(Account of a library) Following is the recepts and Payments Account of "Dhananjay Library, Mumbai" for the year ending 31.03.2020

12. (Account of a library) Following is the recepts and Payments Account of "Dhananjay Library, Mumbai" for the year ending 31.03.2020

 Receipts and Payments for the year ending for the year ending 3103.2020

Dr.                                                                                                                              Cr.

Receipts	Amt ₹	Amt ₹	Payments	Amt ₹	Amt ₹
To Balance b/d		5,000	By Salaries		9,000
To Admission Fees		4,500	By rent		7,500
To subscriptions		20,000	By Investments		6,000
To Lecture Hall Hire Charges		4,200	By Stationery		1,350
To Miscellaneous Income		250	By Electricity Charges		850
To Interest on Investments		900	By Books		5,000
			By Outstanding Expenses (2018-19)		500
			By Balance c/d		4,650
		34,850			34,850

You are required to prepare an Income and Expenditure Account for the year ending 31.03.2020 and balance sheet as on that date.

The Following information is also made available to you.1. On 31.03.2019, the library had the following assets also; Books at ₹50,000, Furniture ₹6,500, and Machinery of 30,000

2. Subscription received in advance amounted to ₹500

3. Outstanding salaries ₹1,300 and for Rent ₹950

4.50% of the Admission Fees should be capitalized 

5. Furniture to be depreciation at 10% p.a. 

6. Library Books were purchased on 1st april 2019 and they carry interest at 20% p.a.

7. The Investments were purchased on 01.04.2019 and they carry interest at 20% p.a.

Solution:

In the Books of "Dhananjay Library, Mumbai"

Income and Expenditure Account for the year ending 31.03.2020

Dr.                                                                                                                                  Cr.

Expenditure	Amount	Amount	Income	Amount	Amount
To Salary	9,000		By Admission Fees 50%		2,250
(+) Outstanding Salary	1,300	10,300	By Subscription	20,000
To rent	7,500		(-) Prepaid Sub.	500	19,500
(+) Outstanding Rent	950	8,450	By Lecture Hall Hire charges		4,200
To Stationery		1,350	By Miscellaneous Income		250
To Electricity Charges		850	By interest on Investment	(900 + 300)	1,200
To depreciation on
Furniture	650
Library Book	5,500	6,150
To Surplus		300
		27,400			27,400

Balance Sheet as on 31.03.2020

Cr.                                                                                                                                     Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital fund	91,000		Books	50,000
(+) Admission fees	2,250		(+) Additional	5,000
(+) Surplus	300	93,550		55,000
			(-) depreciation	5,500	49,500
			Furniture	6,500
			(-) Depreciation	650
Outstanding Salary & Rent	1,300  950	2,250	Machinery		30,000
Prepaid Sub.		500	Investments	6,000
			(+) Interest	300	6,300
		96,300	Cash		4,650

Working Note:

Balance Sheet as on 31.03.2019

Cr.                                                                                                                                     Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital Fund		91,000	Building		50,000
			Furniture		6,500
Outstanding expense		500	Machinery		30,000
			Cash		5,000
		91,500			91,500