Theory question 106
Not-for-Profit OrganisationsThe following is the Receipt and Payments Account of Kayode social Club for the year ended 31st December, 2014.
Receipts and Payments for the year ended 31st December, 2014 (₦)
Receipts: Cash in hand 1/1/2014 500; Cash at bank 1/1/2014 1,000; Subscriptions: 2013 1,200, 2014 4,000, 2015 2,300 (total 7,500); Donations 2,000; End of Year show 15,000; Transfer from deposit account 3,000; total 29,000
Payments: Purchase of sports equipment 1,800; Repairs 1,500; Salaries 1,700; Insurance 1,000; Show expenses 3,200; Transport expenses 500; Secretarial expenses 300; Purchase of furniture 3,000; Balance c/d 16,000; total 29,000
Additional information: (i) Equipment was valued at ₦3,250 and furniture ₦ 1,550 on 31st December, 2013. (ii) Depreciation to be provided as follows: Equipment ₦ 505; Furniture ₦55 (iii) The following expenses were outstanding: Salaries ₦300; Transport ₦100; Repairs ₦250 (iv) Subscriptions owing by members were as follows: 31st December, 2013 ₦ 1,200; 31st December, 2014 ₦2,100 (v) The balance in the bank deposit account at 31st December, 2013 was ₦3,000.
You are required to prepare: (a) Statement of affairs as at 31st December, 2013; (b) Subscriptions account for the year ended 31st December, 2014; (c) Income and Expenditure account for the year ended 31st December, 2014.
Show the model answer
(a) Statement of affairs at 31 December 2013 (₦): equipment 3,250; furniture 1,550; subscriptions owing 1,200; bank deposit 3,000; cash in hand 500; cash at bank 1,000 = 10,500. No liabilities, so accumulated fund = ₦10,500.
(b) Subscriptions Account (₦): Dr - balance b/f (arrears) 1,200; income and expenditure 6,100; balance c/d (in advance) 2,300 = 9,600. Cr - receipts and payments 7,500; balance c/d (arrears) 2,100 = 9,600.
(c) Income and Expenditure Account for 2014 (₦): Income - subscriptions 6,100; donations 2,000; end of year show 15,000 = 23,100.
Expenditure - repairs (1,500 + 250) 1,750; salaries (1,700 + 300) 2,000; transport (500 + 100) 600; insurance 1,000; show expenses 3,200; secretarial 300; depreciation: equipment 505, furniture 55 = 9,410.
Surplus (excess of income over expenditure) ₦13,690.
The transfer from the deposit account is not income, and spending on equipment and furniture is capital.