DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : N. USHA RANI
Designation : Lecturer
Branch : Commercial & Computer
Practice (CCP)
Institute : GPW/Guntur
Year/Sem : III Sem
Subject : ACCOUNTANCY-II
Sub-Code : CCP-302
Topic : NON TRADING CONCERNS
Duration : 50 minutes
Sub Topic : Preparation of I & E A/c from R & P a/c
and list of balances, problems-III
Teaching Aids : PPT ANIMATION

CCP302.68 1
Objectives
On completion of the period, you would be
able to prepare the
Income and Expenditure A/c from Receipts and
Payments A/c and List of balances.

CCP302.68 2
Recap:
So far you learnt that:
 Income and Expenditure A/c is similar to Profit & Loss of
Trading concerns.
 It includes all Revenue incomes of a particular year.
Profit is termed as “Excess of Income over Expenditure”.
 Loss is termed as”Excess of expenditure over Income”.

CCP302.68 3
Known to Unknown
 Salary paid during the financial year(2007) is
Rs.9600/- which includes 700/- for 2006. At the end
of 2007 Rs.900/- is unpaid. calculate The amount to
be debited
Preparation of Income And Expenditure A/c from
Receipts And Payments A/c & List of Balances

CCP302.68 5
1. From the following particulars relating to Ramakrishna
Mission Hospital, prepare Income and expenditure Account
for the year ended 31st December,1989.
Receipts Rs. Payments Rs.
To cash in hand By Medicines 30,590
on Jan., 1989 7,130 By Doctor’s
To Subscriptions 47,996 Honorarium 9,000
To Donations 14,500 By Salaries 27,500
To Interest on By Petty Expenses 461
Investment @ By Equipment 15,000
7% For full 7,000 By Expenses on
year Charity Show 750
To proceeds from 10,450 By Cash in hand on
Charity Show 31st Dec, 1989 3,775

87,076 87,076
CCP302.68 6
Additional Information:

On On
1st Jan, 1989 31st Dec, 1989
Rs. Rs.

(i) Subscription Due 240 280

(ii) Subscription Received
in Advance 64 100
(iv) Stock of Medicines 8,810 9,740
(v) Estimated Value of
Equipment 21,200 31,600
(vii)Building (cost less
depreciation) 40,000 38,000
(vi) Creditors for
Medicines 10,000 8,000

CCP302.68 7
Solution: Rama Krishna Mission Charitable Hospital
INCOME AND EXPENDITURE ACCOUNT
for the year ended 31st December,1989
Expenditure Rs. Income Rs.
To Medicines consumed(1) 27,660 By Subscriptions (3) 48,000
9,000 By Donation 14,500
To Doctor’s Honorarium 27,500 By Interest on 7,000
To Salaries 461 Investment
To Petty Expenses By Proceeds from 10,450
To Depreciation on 4,600 Charity Show
Equipment (2)
To Expenses on Charity 750
Show
To Depreciation onBuilding 2,000
(Rd. 40,000 – 38,000)
To Surplus—Excess of 7,979
income over expenditure 79,950 79,950
CCP302.68 8
Working Notes:

1. Calculation of Medicines Consumed

Rs.
Opening stock of medicines 8,810
Add: Purchased during the year 30,590
Add: Creditors for medicines 31-12-89 8,000
47,400
Less: Stock on 31-12-89 9,740
Less: Creditors for medicines on
1-1-89 10,000 19,740
27,660

CCP302.68 9
2. Calculation of Depreciation on Equipment Rs.

Equipment – Opening balance

21,200
Add: Purchases during the year
15,000

36,200
Less: Equipment – Closing balance
31,600 CCP302.68 10
Depreciation during the year
3. Calculation of Subscription Rs.

Subscription received during the year 47,996

Add: Outstanding on 31-12-89 280
Add: Received in advance on 1-1-89 64
48,340
Less: Subscription outstanding on 1-1-89 240
Less: Received in advance on 31-12-89 100 340
Subscription relating to the year 48,000

CCP302.68
Assignment

CCP302.68 12
 1. From the following Receipts and Payments
Account of a Club and from the information
supplied, prepare Income and Expenditure Account
for the year ended 31st Dec., 1987

RECEIPTS AND PAYMENTS ACCOUNT

Rs. Rs.
To Balance b/d 7,000 By Tournament Exp 1,100
To Donations 8,000 By Furniture 2,000
To Legacies 6,000 By Crockery 1,200
To Sale of Old By Sports Materials 1,200
Furniture By Salaries 3,900
(book value Rs.80) 75 By Charities 8,000
To Endowment Fund By Advertisements 250
Receipts 10,000 By Rent and Taxes 2,100

CCP302.68 13
Problem Contd.
Rs. Rs.
To Sale of By Library Books 800
News papers 420 By 7% Investments 14,600
To Sale of Sports By Cost of
Materials 80 Construction of
To Advertisement in the Building 5,000
year 400 By Balance c/d 11,425
To Tournament Fund 2,700
To Subscription:
Arrears 600
Current 14,000
Advance 800
15,400
51,575 51,57514
CCP302.68
 Balances
as on as on
31st Dec, 1986 31st Dec, 1987
1. Sports Materials 1,000 800
2. Subscriptions outstanding 600 700
3. Salary outstanding 230 120
4. Furniture 1,080 2,400
5. Library Books 900 1,700
Donations and half of the legacies are to be treated as
Capital Income

Ans. Excess of Income Rs.8,387/-

CCP302.68 15
2) The following is the Receipts and Payments A/c of a
club for the year 31-12-1987:

Receipts Rs. Payments Rs.

To Balance 4,200 By Rent 14,000
To Donation 14,000 By Salary:
To Subscriptions: 1986 2,800
1986 2,100 1987 8,400
1987 39,900 11,200
1988 2,800 By Sport Material 12,600
44,800 By Interest (6% Loan) 1,050
To Interest on By Match Exp
5,600
Investment 2,800 By Newspapers 1,400
To Entrance Fees 9,800 By Balance 29,750
75,600 75,600
CCP302.68 16
Problem Contd .
Outstanding subscription for 1987 was Rs. 2,800.
Entrance fees for 1987 Rs. 1,400 was outstanding.
Donation amount
Includes Special Donation for Match Fund Rs. 7,000.
Outstanding expenses for 1987 were : Rent Rs.1,400
; Salary Rs.2,800 and Repair Rs.700.

CCP302.68 17
 On 1st January, 1987 the Club had : Building
Rs. 28,000;Sports Materials Rs. 14,000; Furniture
Rs. 14,000; Match Fund Investments Rs. 21,000
(Interest accrued on that Rs. 700 was Outstanding for
the year 1987) ; Match Fund Rs.21,000. Income for
the year 1986 was Rs.8,400. Sports Materials were
valued at Rs. 17,500 on 31-12-1987.

Prepare Income and Expenditure Account

Ans: Excess of Income Rs. 22,050

CCP302.68 18
For calculating depreciation follow these steps
 Take opening balance of asset XXXX
 Add: asset purchased during the year XXX
XXXX

 Less: closing balance of asset XXX

 Balance is depreciation during the year XXX

CCP302.68 19
For calculation of Medicine (or Consumables like sports
Material etc) follow these steps
 Take opening Balance XXX
 ADD: Purchased during the year XXX
 ADD: Creditors or consumables XXX
at the closing year ------------------------
Total XXX
 Less: Closing Stock XX
 Less: Creditors of
Consumables at XX XX
The beginning ---------- ------------------------
Balance consumed during the year XX

CCP302.68 20
Quiz
(1) Salaries paid are posted to:
(a) Debit side of Income & Expenditure a/c

(b) Credit side of income & Expenditure a/c

(c) Receipts side of receipts and payments a/c

(d) Payments side

CCP302.68 21
Quiz

(2) Sale of old Furniture appears on:

(a) Debit side of Income & Expenditure a/c

(b) Credit side of Income & Expenditure a/c

(a) Receipts side of Receipts & Payments a/c

(d) Payments side of Receipts & Payments a/c

CCP302.68 22
Quiz
(3) Capital fund appears in:

(a) Income & Expenditure Account

(b) Receipts & Expenditure Account

(c) Balance Sheet

(d) None of the above

CCP302.68 23
Quiz
(4) Small amounts of Legacies appear in Income
& Expenditure account :
(a) True
(b) False

CCP302.68 24
Quiz
(5) Depreciation on Fixed Assets charged to
Income & Expenditure A/c:
(a) Yes

(b) No

CCP302.68 25
Frequently Asked Questions:

1. Solve the problems from your old questions papers or

prescribed Text book.

CCP302.68 26