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CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

Vidya Mandir Society's Receipts and Payments Account shows a receipt of ₹90,000 from sale of old furniture. The book value of the furniture sold was ₹1,10,000. The society's opening Balance Sheet showed furniture of ₹5,00,000 and it purchased new furniture for ₹2,00,000 during the year. Depreciation for the year on the furniture remaining and the new furniture is ₹60,000. What is the amount of furniture shown in the closing Balance Sheet, and the effect of the sale on the Income and Expenditure Account?

Closing furniture is ₹5,30,000 and there is a loss of ₹20,000 on sale. Sale proceeds of ₹90,000 are below book value of ₹1,10,000. Furniture is opening ₹5,00,000 plus ₹2,00,000 purchases, less ₹1,10,000 book value sold and ₹60,000 depreciation.

  1. A₹5,30,000 and loss on sale ₹20,000Correct
  2. B₹5,30,000 and profit on sale ₹20,000
  3. C₹5,50,000 and loss on sale ₹20,000
  4. D₹5,90,000 and loss on sale ₹20,000

Explanation

Loss on sale = 1,10,000 − 90,000 = ₹20,000, charged to Income and Expenditure. Closing furniture = 5,00,000 + 2,00,000 − 1,10,000 (book value sold) − 60,000 depreciation = ₹5,30,000. Option ₹5,90,000 ignores the depreciation by deducting only the sale proceeds wrongly; option ₹5,50,000 deducts the sale proceeds and not the book value.

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