10A.

26 Tulsian's Accountancy for CA-IPC (Group I)

ILLUSTRATION
28
Bharat Club provides

SOLUTIO
N
AN EXTRACT OF INCOME AND EXPENDITURE
ACCOUNT

Dr
.

Incom
e

Expenditure

To Sports Materials consumed

Cr
.

Restaurant Purchase:

63,000

China Glass Cutlery

AN EXTRACT OF BALANCE SHEET AS AT 31ST MARCH,

2016
Liabilities

Assets

Creditors for Sports Materials

9,750 Advance for Sports Materials

Stock of Sports Materials

Stock in Restaurant o

3,750
2,500

Working
Notes:

SOLUTIO
N
Dr
.
Particu

Dr
.

Cr.

(I) CREDITORS FOR SPORTS MATERIALS ACCOUNT

Particulars

To Balance b/d

Particulars

5,000 By Balance b/d

To Bank A/c

15,000

54,000 By Stock of Sports Materials A/c

To Balance c/d

9,750 (Credit purchases)

(Balancing figure)

By Balance c/d
68,750
Dr
.

50,000
3,750

To Balance b/d

To Bank A/c (cash purchases)

To Depreciation
Cutlery
To Surplus transfer
Expenditure A/c

Cr.

Dr
.

Particulars

10,500 By Income and Expenditure A/c

(Sports Materials consumed)

To Creditor for Sports Materials

(transfer)

To Wages
To Fuel

68,750

(II) STOCK OF SPORTS MATERIALS ACCOUNT

Particulars

To Opening Stock
To Purchases

50,000 (Balancing figure)

5,000 By Balance c/d
65,500

63,000

To Wages

Expen
c

2,500

AN
I

65,500

Liabili

14.0 TREATMENT OF PROFIT/LOSS FROM TRADING ACTIVITIES

1.Sometimes Not-for-profit organisations carry on trading activities e.g. A Restaurant/Bar run by
a club, Chemist shop by a hospital, Book-Shop by a library.
2.In such a case, a separate Trading Account for each of the trading activities is prepared to
ascertain the Profit/Loss from each of such trading activities.
3.Such Profit/Loss is transferred to Income & Expenditure Account.
4.Trading Account is prepared in the same manner as in case of commercial organisations.
5.Sometimes the figures of Credit Purchases and Credit Sales are missing in the questions, in
such case Total Creditors' Account and Total Debtors' Account should be prepared to
ascertain credit purchases and credit sales respectively.

15.0

DISTINCTIO
N
A 'Receipt & Paymer
Basis of
Distinci
1. Nature of
Acco