membership , we will add only 50,000 per year in the income and expenditure account and balance will goes to the fund for life membership account in the balance sheet .
4th Step : Show Adjustments
There are many adjustments which you have to do in the income and expenditure account whose information , you can not get from receipt and payment account . For example , you have to show depreciation of fixed assets in the debit side of income and expenditure account . You may show bad debt if there is any in the debit side of I / E account
5th Step : Find the Balance of I / E Account
Compare debit and credit side of income and expenditure account . If credit side is more than debit side , it will be surplus over expenses . If debit side will more than credit side , it will be deficit .
Example : Following is given the receipt and payment account and adjustment . You have to make income and expenditure account . The car is bought at the end of year . So , there is no question of depreciation . We did not charge depreciation on freehold land .