Theory question 108
Not-for-Profit OrganisationsThe Receipts and Payments Account of Queens Social Club for the year ended 31st December, 2021 is as follows:
Receipts and Payments Account for the year ended 31st December, 2021 ($)
Receipts: Balance b/d 20,000; Subscription 280,000; Bar sales 223,400; Donations 50,000; End of year dinner 170,000 — total 743,400
Payments: Expenses on dinner 105,000; Donations to hospital 190,000; Affiliation fees 6,000; Bar supplies 140,000; General expenses 183,000; Club equipment 24,000; Bar expenses 71,000; Balance c/d 24,400 — total 743,400
Additional Information: (1/1/2021 / 31/12/2021, $)
Club equipment (cost $50,000) 45,000 / –
Bar stocks 6,000 / 8,000
Subscriptions: In arrears 30,000 / 40,000; In advance 50,000 / 20,000
Creditors for bar supplies 15,000 / 18,000
Furniture and fittings 28,000 / 25,200
Provide depreciation of 10% on cost for club's equipment.
You are required to prepare:
(a) Statement of Affairs as at 1/1/2021
(b) Bar Trading Account for the year ended 31/12/2021;
(c) Subscriptions Account for the year;
(d) Income and Expenditure Account for the year ended 31/12/2021.
Show the model answer
(a) Statement of Affairs at 1/1/2021 ($): Assets – club equipment 45,000; bar stock 6,000; subscriptions in arrears 30,000; furniture and fittings 28,000; cash 20,000 = 129,000. Liabilities – subscriptions in advance 50,000; bar creditors 15,000 = 65,000. Accumulated fund 64,000.
(b) Bar Trading Account: bar sales 223,400; opening stock 6,000 + purchases (140,000 + 18,000 − 15,000 = 143,000) = 149,000 − closing stock 8,000 = cost of sales 141,000; gross profit 82,400; less bar expenses 71,000; bar profit 11,400.
(c) Subscriptions Account: Dr balance b/d (arrears) 30,000; income and expenditure 320,000; balance c/d (advance) 20,000 = 370,000 | Cr balance b/d (advance) 50,000; cash 280,000; balance c/d (arrears) 40,000 = 370,000.
(d) Income and Expenditure Account: Income – subscriptions 320,000; bar profit 11,400; donations 50,000; dinner profit (170,000 − 105,000) 65,000 = 446,400. Expenditure – donations to hospital 190,000; affiliation fees 6,000; general expenses 183,000; depreciation of club equipment (10% × (50,000 + 24,000)) 7,400; depreciation of furniture (28,000 − 25,200) 2,800 = 389,200. Surplus of income over expenditure $57,200.
Work out the opening accumulated fund, bar profit and subscription income first, then build the income and expenditure account.