CA Foundation

Principles and Practice of Accounting

Test 3
Non Profit Making Organisation

All Questions are compulsory.

Working Notes should form part of the respective answer.
Wherever appropriate, suitable assumptions should be made by the Candidate.

1. RTP Nov 2018

The following information of M/s. TT Club are related for the year ended
31st March, 2018:
Balances As on 01-04-17 (`) As on 31-3-18 (`)
Stock of Sports Material 75,000 1,12,500
Amount due for Sports Material 67,500 97,500
Subscription due 11,250 16,500
Subscription received in advance 9,000 5,250
Subscription received during the year ` 3,75,000
Payments for Sports Material during the year ` 2,25,000
You are required to:
• Calculate the amount of Subscription and Sports Material that will appear in Income
& Expenditure Account for the year ended 31.03.2018 and
• Also show how these items would appear in the Balance Sheet as on 31.03.2018.
5 Marks
Answer
Subscription for the year ended 31.3.2018 (2 Marks)
Particulars ` `
Subscription received during the year 3,75,000
Less: Subscription receivable on 1.4.2017 11,250
Less: Subscription received in advance on 31.3.2018 5,250 (16,500)
3,58,500
Add: Subscription receivable on 31.3.2018 16,500
Add: Subscription received in advance on 1.4.2017 9,000 25,500
Amount of Subscription appearing in Income & Expenditure 3,84,000
Account
Sports material consumed during the year end 31.3.2018 (2 Marks)
Particulars `
Payment for Sports material 2,25,000
Less: Amounts due for sports material on 1.4.2017 (67,500)
1,57,500
Add: Amounts due for sports material on 31.3.2018 97,500
Purchase of sports material 2,55,000
Sports material consumed:
Stock of sports material on 1.4.2017 75,000
Add: Purchase of sports material during the year 2,55,000
3,30,000
Less: Stock of sports material on 31.3.2018 (1,12,500)
Amount of Sports Material appearing in Income & Expenditure A/c 2,17,500

Balance Sheet of M/s TT Club For the year ended 31st March, 2018 (An extract) (1 Mark)
Liabilities ` Assets `
Unearned Subscription 5,250 Subscription receivable 16,500
Amount due for sports material 97,500 Stock of sports material 1,12,500

2. QP Nov 18
You are provided with the followings
Balance Sheet as on 31st March 2017
Liabilities ` Assets `
Capital Fund 1,06,200 Building 1,50,000
Subscription received in
6000 Outstanding Subscription 3800
Advanced
Outstanding Expenses 14,000 Outstanding Locker Rent 2400
Loan 40,000 Cash in Hand 20,000
Sundry Creditors 10,000
Total 1,76,200 Total 1,76,200
The Receipts and Payment Account for the year ended on 31st March 2018
Receipts ` Payments `
By Expenses
To Bal b/d
For 17 12,000
Cash in hand 20,000
For 18 20,000 32,000
To Subscriptions
For 17 2,000
By Land 40000
For 18 21,000
For 19 1000 24,000
To Entrance Fees 38,000 By interest 4000
To Locker Rent 7000 By Mis. Exp 4700
To Sale proceeds of old By Bal c/d
1000
newspapers Cash in hand 18,300
To Mis. Income 9000
Total 99,000 Total 99,000
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 from part of your
answer) 10 Marks

Answer
Income and Expenditure Account for the year ended 31st March, 2018 (5 Marks)
Expenditure ` Income `
To Expenses 20,000 By Subscriptions (21,000 + 6,000) 27,000
To Interest 4,000 By Locker rent (7,000 - 2,400) 4,600
To Misc. Expenses 4,700 By Sale proceeds of old newspapers 1,000
To Surplus 12,900 By Misc. income 9,000
41,600 41,600

Balance Sheet as at 31st March, 2018 (5 Marks)

Liabilities Amount Assets Amount
(`) (`)
Capital fund Land and Building 1,90,000
Bal. as on 1.4.2017 1,06,200 Subscription
receivable (2017) 1,800
(3,800 – 2,000)
Add: Entrance fee 38,000
Add: Surplus 12,900 1,57,100
Loan 40,000 Cash in hand 18,300
Creditors 10,000
 Outstanding expenses 2,000
(2017) (14,000-12,000)
Subscription received in
advance 1,000 _____
2,10,100 2,10,100
Note: Entrance fees have been capitalized in the above solution.

3. (QP May 19)

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.
Particulars 01.04.2018 31.03.2019
` `
Outstanding subscription 1,40,000 2,00,000
Advance subscription 25,000 30,000
Outstanding salaries 15,000 18,000
Cash in Hand and at Bank 1,10,000 ?
10% Investment 1,40,000 70,000
Furniture 28,000 14,000
Machinery 10,000 20,000
Sports goods 15,000 25,000
Subscription for the year amount to ` 3,00,000/-. Salaries paid ` 60,000. Face value of
the Investment was ` 1,75,000, 50% of the Investment was sold at 80% 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 @ 15% p.a. on Machinery and Sports goods and
@10% 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
10 Marks
Answer
Receipts and Payments Account for the year ended 31-03-2019 (2.5 Marks)
Receipts ` Payments `
To balance b/d By Salaries 60,000
Cash and bank 1,10,000 By Purchase of sports 10,000
goods ` (25,000-15,000)
To Subscription received (W.N.1) 2,45,000
To Sale of investments (W.N.2) 70,000 By Purchase of 10,000
machinery ` (20,000-
10,000)
To Interest received on investment 14,000
To Sale of furniture 8,000 By Sports expenses 50,000
By Rent paid ` (24,000 - 22,000
2,000)
By Miscellaneous 5,000
expenses
By Balance c/d
Cash and bank 2,90,000
4,47,000 4,47,000

Income and Expenditure account for the year ended 31-03-2019 (2.5 Marks)
Expenditure ` ` Income ` `
To Salaries 60,000 By Subscription 3,00,000
Add: Outstanding for 2019 18,000 By Interest on
Investment
78,000 Received 14,000
Less: Outstanding for 2018 (15,000) 63,000 Accrued 3,500 17,500
(W.N.5)

To Sports expenses 50,000

To Rent 24,000
To Miscellaneous exp. 5,000
 To Loss on sale of furniture 6,000
(W.N.3)
To Depreciation (W.N.4)
Furniture 1,400
Machinery 1,500
Sports goods 2,250 5,150
To Surplus 1,64,350
3,17,500 3,17,500

Working Notes:
1. Calculation of Subscription received during the year 2018-19 (1 Mark)
`
Subscription due for 2018-19 3,00,000
Add: Outstanding of 2018 1,40,000
Less: Outstanding of 2019 (2,00,000)
Add: Subscription of 2019 received in advance 30,000
Less: Subscription of 2018 received in advance (25,000)
2,45,000

2. Calculation of Sale price and profit on sale of investment (1 Mark)

Face value of investment sold: ` 1,75,000 × 50% = ` 87,500
Sales price: ` 87,500 × 80% = ` 70,000
Cost price of investment sold: ` 1,40,000 × 50% = ` 70,000
Profit/loss on sale of investment: ` 70,000 - ` 70,000 = NIL

3. Loss on sale of furniture (1 Mark)

`
Value of furniture as on 01-04-2018 28,000
Value of furniture as on 31-03-2019 14,000
Value of furniture sold at the beginning of the year 14,000
Less: Sales price of furniture (8,000)
Loss on sale of furniture 6,000
4. Depreciation (1 Mark)
Furniture - `14,000 × 10% = 1,400

Machinery- `10,000 × 15% = 1,500

Sports goods – `15,000 × 15% = 2,250

5. Interest accrued on investment (1 Mark)

`
Face value of investment on 01-04-2018 1,75,000
Interest @ 10% 17,500
Less: Interest received during the year (14,000)
Interest accrued during the year 3,500

Note: It is assumed that the sale of investment has taken place at the end of the year.