Theory question 107
Not-for-Profit Organisations7. The following is the Receipts and Payments Account of Egbejoda Social Club for the year ended 31st March, 2005.
Receipts: Balance b/f N13,470; Subscriptions N48,490; Donations N16,000; Bar takings N32,500; total N110,460
Payments: Stationery N375; Transportation N1,600; Sporting equipment N15,000; Bar supplies N20,800; Rent N6,400; General expenses N1,920; Barman's wages N5,500; Balance c/d N58,865; total N110,460
Additional information: (a) (1/4/2004; 31/3/2005): Bar stock N1,700; N2,250. Bar supplies (owing) N800; N1,600. Subscriptions in arrears N7,150; N5,220. Rent accrued N3,000; N2,000. (b) Provide for depreciation of equipment at 20% on cost.
You are required to prepare: (i) Bar Trading Account; (ii) Income and Expenditure Account; and (iii) Balance Sheet as at 31st March, 2005.
Show the model answer
(i) Bar trading account: takings 32,500; opening stock 1,700 + purchases 21,600 (20,800 + 1,600 − 800) − closing stock 2,250 = cost 21,050; gross profit 11,450; less barman's wages 5,500; bar profit 5,950.
(ii) Income and expenditure: income – subscriptions 46,560 (48,490 − 7,150 + 5,220); donations 16,000; bar profit 5,950; total 68,510. Expenditure – stationery 375; transport 1,600; rent 5,400 (6,400 − 3,000 + 2,000); general expenses 1,920; depreciation 3,000 (20% × 15,000); total 12,295. Surplus 56,215.
(iii) Balance sheet 31/3/2005: equipment 15,000 − 3,000 = 12,000; bar stock 2,250; subscriptions in arrears 5,220; cash 58,865 = 78,335; less bar creditors 1,600 and rent accrued 2,000 = 74,735. Accumulated fund 1/4/2004 (13,470 + 1,700 + 7,150 − 800 − 3,000) 18,520 + surplus 56,215 = 74,735.
Work out the opening accumulated fund from the opening balances and cash.