Consumer stores - 350(opening), purchases - 350(in the year), used - 100, Closing - 700. Creditors - 1200, payment - 1000(given in R&P), Creditors - 550(Closing). Subscriptions - 2006-07 Rs. 50, 2007-08 Rs. 3500, 2008-09 Rs. 75 outstanding for 2007-08 Rs. 75 for 2006-07 Rs. 100(given in additional information) The Income and Expenditure a/c was prepared for 2007-08. How to post the above information.
Vijay Krishna from India
Vijay Krishna, when you have to make income and expenditure account for 2007-2008, above information will be used for making it. We have to show consumer store consumption in our income and expenditure account because actual use of consumer store is our expense for this year. I think, there is one wrong figure of opening or purchase because both will be 800 and after deducting closing stock of consumer store, we can get consumer store Rs. 100.Now, for showing expense of purchase of goods in our income and expenditure account, we need to do some calculation.
Purchase of goods = Closing balance of creditor + payment to creditors - opening balance of creditor
Subscriptions are our income. We will show current year income in the income side of income and expenditure account. We should add current year outstanding subscription in it. It means, we have earned the subscription fees but we did not receive in cash. As per accrual principal, we have to add both outstanding income and outstanding expenses in their respective income and expenses. We have to deduct previous year outstanding subscription from current year subscription. Because this year, we have receive previous year outstanding subscription but it will not become current year income because we have already added it in our income when we have made income and expenditure account.