Theory question 106
Not-for-Profit OrganisationsThe books of Omiye Social Club showed the following information for the year ended 31st December 2015
RECEIPTS AND PAYMENTS ACCOUNT (₦)
Receipts: Balance 01/01/2015 3,000; Subscriptions 130,000; Proceeds from concert 9,000; Interest on deposit 2,400; Income from dance 7,200 = 151,600
Payments: Salaries 10,600; Maintenance 13,000; Stationery 1,200; Postage 600; Dance expenses 4,000; General expenses 5,400; Balance c/d 116,800 = 151,600
Balances as at 1st January 2015 were as follows: Accumulated fund ₦266,000; Bank deposit ₦80,000; Club house ₦160,000; Furniture and fittings ₦24,000
Additional information: (i) Outstanding as at 31st December 2015: stationery ₦400; general expenses ₦1,200. (ii) Salaries of ₦10,600 paid including ₦1,000 owed since 2014. (iii) Depreciate club house by 10% and furniture and fittings by 15%.
You are required to prepare: (a) Income and Expenditure Account for the year ended 31st December 2015; (b) Balance Sheet as at that date.
Show the model answer
(a) Income and Expenditure Account (₦): Income – subscriptions 130,000; concert 9,000; interest on deposit 2,400; dance (7,200 − 4,000) 3,200 = 144,600.
Expenditure – salaries (10,600 − 1,000) 9,600; maintenance 13,000; stationery (1,200 + 400) 1,600; postage 600; general expenses (5,400 + 1,200) 6,600; depreciation – club house (10% × 160,000) 16,000, furniture (15% × 24,000) 3,600 = 51,000.
Surplus ₦93,600.
(b) Balance Sheet at 31 December 2015: Fixed assets – club house 160,000 − 16,000 = 144,000; furniture 24,000 − 3,600 = 20,400. Current assets – bank deposit 80,000; cash 116,800. Total assets 361,200. Less accruals (stationery 400 + general expenses 1,200) 1,600. Net 359,600.
Accumulated fund 266,000 + surplus 93,600 = 359,600.
Last year's salary arrears (1,000) are not this year's expense; the opening accumulated fund already allows for it.