Accounting for Non-Profit Organisations Part 2

Question 5 :

Surya Trust runs a charitable hospital and a dispensary and for the year ended 31.3.98, the following balances were extracted from its books :

		Dr. (Rs.)	Cr. (Rs.)
Capital Fund			18,00,000
Donation received in the year			12,00,000
Fees received from patients			6,00,000
Recovery for amenities — rent etc.			5,50,000
Recovery for food supplies			2,80,000
Surgical equipments		9,10,000
Buildings, theatres etc.		6,40,000
Consumption of –	2,40,000
Medicines
Foodstuffs	1,80,000
Chemicals etc.	60,000	4,80,000
Closing Stock of :	40,000
Medicines etc.
Foodstuffs	8,000
Chemicals etc.	2,000	50,000
Sales of Medicines (dispensary)			6,20,000
Opening Stock of Medicines (dispensary)		1,10,000
Purchases of medicines (dispensary)		6,00,000
Salaries :	60,000
Administrative staff
Doctors, nurses, etc.	3,00,000
Assistants at dispensary	30,000	3,90,000
Electricity and power charges etc.	2,10,000
Hospital
Dispensary	4,000	2,14,000
Furniture, fittings and equipments		1,60,000
Ambulance		60,000
Postage, telephone charges etc. less recovery		52,000
Subscription to medical journals		42,000
Ambulance maintenance charges less recoveries			1,600
Consumption of linen, bedsheets, etc.		1,80,000
Fixed Deposit (made on 10.8.96 for 3 yrs. at @ 11%p.a. interest) 10,00,000
Cash in hand		12,100
Cash at Bank		70,500
Sundry Debtors (dispensary)		1,21,000
Sundry Creditors (dispensary)			82,000
Remuneration to trustees, trust office expenses etc.		42,000
		51,33,600	51,33,600

Additional information :

(i)       The dispensary supplies medicines to Hospital on requisitions and delivery notes ; for which no adjustment has been made in the books. Cost of such supplies in the year was Rs. 1,20,000.

(ii)      Stock of medicines at close at dispensary was Rs. 80,000 ;

(iii)      Donations were received towards the corpus of the trust ;

(iv)       Stock of medicines on 31st March, 1998 at the Hospital included Rs. 8,000 worth of medicines belonging to patients ; this has not been considered in arriving of the figure of consumption of medicines ;

(v)       One of the well-wishers donated Surgery Equipment, whose market value was Rs. 80,000 on 15th August, 1997 ;

(vi)       The Hospital is to receive a grant of 25% of the amount spent on treatment of poor patients from the local branch of the Red Cross Society. Such expenditure in the year was Rs. 1 lakh.

(vii)      Out of the fees recovered from the patients, 10% is to given to specialists as retained.

(viii)      Depreciations on assets, on closing balances, is to be provided on :

Surgical Equipments	20%
Buildings	5%
Furniture and fittings	10%
Ambulance	30%

Prepare the Income and Expenditure Account of the dispensary, Trust and the Hospital for the year ended 31st March, 1998 and statement of affairs of the Trust as at that date.

Answer :

SURYA TRUST

Dr.	Income & Expenditure Account for the year ended 31st March, 1998				Cr.
	Particulars	Rs.	Particulars		Rs.
To	Opening stock	1,10,000	By	Sales	6,20,000
To	Purchases	6,00,000	By	Issues to Hospital	1,20,000
To	Gross Profit	1,10,000	By	Closing stock	80,000
		8,20,000			8,20,000
To	Salaries	30,000	By	Gross Profit	1,10,000
To	Electric charges	4,000
To	Net Profit tfd. to General
	Trust Income & Expenditure A/c	76,000
		1,10,000			1,10,000

Dr.			General Trust A/c						Cr.
		Particulars			Rs.	Particulars			Rs.
	To	Deficit in Hospital A/c		2,67,400		By	Profit from Dispensary		76,000
	To	Postage, Telephone charges, etc		52,000		By	Interest due on
							Fixed Deposit		1,10,000
To		Trustees & Remuneration expns., etc.		42,000		By	Net Deficit for the year		1,75,400
				3,61,400					3,61,400
Dr.				Hospital A/c					Cr.
		Particulars	Rs.	Rs.		Particulars			Rs.
	To	Consumption of :	3,68,000		By	Fees recovered from patients			6,00,000
		Medicines			By	Recovery for room rent etc.			5,50,000
		Food stuffs	1,80,000		By	Recovery from Food supplied			2,80,000
		Chemicals etc.	60,000	6,08,000	By	Ambulance receipts (Net)			1,600
					By	Grants receivable from Red Cross  25,000
To		Salaries to :
		Doctors, Nurses etc.	3,00,000
	To	Administrative Staff	60,000	3,60,000
		Returns due to specialists		60,000
	To	Electricity & Power charges		2,10,000
	To	Subscription to Medical Journals		42,000
	To	Consumption of linen
		bed sheets, etc.		1,80,000
To		Depreciation of : —
		Surgical equipments @ 20%
		on Rs. 9,90,000	1,98,000
		Building @ 5%	32,000
		Furniture & fits. @ 10%	16,000		By	Excess of Expenditure
		Ambulance @ 30%	18,000	2,64,000		over Income			2,67,400
				17,24,000					17,24,000
		STATEMENT OFAFFAIRS as at 31.3.98						(figures in Rs. ’000)
		Liabilities					Assets
	Capital Fund :				Cash in hand				12.1
		As on 1.7.97	1800		Cash at Bank :			70.5
		Add : Donation received	1200			On Current A/c
		Add : Market value of				On Fixed Deposit		1000.0	1070.5
		gift of Equipment	80	3080	Interest accrued on F. D.				110
		Less : Deficit for the year		175.4	Sundry Debtors				121
				2904.6	Grant due from Red Cross				25

Sundry Creditors :				Stocks of goods –
–	For Medicine supplied	82		Medicines (Dispensary)		80
–	For retainer due			Hospital :
	to specialists	60	142	Medicines	32
				Food	8
				Chemicals	2	42
				Surgical Equipments :
				(as on 1.4.97)	910
				Gift received	80
					990
				Less : Depreciation	198	792
				Building, Theatre etc :	640
				as on 1.4.97
				Less : Depreciation	32	608
				Furniture & Fittings etc. :	160
				as on 1.4.97
				Less : Depreciation	16	144
				Ambulance :
				as on 1.4.97	60
			.	Less : Depreciation	18	42.0
			3046.6			3046.6

SELF-EXAMINATION QUESTIONS 1.       Distinguish, giving examples, between Receipts and Payment Account and Income and Expenditure Accounts. 2.       Do you consider the following to be Capital or Revenue item ? Give reasons. (i)       A motor car, whose book value is Rs. 10,000 and was sold for Rs. 15,000, thus making a gain of Rs. 5,000. (ii)       Legal expenses incurred in raising a debenture loan. (iii)      Rs. 15,000 was paid as compensation to a discharged employee. (iv)       The removal of stock from old works to new works costed Rs. 5,000. 3.        The Secretary of the Systematic Club has prepared the following draft Balance Sheet of the club as at 30.9.1995 : Liabilities Rs. Assets Rs. Capital Account : 14,300 Fixtures & Fittings : 10,600 Balance as on 30.9.95 As on 30.09.95 Less : Loss for the year 2,100 Less : Depreciation for the year 1,000 12,200 9,600 Subscription in advance 600 Stock 3,200 Creditors 2,400 Debtors 1,400 Balance at bank 950 Cash in hand 50 15,200 15,200 You ascertain the following :– (1)       The amount of loss was only a balancing figure as the books had been kept on a single entry basis. (2)       The balance at bank was that shown by the bank statement at the close of the business on 30.9.95. (3)       The following amounts had been paid into bank on 30.09.95 but had not been credited by the bank : (i)       Two cheques of Rs. 50 each had been cashed for a member - one had since been duly honoured but the other head been returned marked “refer to drawer” and, on being approached, the member repaid Rs. 50 in cash; (ii)       A member’s subscription of Rs. 80 for the year 1995-96. (4)       The following cheques had been drawn in September but has not been presented until October : (i)       Rs. 480 for bar supplies which had been delivered but had not been included in stock; (ii)       Rs. 350 for additional typewriter received on October 2; (iii)      Rs. 100 as bonus of the professional included under the creditors; (iv)       Rs. 140 for fuel which had been included in the stock figure but not in the creditors and this cheque was dated October 1. You are required to prepare :– (a)       a bank reconciliation statement as on 30.9.95, and (b)       a revised Balance Sheet as on the date to give effect to the consequential adjustments, assuming that otherwise the items in the draft Balance sheet were correct.