Page 224 - AAAXII

Model Test Papers M.213

9. Difference between Receipts and Payments Account and Income and
Expenditure Account

Basis of Distinction Receipts and Payments Account Income and Expenditure Account
1. Nature of Account It is a real account. It is a nominal account.
2. Basis of Accounting It is prepared on Cash Basis of Accounting. It is prepared on Accrual Basis of Accounting.
3. Balance It starts with the Opening Balance of Cash It has on Opening Balance. Balance at the
and Bank. Balance at the end represents end means either surplus or deficit.
cash and bank balance at the end.
10.
Dr. X’S CAPITAL ACCOUNT Cr.
Date Particulars ` Date Particulars `

2015 2015
April 1 To Bank A/c 25,100 April 1 By Balance b/d 85,100
To X’s Loan A/c 60,000 (Net amount due)
85,100 85,100

Dr. X’S LOAN ACCOUNT Cr.
Date Particulars ` Date Particulars `
2016 2015
March 31 To Bank A/c (` 20,000 + ` 3,000) 23,000 April 1 By X’s Capital A/c 60,000
To Balance c/d 40,000 2016
March 31 By Interest A/c (5% of ` 60,000) 3,000
63,000 63,000
2017 2016
March 31 To Bank A/c (` 20,000 + ` 2,000) 22,000 April 1 By Balance b/d 40,000
To Balance c/d 20,000 2017
March 31 By Interest A/c (5% of ` 40,000) 2,000
42,000 42,000
2018 2017
March 31 To Bank A/c (` 20,000 + ` 1,000) 21,000 April 1 By Balance b/d 20,000
2018
March 31 By Interest A/c (5% of ` 20,000) 1,000
21,000 21,000

Note: Amount of each instalment (Towards Principal Only) = (` 85,100 – ` 25,100)/3 = ` 20,000.
11. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2016
March 31 On Creation of DRR:
Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 5,00,000
To Debentures Redemption Reserve A/c (Note) 5,00,000
(Being the DRR credited for full face value of debentures outstanding)
April 30 On Making the Investment:
Debentures Redemption Investment A/c ...Dr. 75,000
To Bank A/c 75,000
(Being the required investment made)