/c.
7.8 Non-Trading Concern

3. For the preparation of the closing balance sheet, we have to find out the capital fund.
As such, first we have to prepare the opening balance sheet.

Balance Sheet of Peddi Krishna Prasad Memorial Club

as on 1-4-2003

Liabilities Rs. Assets Rs.

Capital fund 3,51,000 Cash 30,000
Outstanding subscriptions 1,000
Buiildings 3,20,000
3,51,000 3,51,000

Balance Sheet of Peddi Krishna Prasad Memorial club as on 31-12-2004

Liabilities Rs. Rs. Assets Rs. Rs.

Capital fund 3,51,000 Cash 13,000
Add : Entrance fee 4,000 Investments 55,000
Donations 13,000 Buildings 3,20,000
Excess of income over 18,500 3,86.500 Outstanding 2,800
expenditure subscriptions
Prepaid Subscriptions 3,000 Prepaid expenses
Outstanding expenses Rates 500
Salary 1,500 Printing 300 800
Electiricity expenses 600 2,100
3,91,600 3,91,600

Solution – 12 :
Balance Sheet as on 1-1-2002

Liabilities Rs. Assets Rs.

Outstanding rent 500 Cash balance 500
Capital fund (Balancing figure) 7,000 Investments 1,000
Furniture 1,000
Books 4,000
Outstanding subscriptions 1,000
7,500 7,500

Income and Expenditure a/c of Hyderabad Literary Society

for the year ended 31-12-2002
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Rent, rates 1,000 By Subscriptions 10,000
Less : relating to last 500 Less : relating to last 1,000
year year
Accounting - II 7.9

500 9,000
Add : Outstanding 500 1,000 Add : Last year 500 9,500
To Wages 500 By Donations 3,500
To Lighting charges 250 By Interest on 100
investments
To Lecturer’s fees 1,000 By Proceeds from 3,000
lectures
To Other expenses 2,000 By Interest on fixed 1,000
deposits
To Depreciation :
Books 100
Furniture 300 400
By Excess of income 11,950
over expenditure
17,100 17,100
Balance Sheet of Hyderabad Literary Society as on 31-12-2002

Liabilities Rs. Rs. Assets Rs. Rs.

Entrance fee 1,500 Cash in hand 50
Life membership fee 500 Cash at bank 800
Outstanding rent 500 Fixed deposits 10,000
Capital fund 7,000 Add : Outstanding 1,000 11,000
interest
Add : Excess of income 11,950 18,950 Iinvestments 1,000
over expenditure
Furniture 1,000
Add : Purchases 2,000
3,000
Less :Depreciation 300 2,700
Books 4,000
Add : Purchases 1,500
5,500
Less : Depreciation 100 5,400
Outstanding 500
subscriptions
21,450 21,450

Solution – 13 :
Income and Expenditure a/c of Hyderabad Club
for the year ended 31-12-2003
Dr. Cr.
Expenditure Rs. Rs. Income Rs. Rs.
To Salaries 6,500 By Subscriptions 6,400
Add : Outstanding 600 7,100 Less : Received in 400
advance
To Rent 1,200 6,000
Less : Relating to last 100 Less : Outstanding 200
year
7.10 Non-Trading Concern

1,100 5,800
Add : relating to 2002 100 1,200 Add : Outstanding 300 6,100
To Printing & 180 By Interest on 2,500
Stationery investments
To Postage 50 By Bank Interest 50
To Loss on sale of 140 By Excess of 20
furniture expenditure over
income
8,670 8,670

Note : In the adjustments we are not given the details relating to rent properly.
However, we can find out that the rent for the month of December, 2003 is still to be
paid. Hence rent, outstanding for December, 2003 is added to rent in Income and
Expenditure a/c.

Balance Sheet of Hyderabad Club as on 1-1-2003

Liabilities Rs. Assets Rs.

Outstanding rent 100 Cash 1,200
Capital fund (Balancing figure) 41,940 Investments 40,000
Furniture 640
Outstanding subscriptions 200
42,040 42,040

Balance Sheet of Hyderabad club as on 31-12-2003

Liabilities Rs. Rs. Assets Rs. Rs.

Subscriptions received in 400 Cash 920
advance
Outstanding salaries 600 Investments 40,000
Outstanding rent 100 Govt. Bonds 1,000
Capital fund 41,940 Outstanding 300
subscriptions
Less : Excess of 20 41,920 Cycle 800
expenditure over income
43,020 43,020

Solution – 14 :
Receipts and Payments a/c
for the year ended 31-12-2003
Dr. Cr.
Receipts Rs. Rs. Payments Rs. Rs.
To Balance b/d 1,390 By Salaries 2,580
To Subscriptions 2,750 By Stationery 410
Add : Subscriptions 125 Add : Closing stock 100
Accounting - II 7.11

received in advance
2,875 510
Add : Outstanding 60 Less : Opening 75 435
subscriptions stock
2,935 By Taxes 550
Less : Outstanding 200 2,735 Add : Prepaid taxes 250
subscriptions
To Entertainment 2,100 800
receipts
To Interest on 1,250 Less : Prepaid taxes 125 675
investments for the year 2003
By Telephone 185
Add : Outstanding 50 235
telephone expenses
By General 750
Expenses
Less : Outstanding 50 700
By Investments 2,000
By Balance c/d
Bank 500
Cash 350
7,475 7,475

Note : Receipts and Payments a/c opening balance is the balancing figure.

Solution – 15 :
Balance Sheet of Pioneer Sports Club as on 1-1-2004

Liabilities Rs. Assets Rs.

Outstanding Printing, Stationery 400 Cash 4,200
Capital fund (Balancing figure) 78,300 Outstanding entrance 1,000
fees (2003)
Outstanding subscriptions 500
(2003)
Fixtures, fittings 4,000
Sports material 25,000
Play ground 44,000
78,700 78,700

Balance Sheet of Pioneer Sports Club as on 31-12-2004

Liabilities Rs. Rs. Assets Rs.

Outstanding secretary 500 Cash 7,700
salary
Outstanding audit fees 500 Unexpired insurance 200
Subscriptions received in 400 Outstanding entrance 500
advance fees
7.12 Non-Trading Concern

Capital fund (1-1-2004) 78,300 Outstanding 500

subscriptions
Add : Surplus 23,200 1,01,500 Accrued rent 1,000
Investments 20,000
Fixtures, Fittings 4,000
Sports Material 25,000
Club land, play ground 44,000
1,02,900 1,02,900

Notes :

1. The difference in Secretary’s salary and audit fees between income and expenditure
a/c and receipts and payments a/c is to be taken as outstanding expenses.
2. The difference in fire insurance between income and expenditure a/c and receipts
and payments a/c is to be taken as unexpired insurance.
3. The difference in subscriptions between income and expenditure a/c and receipts
and payments a/c to be taken as outstanding subscriptions. In the same way,
outstanding entrance fee and outstanding rent are to be calculated.