Not for Profit Organisation – CA Foundation Accounts Study Material

Not for Profit Organisation – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 1.
Income and Expenditure A/c.
Answer:
Income and Expenditure A/c:

  • Income & Expenditure Account – is just like a profit & Loss account.
  • All the Expenses for that year i.e., related to that year, will be debited to it
  • All the incomes related to that year will be credited to it.
  • If the credit side is more, the balance is known as “Surplus”(Profit)
  • If the debit side is more the balance is known as “Deficit” (Loss) which is then
  • Transferred (Surplus is credited/Loss is debited) to the capital account of the Association/Trust which is known by different names such as Trust Fund/General Fund/Capital Fund etc.

Question 2.
Receipt and Payment A/c.
Answer:
Receipt and Payment A/c:

  • Receipt & Payment Account – is a summarized cash book.
  • All receipts in that year may be loan, a capital receipt or an income will be Debited to Receipt & Payment a/c.
  • Income received in this year may be related to this year or previous year or next year.
  • Similarly all payments made in this year may be for capital expenditure, repayment of loan, revenue expenditure etc. should be credited to Receipt & Payment A/c.
  • The revenue expenditure paid in this year, may relate to this year or previous year or next year.
  • Balance of this a/c is the closing cash and bank balance and will appear in the balance sheet.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 3.
Entrance Fees.
Answer:
Entrance Fees:
(a) The Associations collect entrance fees/admission fees from the new members at the time of their admission.

(b) It is different from the membership fees/subscriptions, which are received every year and hence treated as revenue income and transferred to Income & Expenditure account.

(c) But the entrance fees is received only once from a member, hence it can be treated as follows:
→ If the amount is just sufficient to recover the expenditure incurred while admitting any member then it will be treated as revenue income and transferred to Income & Expenditure account.

→ Otherwise the entrance fees can be Capitalized & transferred to the Trust Fund Account. OR;

→ Entrance fees may be treated as deferred Income and shown in the Balance Sheet under the head “Entrance Fees Account” & Part-amount can be written off every year by transferring to Income & Expenditure A/c in proportion to the benefit extended to the members, estimated on some suitable basis.

Question 4.
Membership fees.
Answer:
Membership fees:

  • These are usually charged yearly from the members hence are treated as revenue income and credited to I&E a/c.
  • The amount received should be duly adjusted for outstanding and advances, so as to get the figure of income for the year.
  • When number of members and the rate of membership fees/subscription is given then income = number of member x rate per member.
  • Outstanding subscription i.e. subscription receivable will be shown on the asset side of balance sheet.
  • Advance subscription i.e. unearned subscription will be shown on the liability side of balance sheet.

Question 5.
Donation.
Answer:
Donation:

  • Donations are the voluntary contribution provided by the well wishers for general or specific purpose.
  • If donations are received for a particular purpose then it will be credited to that particular fund a/c say donation received for construction of building credited to Building fund a/c.
  • Otherwise general donations will be credited to Income & Expenditure a/c.
  • If question requires capitalisation, but does not specify the fund to which it should be credited, then credit such donation to trust fund a/c.
  • Donation may be in kind then stock or fixed asset whatever is received will be debited and the credit will be as explained in above points.

Question 6.
From the following data, prepare an Income and Expenditure Account for the year ended 31st December, 2011 of the Mayura Hospitals.
Receipt and Payments Account (For the year ended 31st Dec. 2011)
Not for Profit Organisation – CA Foundation Accounts Study Material 1
Additional information:
(i) Subscription in arrears as on 31-12-2010 ₹ 3,200
(ii) Investments in 8% Govt. Securities were made on 1st July, 2011
Solution:
Income and Expenditure Account for the Year Ended 31.12.2011
Not for Profit Organisation – CA Foundation Accounts Study Material 2

Working Notes:
Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 3
Salary Account
Not for Profit Organisation – CA Foundation Accounts Study Material 4
Rent Account
Not for Profit Organisation – CA Foundation Accounts Study Material 5
Important Points:

  • Govt, grant for Building will be credited to building fund a/c and will appear in Balance sheet.
  • Addition to Purchase of Furniture, Equipment, Building and Investment will be debited to respective asset a/ c and will appear in Balance sheet.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 7.
The following informations were obtained from the books of Delhi Club as on 31.3.2011 at the end of the first year of the Club. You are required to prepare Receipts and Payments Account for the year ended 31.3.2011:
(i) Donations received for Building and Library Room ₹ 2,00,000.

(ii) Other revenue receipts:
Not for Profit Organisation – CA Foundation Accounts Study Material 6

(iii) Other actual payments:
Not for Profit Organisation – CA Foundation Accounts Study Material 7
Donations to the extent of ₹ 25,000 were utilized for the purchase of Library Books, balance was still unutilized. In order to keep it safe, 9% Govt. Bonds of ₹ 1,60,000 were purchased on 31.3.2011. Remaining amount was put in the Bank on 31.3.2011 under the term deposit.
Solution :
Delhi Club
Receipt and Payments A/c for the year ended 31st March 2011
Not for Profit Organisation – CA Foundation Accounts Study Material 8

Question 8.
Members of a club, are paying an annual subscription of ₹ 500. On 31st March, 2010, subscriptions in arrears from 10 members and received in advance •from 5 members. Subscriptions received during the year ended 31st March, 2011 from 446 members, including from 21 members for the year 2011-2012. Subscriptions in arrears as on 31st March, 2011 from 30 members. Calculate the amount of subscriptions income for the year ended on 31st March, 2011 by preparing subscriptions a/c.
Solution:
Subscription a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 9
Alternatively above figure can be ascertained by preparing a statement.
Not for Profit Organisation – CA Foundation Accounts Study Material 10

Question 9.
On the basis of the following information related to its many rented premises, calculate the amount that will appear against the item ‘Rent’ in the income and expenditure account for the year ended 31st March, 2011:

Rent prepaid as on 1st April, 2010 12,000
Rent payable as on 1st April, 2010 25,600
Amount paid for rent during the year ended 31st March, 2011 23,200
Rent prepaid as on 31st March, 2011 24,000
Rent payable as on 31st March, 2011 1,40,000

Solution:
Rent a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 11

Question 10.
On the basis of the following information, calculate the amount that will appear against the item ‘stationery consumed’ in the income and expenditure account for the year ended 31 st March, 2011:

Stock of stationery as on 1st April, 2010 12,000
Creditors for stationery on 1st April, 2010 25,600
Amount paid for stationery during the year ended 31st March, 2011 1,40,000
Stock of stationery as on 31st March, 2011 23,200
Creditors for stationery as on 31st March, 2011 24,000

Solution:
Stationery a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 12
Note:
Alternatively you can prepare two accounts as explained below that will also show you amount of stationery purchased.
Creditors for Stationery a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 13
Stationery Stock a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 14
When Opening balance sheet. Receipt & Payment a/c and some information is given.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 11.
Smith Library Society showed the following position on 31st March 2010:
Balance sheet as on 31st March, 2010
Not for Profit Organisation – CA Foundation Accounts Study Material 15
The Receipt and Payment Account for the year ended on 31st March, 2011 is given below
Not for Profit Organisation – CA Foundation Accounts Study Material 16
You are required to prepare an Income and Expenditure Account for the year ended 31 st March, 2011 and a Balance Sheet as at 31 st March, 2011 after making the following adjustments:
(a) Membership Subscription included ₹ 10,000 received in advance.
(b) Provide for outstanding rent ₹ 4,000 and salaries ₹ 3,000.
(c) Books to be depreciated @10% including additions. Electrical Fittings and Furniture’s are also to be depreciated at the same rate.
(d) 75% of Entrance Fees is to be capitalised.
(e) Interest on Securities is to be calculated @ 5% p.a. including purchases made on 1.10.2010 for ₹ 40,000.
Solution:
Income and Expenditure Account
Not for Profit Organisation – CA Foundation Accounts Study Material 17
Balance sheet on date 31.3.2011
Not for Profit Organisation – CA Foundation Accounts Study Material 18
Working notes:
Expenses outstanding Account
Not for Profit Organisation – CA Foundation Accounts Study Material 19
Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 20
Rent Account
Not for Profit Organisation – CA Foundation Accounts Study Material 21
Salary Account
Not for Profit Organisation – CA Foundation Accounts Study Material 22
Entrance fees Account
Not for Profit Organisation – CA Foundation Accounts Study Material 23
Interest Account
Not for Profit Organisation – CA Foundation Accounts Study Material 24
Calculation of interest on investment:
Not for Profit Organisation – CA Foundation Accounts Study Material 25
Income & Expenditure A/c and Opening & Closing Balance sheet is given.

Question 12.
Chail Cricket Club gives you the following information:
Income & Expenditure Account for the year ended 31st Dec., 2011
Not for Profit Organisation – CA Foundation Accounts Study Material 26
Balance Sheet
Not for Profit Organisation – CA Foundation Accounts Study Material 27
Prepare the Receipt and Payment Account of the Club for the year ended 31 st Dec. 2011.
Solution:
Important Points:
→ Expenses in which there is no opening or closing adjustment will be equal to payment and will appear as it is in Receipt & Payment a/c.

→ Similarly Income in which there is no opening or closing adjustment will be equal to receipt and will appear as it is in Receipt & Payment a/c.

→ For others figure of receipt or payment will be ascertained by preparing concerned account.
Receipt and Payment Account:
Not for Profit Organisation – CA Foundation Accounts Study Material 28
Working note:
Salary and Wages Account
Not for Profit Organisation – CA Foundation Accounts Study Material 29
Miscellaneous Expense Account
Not for Profit Organisation – CA Foundation Accounts Study Material 30
Honorarium To Secretary Account
Not for Profit Organisation – CA Foundation Accounts Study Material 31
Equipment Account
Not for Profit Organisation – CA Foundation Accounts Study Material 32
Fixed Deposit Account
Not for Profit Organisation – CA Foundation Accounts Study Material 33
Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 34

Question 13.
From the following, find out the amount of subscriptions to be included in the income and expenditure account for the year ended 31st March, 1999.
Subscriptions were received during the year 1998-99 as follows:

For the year 1997-98 2,000
For the year 1998-1999 30,000
For the year 1999-2000 3,000

Subscriptions outstanding as on 31st March, 1998 were ₹ 3,500 out of which ₹ 500 were considered to be irrecoverable. On the same date, subscription received in advance for 1998-99 were ₹ 2,000. Subscriptions still outstanding as on 31st March, 1999 amounted to ₹ 6,000.
Solution:
Subscription a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 35

Question 14.
During the year ended 31st March, 2012, Sachin Cricket Club received subscriptions as follows :

For year ending 31st March, 2011 12,000
For year ending 31st March, 2012 6,15,000
For year ending 31st March, 2013 18,000
Total 6,45,000

There are 500 members and annual subscription is ₹ 1,500 per member.
On 31st March, 2012, a sum of ₹ 15,000 was still in arrears for subscriptions for the year ended 31 st March, 2011.
Ascertain the amount of subscriptions that will appear on the credit side of Income and Expenditure Account for the year ended 31st March, 2012. Also show how the items would appear in the Balance Sheet as on 31 st March, 2011 and the Balance Sheet as on 31st March, 2012.
Solution:
Subscription a/c year ended 31.03.2012
Not for Profit Organisation – CA Foundation Accounts Study Material 36
Income & Expenditure Account (An extract) of Sachin Cricket Club For the year ended 31st
Not for Profit Organisation – CA Foundation Accounts Study Material 37
Balance Sheet of Sachin Cricket Club as on 31st March 2012 (An extract)
Not for Profit Organisation – CA Foundation Accounts Study Material 38

Question 15.
On 31 st March, 1999 Writers Club a cultural association had the following assets and liabilities:
Not for Profit Organisation – CA Foundation Accounts Study Material 39
The following is the receipt and payment account for the year ended 31st March, 2000:
Not for Profit Organisation – CA Foundation Accounts Study Material 40
The club informs You that:
Membership fee for 1999-2000 due is ₹ 25,000; it includes ₹ 1,000 due from the member who has not yet paid also for 1998-99; provision for irrecoverable membership is to be made in respect of this member.
Income receivable on 31-3-2000 on ICICI bond is ₹ 30,000 and on government securities is ₹ 24,000.
Prepaid expenses on 31-3-2000 amount to ₹ 7,000.
Outstanding expenses on 31-3-2000 amount to ₹ 8,000.
Depreciation provision is to be ₹ 12,500.
Programme is an annual feature.

The club asks you to prepare:
(a) Income and expenditure account for the year ended 31st March, 2000.
(b) Balance sheet as at 31st March, 2000.
Solution:
Income & Expenditure A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 41
Balance Sheet As On 31.03.2000
Not for Profit Organisation – CA Foundation Accounts Study Material 42
Working Notes:
By preparing these accounts we get missing information which may be a transaction (complete the double entry of same) or a balance of that account. Complete accounting for whatever information is available in the question. Then by balancing the account you will get missing information as a balancing information.

Membership Fees A/c [subscription]:
Not for Profit Organisation – CA Foundation Accounts Study Material 43
Expenses A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 44
Fixed Deposits A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 45
Government Securities A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 46
Fixed Asset A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 47
Interest On Investment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 48

Question 16.
The following is the receipts and payments account of Jyoti Charitable Hospital for the year ended 31st March, 2003:
Not for Profit Organisation – CA Foundation Accounts Study Material 49
Additional information:

On 1.4.2002 (₹) On 31.3.2003 (₹)
Subscriptions due

Subscriptions received in advance

Stock of medicines

Creditors for medicines

Equipment’s

Buildings

10,000

20,000

2,00,000

1,60,000

4,20,000

8,00,000

20,000

10,000

3,0,000

2,40,000

6,00,00

7,60,000

You are required to prepare income and expenditure account for the year ended 31st March, 2003 and balance sheet as at that date.
Solution:
Income & Expenditure A/c [P&L A/c]:
Not for Profit Organisation – CA Foundation Accounts Study Material 50
Balance Sheet As On 31.03.2003
Not for Profit Organisation – CA Foundation Accounts Study Material 51
Working Notes:
Important Points:
By preparing these accounts we get missing information which may be a transaction (complete the double entry of same) or a balance of that account. Complete accounting for whatever information is available in the question. Then by balancing the account you will get missing information as a balancing information.
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 52
Medicine A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 53

Creditors For Medicane A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 54
Equipment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 55
Building A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 56
Balance Sheet As On 31.03.2002
Not for Profit Organisation – CA Foundation Accounts Study Material 57
Investment is calculated from interest Investment = 1,40,000/7 x 100 = 20,00,000

Question 17.
Following is the Receipts and Payments Account of Mayur Club for the year ended 31st March, 2008:
Not for Profit Organisation – CA Foundation Accounts Study Material 58
Following additional information is provided to you:
(i) The Club has 220 members. The annual subscription is ₹ 4,500 per member.
(ii) Depreciation to be provided on Furniture at 10% p.a. and on Sports equipment at 15% p.a.
(iii) On 31st March, 2008, stock of sports material in hand (after members use during the year) is valued at ₹ 78,000 and stock of stationery at 7 3,150. Rent for 1 month is outstanding. Unexpired insurance amounts to ₹ 9,600.
(iv) On 31st March, 2007 the Club had the following Assets:

Furniture ₹ 2,70,000
Sports equipment ₹ 0,80,000
Bank fixed deposit ₹ 4,50,000
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
You are required to prepare:
(i) Income and Expenditure Account; and
(ii) Balance Sheet as at 31st March, 2008.
Solution:
Income & Expenditure A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 59
Balance Sheet as on 31.03.2008
Not for Profit Organisation – CA Foundation Accounts Study Material 60
Working Notes:
Balance Sheet as on 31.03.2007
Not for Profit Organisation – CA Foundation Accounts Study Material 61
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 62
Equipment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 63
Fixed Deposits A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 64
Rent A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 65
Insurance A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 66
Sports Materials A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 67
Stationery A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 68
Workings:
Calculation of rent outstanding :
Rent for 1 month is outstanding, which implies that the rent paid is for 11 months.
Rent outstanding = \(\frac { 1,48,500 }{ 11 }\) = 13,500

Question 17.
The following is the Receipt and Payment Account of Park View Club in respect of the year ended 31st March, 2011:
Not for Profit Organisation – CA Foundation Accounts Study Material 69
Additional information:
(i) There are 450 members each paying an annual subscription of ₹ 500. On 1st April, 2010, outstanding subscription was ₹ 5,000.
(ii) There was an outstanding telephone bill for ₹ 3,500 on 31st March, 2011.
(iii) Outstanding sundry expenses as on 31st March, 2010 totalled ₹ 7,000.
(iv) Stock of stationery:
On 31st March, 2010           ₹ 5,000
On 31st March, 2011           ₹ 9,000
(v) On 31st March, 2010 building stood in the books at ₹ 10,00,000 and it was subject to depreciation @ 5% per annum.
(vi) Investment on 31st March, 2010 stood at ₹ 20,00,000.
(vii) On 31st March, 2011, income accrued on the investments purchased during the year amounted to ₹ 3,750.
Prepare an Income and Expenditure Account for the year ended 31st March, 2011 and the Balance Sheet as at that date.
Solution:
Park View Club
Income and Expenditure Account
for the year ended on 31st March 2011
Not for Profit Organisation – CA Foundation Accounts Study Material 70
Balance Sheet as at 31st March 2011
Not for Profit Organisation – CA Foundation Accounts Study Material 71
Working Notes:
(1) Calculation of Opening Capital Fund
Balance Sheet as at 31st March 2010
Not for Profit Organisation – CA Foundation Accounts Study Material 72

(2) Calculation of subscriptions accrued during the year
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 73

(3) Calculation of stationery consumed during the year

Opening Stock of stationery

Add Purchased

Total

Less: Closing Stock of stationery

Stationery consumed

5,000

40,000

45,000

(9,000)

36,000

Question 18.
The Accountant of Diana Club furnishes you the following Receipts and Payments account for the year ending 30th September, 2003:
Not for Profit Organisation – CA Foundation Accounts Study Material 74
Additional Information:

01.10.2002
01.10.2002
(i) Subscription due (not received)
(ii) Cheques issued, but not presented for payment of printing
(iii) Club premises at cost
(iv) Depreciation on club premises provided so far
(v) Car at cost
(vi) Depreciation on car
(vii) Value of Bar stock
(viii) Amount unpaid for bar purchases
2,400
180
58,000
37,600
24,380
20,580
1,420
1,180
1,960
60




1,740
860

(ix) Depreciation is to be provided @596 p.a. on the written down value of the club premises and @ 1596 p.a. on car for the whole year.
You are required to prepare an Income and Expenditure account of Diana Club for the year ending 30th September, 2003 and Balance Sheet as on that date.
Solution:
Income and Expenditure Account of Diana Club
for the year ended 30th September, 2003
Not for Profit Organisation – CA Foundation Accounts Study Material 75
Balance Sheet of Diana Club as on 30th September, 2003
Not for Profit Organisation – CA Foundation Accounts Study Material 76

Working Notes:
1. Balance Sheet of Diana Club as on 1st October, 2002
Not for Profit Organisation – CA Foundation Accounts Study Material 77

2. Calculation of bar purchases for the year:
Bar Creditor a/c

To Cash/Bank A/c (Paid during the year)
To Closing outstanding c/f (payable)
11,540
860
By Opening Outstanding b/f (Payable)
By Income & Exp. A/c (Purchase: Bal.fig.)
1,180
11,220
12,400 12,400

3. Calculation of subscriptions accrued during the year:
Subscription a/c
Not for Profit Organisation – CA Foundation Accounts Study Material 78

4. Depreciation on club premises and written down value on 30th September, 2003:
Not for Profit Organisation – CA Foundation Accounts Study Material 79

5. Calculation of profit on sale of car:
Not for Profit Organisation – CA Foundation Accounts Study Material 80

6. Depreciation on car and written down values on 30th September, 2003:
Not for Profit Organisation – CA Foundation Accounts Study Material 81

Note:
The opening and closing balance of cash and bank shown in the Receipts and Payments Account (given in the question), include the bank balance as per cash book. Therefore, no adjustment has been made in the above solution on account of cheques issued, but not presented for payment of printing. This is a reconciliation item pending to be recorded by bank.

Question 19.
Summary of Receipts and payments of Bombay Medical Aid Society for the year ended 31.12.2000 are as follows:
Opening Cash balance in hand ₹ 8,000, Subscription ₹ 50,000, Donation ₹ 15,000, Interest on Investments @ 9% p.a. ₹ 9,000, Payments for medicine supply ₹ 30,000, Honorarium to Doctors ₹ 10,000, Salaries ₹ 28,000, Sundry Expenses ₹ 1,000, Equipment purchase ₹ 15,000, Charity show expenses ₹ 1,500, Charity show collections ₹ 12,500.
Additional information:

1.1.2000 31.12.2000
Subscription due
Subscription received in advance
Stock of medicine
Amount due for medicine supply
Value of equipment
Value of building
1,500
1,200
10,000
9,000
21,000
50,000
2,200
700
15,000
13,000
30,000
48,000

You are required to prepare Receipts and Payments Account and Income and Expenditure Account for the year ended 31.12.2000 and Balance Sheet as on 31.12.2000.
Solution:
Income and Expenditure Account
Not for Profit Organisation – CA Foundation Accounts Study Material 82
Balance sheet on date 31.12.2000
Not for Profit Organisation – CA Foundation Accounts Study Material 83
Receipt and Payment Account
Not for Profit Organisation – CA Foundation Accounts Study Material 84
Working note:
Balance sheet on date 1.1.2000
Not for Profit Organisation – CA Foundation Accounts Study Material 85
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 86
Medicine Expenditure A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 87
Creditors for M.S. A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 88
Equipment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 89
Building A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 90
Amount of Investment = Interest ÷ Rate = 9,000 ÷ 9/100 = 1,00,000.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 20.
The following information’s were obtained from the books of Delhi Club as on 31.3.1998 at the end of the first year of the Club. You are required to prepare Receipts and Payments Account, Income and Expenditure Account for the year ended 31.3.1998 and a Balance Sheet as at 31.3.1998 on mercantile basis:
(i) Donations received for Building and Library Room ₹ 2,00,000.
(ii) Other revenue income and actual receipts:

Revenue Income
Actual Receipts
Entrance Fees
Subscription
Locker Rents
Sundry Income
Refreshment Account
17,000
20,000
600
1,600
17,000
19,000
600
1,060
16,000

(iii) Other revenue expenditure and actual payments:

Revenue Expenditure
Actual Payments
Land (cost ₹ 10,000)
Furniture (cost ₹ 1,46,000)
Salaries
Maintenance of Playgrounds
Rent
Refreshment Account


5,000
2,000
8,000
10,000
1,30,000
4,800
1,000
8,000
8,000

Donations to the extent of ₹ 25,000 were utilized for the purchase of Library Books, balance was still unutilized. In order to keep it safe, 9% Govt. Bonds of ₹ 1,60,000 were purchased on 31.3.1998. Remaining amount was put in the Bank on 31.3.1998 under the term deposit. Depreciation at 10% p.a. was to be provided for the year on Furniture and Library Books.
Solution:
Delhi Club
Income and Expenditure Account for the year ended 31st March 1998
Not for Profit Organisation – CA Foundation Accounts Study Material 91
Balance sheet on date 31.3.1998
Not for Profit Organisation – CA Foundation Accounts Study Material 92
Receipts and Payments A/c for the year 31st March 1998
Not for Profit Organisation – CA Foundation Accounts Study Material 93

Question 21.
The Receipts and Payments Account of Trustwell Club prepared on 31st March, 2008 is as follows:
Receipts and Payments Account
Not for Profit Organisation – CA Foundation Accounts Study Material 94
Additional Information:
Trustwell Club had balances as on 1.4.2007:
Furniture ₹ 1,800; Investment at 5% ₹ 27,000; Sports Materials ₹ 6,660;
Balance as on 31.3.2008: Subscription Receivable ₹ 270; Subscription received in advance ₹ 90; Stock of Sports Material ₹ 1,800.
Do you agree with above Receipts and Payments Account? If not, prepare correct Receipt and Payments Account and Income and Expenditure Account for the year ended 31st March, 2008 and Balance Sheet as on that date.
Solution:
In the books of Trustwell Club
Corrected Receipts & Payments Account
for the year ended 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 95
Income & Expenditure Account
for the year ended 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 96
Balance sheet of Trustwell Club as on 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 97
Working Notes:
1. Balance Sheet of Trustwell Club as on 1st April, 2007
Not for Profit Organisation – CA Foundation Accounts Study Material 98

2. Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 99

3. Sports Material Stock Account
Not for Profit Organisation – CA Foundation Accounts Study Material 100

Question 22.
From the following particulars relating to Deena Nath Charitable Hospital, prepare (i) Receipts and Payments Account for the year ended on 31st March, 1996; and (ii) Balance Sheet as on 31st March, 1996:
Income and Expenditure Account
For the year ended 31st March, 1996
Not for Profit Organisation – CA Foundation Accounts Study Material 101
Additional Information:
Not for Profit Organisation – CA Foundation Accounts Study Material 102
Solution:
Receipt & Payment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 103
Balance Sheet as on 31.3.96
Not for Profit Organisation – CA Foundation Accounts Study Material 104
Working Notes:
Balance Sheet as on 31.3.95
Not for Profit Organisation – CA Foundation Accounts Study Material 105
Medicine A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 106
Electricity A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 107
Furniture A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 108
Equipment A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 109
Interest A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 110
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 111

Question 23.
Following is the Income and Expenditure Account of Victoria Club for the year ending 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 112
Additional Information:
Not for Profit Organisation – CA Foundation Accounts Study Material 113
→ The Club owned a sports ground of ₹ 40,000
→ The Club took a loan of ₹ 8,000 from a bank during the year 2006-07, which was not paid in 2007-08.
→ Audit fee of 2007-08 was outstanding, but Audit fees of ₹ 800 for 2006-07 was paid in 2007-08
Prepare Receipts and Payments Account for the year ending 31st March, 2008 and a Balance Sheet as on that date.
Solution:
In the books of Victoria Club
Receipts and Payments Account for the year ended on 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 114
Balance Sheet of Victoria Club
As on 31st March, 2008
Not for Profit Organisation – CA Foundation Accounts Study Material 115

Working Notes:
1. Balance Sheet of Victoria Club
as on 31st March, 2007
Not for Profit Organisation – CA Foundation Accounts Study Material 116

2. Sports Equipment Account
Not for Profit Organisation – CA Foundation Accounts Study Material 117

3. Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 118

4. Salary & Wages Account
Not for Profit Organisation – CA Foundation Accounts Study Material 119

Question 24.
The Income and Expenditure Account of City Sports Club for the year ended 31st March, 2009 was as follows:
Not for Profit Organisation – CA Foundation Accounts Study Material 120
The above account had been prepared after the following adjustments:

Subscription outstanding on 31.03.2008 12,000
Subscription received in advance on 31.03.2008 9,000
Subscription received in advance on 31.03.2009 5,400
Subscription outstanding on 31.03.2009 15,000

Salaries outstanding at the beginning and at the end of the financial year were ₹ 8,000 and ₹ 10,000 respectively. Sundry expenses included prepaid insurance expenses of ₹ 1,200.
The club owned a freehold ground valued ₹ 2,00,000. The club has sports equipment on 01.04.2008 valued at ₹ 52,000. At the end of the year after depreciation the sports equipment amounted to ₹ 54,000. The club raised a loan of ₹ 40,000 from a bank on 01.01.2008 which was unpaid till 31.03.2009. On 31.03.2009 Cash in hand was ₹ 32,000.
Prepare Receipts and Payments account of the club for the year ended 31 st March, 2009 and Balance Sheet as on that date.
Solution:
Receipts and Payments Account for the year ended 31.03.2009
Not for Profit Organisation – CA Foundation Accounts Study Material 121
Balance Sheet as on 31.03.2009
Not for Profit Organisation – CA Foundation Accounts Study Material 122
Working Notes:
1. Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 123
2. Salary Account
Not for Profit Organisation – CA Foundation Accounts Study Material 124
3. Sports Equipment Account
Not for Profit Organisation – CA Foundation Accounts Study Material 125
4. Balance Sheet as at 01.04.2009
Not for Profit Organisation – CA Foundation Accounts Study Material 126

Question 25.
The Receipts and Payments Account, the Income and Expenditure Account and additional information of a sports club for the year ended 31st March, 2013 were as follows:
Receipts & Payments Account
For the year ending on 31st March, 2013
Not for Profit Organisation – CA Foundation Accounts Study Material 127
Income & Expenditure Account
For the year ending on 31st March, 2013
Not for Profit Organisation – CA Foundation Accounts Study Material 128
Additional Information:
The assets and liabilities as on 31st March, 2012 include club Grounds & Pavilion ₹ 4,40,000, Sports Equipments ₹ 2,50,000, Furniture & Fixtures ₹ 40,000, Subscription in Arrear ₹ 8,000, Subscription received in advance ₹ 2,000 and Creditors for Printing & Stationery ₹ 5,000.
You are required to prepare the Balance Sheet of the Club as on 31st March, 2013.
Solution:
Balance Sheet of Sports Club
As at 31st March 2013
Not for Profit Organisation – CA Foundation Accounts Study Material 129
Alternatively accounts can be prepared to ascertain the missing figures.
Working Note:
Calculation of Capital Fund as on 1st April, 2012
Balance Sheet of Sports Club
As at 31st March 2012
Not for Profit Organisation – CA Foundation Accounts Study Material 130

Question 26.
You are provided with the followings:
Balance Sheet as on 31st March, 2017
Not for Profit Organisation – CA Foundation Accounts Study Material 131
The Receipts and Payments account for the year ended on 31st March, 2018
Not for Profit Organisation – CA Foundation Accounts Study Material 132
You are required to prepare Income and Expenditure account for the year ended 31st March, 2018 and a Balance Sheet as at 31st March, 2018 (Workings should form part of your answer).
Solution:
Income & Expenditure A/c
(for the year ending 31st March, 2018)
Not for Profit Organisation – CA Foundation Accounts Study Material 133
Working Note:
Subscription A/c
Not for Profit Organisation – CA Foundation Accounts Study Material 134
Balance Sheet as on 31st March, 2018
Not for Profit Organisation – CA Foundation Accounts Study Material 135

Question 27.
From the following information supplied by M.B.S. Club prepare Receipts and Payments Account and Income and Expenditure Account for the year ended 31st March 2019.

01.04.2018
Rs.
31.03.2019
Rs.
Outstanding subscription
Advance Subscription
Outstanding Salaries
Cash in Hand and at Bank
10% Investment
Furniture
Machinery
Sports Goods
1,40,000
25,000
15,000
1,10,000
1,40,000
28,000
10,000
15,000
2,00,000
30,000
18,000
??
70,000
14,000
20,000
25,000

Subscription for the year amount to ₹ 3,00,000. Salaries paid 7 60,000. Face value of the Investment was ₹ 1,75,000, 5096 of the Investment was sold at 8096 of Face Value. Interest on Investments was received ₹ 14,000. Furniture was sold for ₹ 8000 at the beginning of the year. Machinery and Sports Goods purchased and put to use at the last date of the year. Charge depreciation @ 1596 p.a. on Machinery and Sports Goods and @1096 p.a. on Furniture.
Following Expenses were made during the year:
Sports Expenses: ₹ 50,000
Rent: ₹ 24,000 out of which ₹ 2,000 outstanding
Misc. Expenses : ₹ 5,000
Solution:
Receipts & Payments A/c for the year ended 31st March, 2019
Not for Profit Organisation – CA Foundation Accounts Study Material 136
Income & Expenditure A/c for the year ended 31st March, 2019
Not for Profit Organisation – CA Foundation Accounts Study Material 137
Working Notes:
(i) Subscription Account
Not for Profit Organisation – CA Foundation Accounts Study Material 138

(ii) Loss on Sale of Furniture
Cost of Furniture sold = ₹ 28,000 – ₹ 14,000 = ₹ 14,000
Sale value of furniture = ₹ 8,000
Loss on sale of furniture = ₹ 14,000 – ₹ 8,000 = ₹ 6,000

(iii) Sale Value of Investment
= 1,75,000 x 50% = 87,500 (Face value)
= 87,500 x 80% = 70,000
Therefore, No Profit or Loss on Sale of Investment

(iv) Since date of sale of Investment is not given, it has been assumed that the interest received on investments of ₹ 14,000 is the interest of the year.

True or False

Question 1.
Scholarship granted to students out of funds provided by Government will be debited to Income & Expenditure Account.
Answer:
False: The Scholarship granted to students should be deducted from the funds provided by the Government for the same purpose in the Balance Sheet.

Question 2.
Receipts and Payments Account is a summary of all capital receipts and payments.
Answer:
False: Receipts and Payments Account is a summary of all cash or bank receipts and payments whether they are of capital or revenue in nature.

Question 3.
If there appears a sports fund, the expenses incurred on sports activities will be taken to income and expenditure account.
Answer:
False: Expenses incurred on sports activities will be deducted from sports fund only.

Question 4.
Receipts and Payments Account highlights total income and expenditure.
Answer:
False: Receipts and Payments Account is a summary of all cash or bank receipts and payments whether they are of capital or revenue in nature.

Not for Profit Organisation – CA Foundation Accounts Study Material

Question 5.
Only revenue items are disclosed in Income and Expenditure account.
Answer:
True: Income and Expenditure Account is prepared to find out surplus/ deficit. Hence, only revenue items are shown in the Income and Expenditure Account. Thus, capital expenditures are not shown in Income & Expenditure Account.

Question 6.
Fees received for Life Membership is a revenue receipt as it is of recurring nature.
Answer:
False: Life membership fee received for the life membership is a capital receipt because it is of non-recurring nature.

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