Theory question 108
Not-for-Profit Organisations8. Ogyen Sports Club had a membership of 140 who pay annual subscription of N2,000 each. For the year 2005, the Receipts and Payments Account showed the following:
Receipts: Balance b/d N12,000; Subscriptions N290,000; Donations N50,000; Sale of games tickets N45,000; total N397,000
Payments: Cost of games N27,000; Rent N2,000; Groundman's wages N2,400; Cost of refreshment N4,900; Squash racquets N6,000; Hockey sticks N10,000; Games prizes N12,000; Annual awards N100,000; Balance c/d N232,700; total N397,000
Additional information: (a) (31/12/2004; 31/12/2005): Subscriptions (in arrears) N30,000; N25,000. Subscriptions in advance N10,000; N15,000. Sports equipment N40,000; ? (b) Sports equipment are to be depreciated at 50%.
You are required to prepare: (i) subscriptions account; (ii) income and expenditure account for the year ended 31st December, 2005, and (iii) a balance sheet as at 31st December, 2005.
Show the model answer
(i) Subscriptions account: Dr arrears b/d 30,000; income and expenditure 280,000 (140 × 2,000); advance c/d 15,000 = 325,000. Cr advance b/d 10,000; cash 290,000; arrears c/d 25,000 = 325,000.
Equipment: 40,000 + squash racquets 6,000 + hockey sticks 10,000 = 56,000; depreciation 50% = 28,000; closing 28,000.
(ii) Income and expenditure 2005: Income – subscriptions 280,000; donations 50,000; games tickets 45,000; total 375,000. Expenditure – cost of games 27,000; rent 2,000; wages 2,400; refreshments 4,900; games prizes 12,000; annual awards 100,000; depreciation 28,000; total 176,300. Surplus 198,700.
(iii) Balance sheet 31/12/2005: equipment 28,000; subscriptions in arrears 25,000; cash 232,700 = 285,700; less subscriptions in advance 15,000 = 270,700. Accumulated fund 1/1/2005 (12,000 + 30,000 + 40,000 − 10,000) 72,000 + surplus 198,700 = 270,700.
Subscriptions for the year are simply members × fee; the subscriptions account checks it.