Question :
A club has the policy of capitalising 25% of its entrance fees. The amount of entrance fees capitalised during the year is Rs.50,000. The amount of entrance fees to be shown on credit side of Income and Expenditure A/c will be:
Option 1:
Rs.2,00,000
Option 2: Rs.2,50,000
Option 3: Rs.1,50,000
Option 4: Rs.1,00,000
Correct Answer: Rs.1,50,000
Solution :
Entrance capitalised = Rs.50,000.
% of entrance fees capitalised = 25%.
Total entrance fees = Rs.50,000 X 100/25 = Rs.2,00,000.
% of entrance fees is to be credited to Income and Expenditure Account = 100% - 25% = 75%.
Entrance fees to be credited to Income and Expenditure Account = Rs.2,00,000 X 75% = Rs.1,50,000.
Hence, the correct option is 3.
