Page 17 - DEBKVOL-1

Chapter 1 Financial Statements of Not-for-Profit Organisations 1.7
.
Illustration 9.
From the following Receipts and Payments Account of Sonic Club and from the additional
information, compute the amount of salaries for the year 2018–19 to be shown in Income and
Expenditure Account and in the Balance Sheet of 2017–18 and of 2018–19:
AN EXTRACT OF RECEIPTS AND PAYMENTS ACCOUNT
Dr. for the year ended 31st March, 2019 Cr.
Receipts ` Payments `
By Salaries:
2017–18 20,000
2018–19 2,80,000
2019–20 18,000 3,18,000
Additional Information:
`
(i) Salaries outstanding on 31st March, 2018 25,000
(ii) Salaries outstanding on 31st March, 2019 45,000
(iii) Salaries paid in advance as on 31st March, 2018 10,000

Solution: Sonic Club
BALANCE SHEET (AN EXTRACT) as at 31st March, 2018
Liabilities ` Assets `

Outstanding Salaries 25,000 Prepaid Salaries 10,000
INCOME AND EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2019 Cr.
Expenditure ` Income `
To Salaries 3,18,000
Less: Outstanding (2017–18) 20,000
2,98,000
Less: Prepaid (2019–20) 18,000
2,80,000
Add: Outstanding for 2018–19 (Note) 40,000
3,20,000
Add: Prepaid (31.3.2018) 10,000 3,30,000

BALANCE SHEET (AN EXTRACT) as at 31st March, 2019
Liabilities ` Assets `
Outstanding Salaries: Prepaid Salaries 18,000
For 2017–18 (` 25,000 – ` 20,000) 5,000
For 2018–19 (` 45,000 – ` 5,000) 40,000 45,000

Note: `
Outstanding Salaries on 31st March, 2019 45,000
Less: Salary still outstanding for 2017–18 (` 25,000 – ` 20,000) 5,000
Thus, Outstanding salaries for 2018–19 must be 40,000