Theory question 107
Not-for-Profit OrganisationsThe receipts and payments of Show Boy Club for the year ended 31st December, 2010 are as follows:
Opening balance 1/1/10: D289,860
Proceeds from dance: D216,900
Transfer to bank deposit: D720,000
Rates: D60,000
Entrance fees received: D30,000
Wages paid: D433,800
Subscriptions received: D1,800,000
Equipment bought: D240,000
Repairs: D97,032
General expenses: D293,376
Stationery: D58,740
Interest received on bank deposit: D72,000
Donations received: D25,200
Additional information:
(i) Accrued wages at 31/12/10 - D28,800.
(ii) Rates prepaid amounted to D12,000.
(iii) General expenses included D18,000 owed since the previous year.
(iv) Out of the subscriptions received, D48,000 was in arrears for the previous year while D120,000 was paid in advance for the coming year. In addition, D72,000 was still owing as at 31st December, 2010.
(v) Assets of the club at 1st January, 2010 were: Club house D5,760,000; Equipment D3,600,000; Bank deposit D2,400,000.
(vi) Depreciation: Club house 5%; Equipment 10%.
You are required to prepare: (a) Statement of Affairs as at 1st January, 2010; (b) Receipts and Payments Account for the year ended 31st December, 2010; (c) Subscriptions Account; (d) Income and Expenditure Account for the year ended 31st December 2010.
Show the model answer
(a) Statement of Affairs at 1/1/2010
Assets: club house 5,760,000; equipment 3,600,000; subscriptions in arrears 48,000; bank deposit 2,400,000; cash 289,860 = 12,097,860
Less liability: general expenses accrued 18,000
Accumulated fund D12,079,860
(b) Receipts and Payments Account
Receipts: balance b/d 289,860; dance 216,900; entrance fees 30,000; subscriptions 1,800,000; interest 72,000; donations 25,200 = 2,433,960
Payments: rates 60,000; wages 433,800; equipment 240,000; repairs 97,032; general expenses 293,376; stationery 58,740; transfer to bank deposit 720,000 = 1,902,948
Balance c/d D531,012
(c) Subscriptions Account
Dr: arrears b/d 48,000; income and expenditure 1,704,000; advance c/d 120,000 = 1,872,000
Cr: cash received 1,800,000; owing c/d 72,000 = 1,872,000
(Subscriptions for 2010 = 1,800,000 − 48,000 − 120,000 + 72,000 = 1,704,000)
(d) Income and Expenditure Account for 2010
Income: dance 216,900; entrance fees 30,000; interest 72,000; donations 25,200; subscriptions 1,704,000 = 2,048,100
Expenditure: rates (60,000 − 12,000) 48,000; wages (433,800 + 28,800) 462,600; depreciation club house (5% × 5,760,000) 288,000; depreciation equipment (10% × (3,600,000 + 240,000)) 384,000; repairs 97,032; general expenses (293,376 − 18,000) 275,376; stationery 58,740 = 1,613,748
Excess of income over expenditure D434,352
The transfer to bank deposit is not an expense; it only moves money from cash to the deposit account.