On the basis of the following Trial Balance and other information of Mahesh School for the year ended on 31st December, 2022, prepare Income and Expenditure Account and Balance Sheet: Additional Information:
Outstanding fees of this year Rs. 25,000.
Outstanding salaries Rs. 30,000.
Furniture purchased of Rs. 40,000 on 1st October, 2021.
Furniture of book value Rs. 50,000 was sold on 1st April 2021.
Depreciation on furniture @ 10% per year, 15% per year on library books, 5% per year on building.
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In preparing the Income and Expenditure Account, always account for depreciation on fixed assets like furniture and buildings. This helps in reflecting the true value of the assets over time and ensures a more accurate calculation of the surplus or deficit.
Step 1: Preparation of Income and Expenditure Account
The Income and Expenditure Account for Mahesh School is prepared to record its revenues and expenses. The surplus or deficit is calculated by comparing total income and total expenditure.
Income and Expenditure Account for the year ended 31st December, 2022
Expenditure
Amount (Rs.)
Income
Amount (Rs.)
Salaries
5,30,000
Entrance fees
12,500
General expenses
18,000
Tuition fees received
5,00,000
Sports expenses
15,000
Rent for school hall
10,000
Depreciation on furniture (10% of Rs. 1,00,000)
10,000
Government grants
3,50,000
Depreciation on library books (15% of Rs. 1,50,000)
22,500
Donation for library books
62,500
Depreciation on building (5% of Rs. 6,25,000)
31,250
Sale of old furniture
20,000
Outstanding salaries
30,000
Outstanding fees
25,000
Total Expenditure
6,71,750
Total Income
9,55,000
Surplus/Deficit
2,83,250
Step 2: Preparation of Balance Sheet
The Balance Sheet for Mahesh School shows the financial position as at 31st December, 2022. It includes all assets and liabilities adjusted according to the income and expenditure account.
