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Chapter 1 Financial Statements of Not-for-Profit Organisations 1.9
.
Illustration 11.
From the following Receipts and Payments Account of Sonic Club and from the given additional
information, prepare Income and Expenditure Account for the year ending 31st December, 2006
and the Balance Sheet as at that date:
Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st December, 2006 Cr.
Receipts ` Payments `
To Balance b/d 1,90,000 By Salaries 3,30,000
To Subscriptions 6,60,000 By Sports Materials 4,00,000
To Interest on Investments @ 8% p.a. for full year 40,000 By Balance c/d 1,60,000
8,90,000 8,90,000

Additional Information:
(i) The club had received ` 20,000 for subscription in 2005 for 2006.
(ii) Salaries had been paid only for 11 months.
(iii) Stock of Sports Materials on 31st December, 2005 was ` 3,00,000 and on 31st December,
2006 ` 6,50,000. (KVS 2015)

Solution: Sonic Club
Dr. INCOME AND EXPENDITURE ACCOUNT for the year ended 31st December, 2006 Cr.
Expenditure ` Income `
To Salaries 3,30,000 By Subscription 6,60,000
Add: Outstanding Salaries 30,000 3,60,000 Add: Received in 2005 20,000 6,80,000
To Sports Material: By Interest on Investments 40,000
Opening Stock 3,00,000
Add: Purchases 4,00,000
7,00,000
Less: Closing Stock 6,50,000 50,000
To Surplus (i.e., Excess of 3,10,000
Income over Expenditure)
7,20,000 7,20,000

BALANCE SHEET as at 31st December, 2006
Liabilities ` Assets `
Outstanding Salaries 30,000 Cash 1,60,000
Capital Fund (WN) 9,70,000 Stock of Sports Materials 6,50,000
Add: Surplus 3,10,000 12,80,000 Investments 5,00,000
13,10,000 13,10,000

Working Note:
Calculation of Capital Fund on 1st January, 2006:

BALANCE SHEET as at 1st January, 2006
Liabilities ` Assets `
Subscription Received in Advance 20,000 Cash 1,90,000
Capital Fund (Balancing Figure) 9,70,000 Stock of Sports Material 3,00,000
Investments (` 40,000 × 100/8) 5,00,000
9,90,000 9,90,000