NPO: Practical Problems 🧮
Let's solve a comprehensive problem. Converting R&P A/c to I&E A/c and Balance Sheet.
Problem 📝
Receipts & Payments A/c for the year ended 31st Dec 2023
| Receipts | ₹ | Payments | ₹ |
|---|---|---|---|
| To Balance b/d | 5,000 | By Salaries | 6,000 |
| To Subscriptions | 20,000 | By Rent | 3,000 |
| To Donations (General) | 4,000 | By Furniture (Purchased on 1st July) | 10,000 |
| To Interest on Investment | 1,000 | By Balance c/d | 11,000 |
| Total | 30,000 | Total | 30,000 |
Adjustments:
- Subscriptions Outstanding: 2022 (Start) = ₹1,000; 2023 (End) = ₹2,000.
- Salaries Outstanding at end = ₹500.
- Depreciate Furniture @ 10% p.a.
- Opening Capital Fund = ₹25,000.
Solution 📊
1. Income & Expenditure Account
| Expenditure | ₹ | Income | ₹ |
|---|---|---|---|
| To Salaries (6,000 + 500) | 6,500 | By Subscriptions (Working Note 1) | 21,000 |
| To Rent | 3,000 | By Donations | 4,000 |
| To Depreciation on Furniture (WN 2) | 500 | By Interest | 1,000 |
| To Surplus (Balancing Fig) | 16,000 | ||
| Total | 26,000 | Total | 26,000 |
2. Balance Sheet as on 31st Dec 2023
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital Fund: | Furniture: | ||
| Opening | 25,000 | Cost | 10,000 |
| Add: Surplus | 16,000 | Less: Dep | (500) |
| 41,000 | 9,500 | ||
| Current Liab: | Current Assets: | ||
| Salary Outstanding | 500 | Subscriptions Outstanding | 2,000 |
| Cash Balance | 11,000 | ||
| Opening Assets (Balancing)* | 19,000 | ||
| Total | 41,500 | Total | 41,500 |
| (Note: In a real sum, Opening Assets like Investments would be derived from Opening Balance Sheet. Here assumed for tallying). |
Working Notes 📒
1. Subscriptions Income:
- Received: 20,000
- (+) Outstanding End (Current Year income not received): 2,000
- (-) Outstanding Start (Previous Year income received now): 1,000
- Income = 21,000.
2. Depreciation:
- Furniture purchased on 1st July (Used for 6 months).
- 10,000 × 10% × 6/12 = ₹500.
🎉 TOPIC 18 COMPLETE! You have mastered Financial Accounting II. From Bills of Exchange to NPOs. You are now an Accounting Pro! 🎓
Next Step: Check out Corporate Accounting (Topic 19) for Company Accounts! 🏢