# Income & Expenditure Account: Accounting Treatment

Last Updated : 05 Apr, 2023

Illustration 1:

From the following Receipts and Payment Account and additional information, prepare Income and Expenditure Account of GFG Organisation:

On 1st April,2021 â‚¹740 were unpaid subscriptions and â‚¹1,220 were unpaid on 31.3.2022. Rent Outstanding in the beginning as well as at the end  of year was â‚¹3,400. Depreciation is to provided on Furniture of â‚¹1,750 (in the beginning of the year, it was worth â‚¹33,000 ) and on Books â‚¹1,890 (in the beginning of the year, it was worth â‚¹22,020 ). Salaries outstanding on 31.3.2022 was â‚¹1,200.

Solution:

Illustration 2:

Prepare Income and Expenditure Account for Geeks Organisation from the information given below:

1. There are 270 members each paying an annual subscription of â‚¹75 and â‚¹1,000 being in arrears for 2020-21 in the beginning of the year.

2. Cost of Building is â‚¹20,500. Depreciate it by 8%.

3. Amounts outstanding on 31.3.2022- Postage â‚¹640 and Electricity charges â‚¹450.

4. â‚¹280 paid in advance for sundries.

5. Prepaid insurance premium â‚¹660 on 2021 and â‚¹ 1,060 on 2022.

Solution:

Workings:

1. Insurance Premium to be debited to Income & Expenditure A/c:

=Prepaid premium (Opening) + Paid during the year – Prepaid premium (Closing)

= â‚¹660 + â‚¹16,600 – â‚¹1,060

=â‚¹ 16,200

2. Subscription to be credited to Income & Expenditure A/c:

Illustration 3:

From the following information prepare Income and Expenditure Account of GG Club for the year ended on 31st March,2022:

1. 50% of the Donations are to be capitalized.

2. Loan from Bank was taken on 1st July,2021 at 15% p.a.

Solution:

Workings:

1. Member’s Subscriptions for the year 2021-22:

2. Interest on Bank Loan =

= â‚¹900

3. Profit from Tinned Provision Account:

4. Depreciation on Equipment Account:

Previous
Next