C hapter 28: Receipts and payments

accounts and income and

expenditure accounts
Contents of chapter
This chapter is concerned with accounts for non-profit making organisations and how to prepare them.

Notes for teachers

Some non-profit making organisations will draw up accounts using double entry records. The income and
1
expenditure accounts will be drawn up using the same techniques as those for profit and loss accounts.

Separate accounts are often kept for activities, e.g. bars, Christmas party and other special events
2 organised to make a profit. The net profit (or net loss) is then transferred to the income and expenditure
account.

Subscriptions prepaid or owing should be taken into account unless an examiner tells the examinee to do
3 otherwise.

Donations received are credited to the income and expenditure account.

4

Entrance fees usually have to be paid once by a member. Clubs and societies can account for them in an
5 appropriate way. If no instructions are given, they are included as income in the year that they are
received.

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Answers to MCQs and exercises
28.1 D 28.2 B 28.3 B 28.4 B 28.5 C

28.6
(a) Happy Days Hockey Club
Receipts and Payments Account for the year ended 30 June 20X8
Receipts $ Payments $
Bank and cash balances b/f 2,715 Teams’ travel expenses 1,598
Subscriptions 8,570 Groundsman’s wages 3,891
Donations 1,500 Postage and stationery 392
Receipts from raffles 3,816 Rent of pitches and clubhouse 4,800
General expenses 419
Prizes for raffles 624
Bank and cash balances c/f 4,877
16,601 16,601

(b) Happy Days Hockey Club

Income and Expenditure Account for the year ended 30 June 20X8
$ $
Income:
Subscriptions ($8,570 + $160) 8,730
Donations 1,500
Profit from raffles ($3,816 – $624) 3,192
13,422
Less Expenditure:
Teams’ travel expenses 1,598
Groundsman’s wages ($3,891 + $75) 3,966
Postage and stationery 392
Rent of pitches and clubhouse ($4,800 + $400) 5,200
General expenses 419 11,575
Surplus of income over expenditure 1,847

28.7
Rent
20X7 $ 20X7 $
Jan 1 In advance b/f 200 Dec 31 Income and expenditure 4,200
Dec 31 Bank 3,700
" 31 In arrears c/f 300
4,200 4,200

Insurance
20X7 $ 20X7 $
Jan 1 In advance b/f 180 Dec 31 Income and expenditure 1,060
Dec 31 Bank 1,210 " 31 In advance c/f 330
1,390 1,390

Subscriptions
20X7 $ 20X7 $
Jan 1 In arrears b/f 2,700 Jan 1 In advance b/f 850
Dec 31 Income and expenditure 11,380 Dec 31 Bank 12,600
" 31 In advance c/f 1,080 " 31 In arrears c/f 1,710
15,160 15,160

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 28.8X
(a) East Point Social Club
Receipts and Payments Account for the year ended 31 December 20X5
Receipts $ Payments $
Bar takings 8,960 Bank overdraft b/f 1,650
Subscriptions received 30,100 Bar purchases 6,150
Donations 4,240 Rent 5,000
Wages of bar staff 1,880
Equipment 8,900
Insurance 1,570
Affiliation fees 360
Transport expenses 7,140
Wages of ground staff 9,370
Balance c/f 1,280
43,300 43,300

(b) East Point Social Club

Refreshment Bar Trading Account for the year ended 31 December 20X5
$ $
Takings 8,960
Less Cost of goods sold:
Opening bar stock 550
Add Purchases 6,150
6,700
Less Closing bar stock 940 5,760
3,200
Staff wages 1,880
Bar profit transferred to income and expenditure account 1,320

(c) East Point Social Club

Income and Expenditure Account for the year ended 31 December 20X5
$ $
Income:
Subscriptions (600 × $50) 30,000
Donations received 4,240
Profit from refreshment bar trading 1,320
35,560
Less Expenditure:
Rent ($5,000 + $1,000) 6,000
Insurance ($1,570 – $210) 1,360
Affiliation fees 360
Transport expenses 7,140
Wages of ground staff 9,370
Depreciation of equipment (W1) 5,000 29,230
Surplus of income over expenditure 6,330

Workings:
(W1) Depreciation of equipment:
(Old equipment $16,100 + New equipment $8,900) × 20% = $5,000

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(d) East Point Social Club
Accumulated Fund as at 31 December 20X4
$ $
Equipment 16,100
Fixtures 2,100
Bar stocks 550
Subscriptions owing (24 × $50) 1,200 19,950
Less Bank overdraft 1,650
18,300

28.9
(a) East Golf Club
Bar Trading Account for the year ended 31 December 20X5
$ $
Bar takings 21,000
Less Cost of goods sold:
Bar stock as at 1 January 20X5 800
Add Bar purchases 5,200
6,000
Less Bar stock as at 31 December 20X5 1,100 4,900
16,100
Less Bar wages 700
Bar profit to income and expenditure account 15,400

(b) East Golf Club

Income and Expenditure Account for the year ended 31 December 20X5
$ $
Income:
Subscriptions 25,000
Profit from bar trading 15,400
40,400
Expenditure:
Rent and rates 3,215
Insurance 1,010 4,225
Surplus of income over expenditure 36,175

(c) East Golf Club

Balance Sheet as at 31 December 20X5
Fixed Assets $ $
Sports ground 150,000
Club equipment 30,000
180,000
Current Assets
Stock 1,100
Bank 205
1,305
Less Current Liabilities
Creditors 1,200
Net current assets 105
180,105
Financed by:
Accumulated fund as at 1 January 20X5 143,930
Add Surplus of income over expenditure 36,175
180,105

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 28.10X
Superball Football Club
Income and Expenditure Account for the year ended 31 May 20X6
$ $
Income:
Subscriptions ($8,124 – $160 + $94) 8,058
Prize money received 1,000
Profit from disco ($3,149 – $1,112) 2,037
Collections at matches 5,090
16,185
Less Expenditure:
Hire of transport ($3,710 + $90) 3,800
Ground maintenance costs 1,156
Groundman’s wages 5,214
Committee expenses ($906 + $170) 1,076
Rent of ground ($2,450 – $200) 2,250
General expenses 814 14,310
Surplus of income over expenditure 1,875

28.11
Upper Harbour Sports Club
Bar Trading Account for the year ended 31 March 20X8
$ $
Bar sales 15,270
Less Cost of goods sold:
Opening stock 2,190
Add Purchases 9,540
11,730
Less Closing stock 2,460 9,270
Bar profit to income and expenditure account 6,000

Upper Harbour Sports Club

Income and Expenditure Account for the year ended 31 March 20X8
Income: $ $ $
Subscriptions ($4,640 + $90) 4,730
Profit from bar trading 6,000
10,730
Expenditure:
Salary of secretary 3,600
Wages of staff 5,280
Postage and telephone 870
Rates and insurance ($1,230 – $60) 1,170
Sundry expenses 840
Provision for depreciation: Sports equipment 600
Office furniture 120 720 12,480
Deficit of expenditure over income (1,750)

172
 Upper Harbour Sports Club
Balance Sheet as at 31 March 20X8
Cost Accumulated Net book
depreciation value
$ $ $
Fixed Assets
Club premises 13,500 — 13,500
Sports equipment 5,100 600 4,500
Office furniture 1,200 120 1,080
19,800 720 19,080

Current Assets
Stock 2,460
Prepayment 60
Subscriptions in arrears 90
Bank 2,790
Cash 60
5,460
Less Current Liabilities
Creditors 4,000
Net current assets 1,460
20,540
Financed by:
Accumulated fund as at 1 April 20X7 22,290
Less Deficit of expenditure over income 1,750
20,540

28.12X
(a) Galvanic Social Club
Refreshment Trading Account for the year ended 31 March 20X5
$ $
Sales 18,000
Less Cost of goods sold:
Opening stock 3,000
Add Purchases 11,000
14,000
Less Closing stock 6,500 7,500
Gross profit 10,500
Less Wages of refreshment bar staff ($5,300 + $1,000) 6,300
1
Rent and rates [($5,000 – $600) × 5 ] 880
Insurance ($800 × 1 ) 160 7,340
5
Profit from refreshment trading 3,160

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 (b) Galvanic Social Club
Income and Expenditure Account for the year ended 31 March 20X5
$ $
Income:
Profit from refreshment trading 3,160
Subscriptions (102 × $160) 16,320
19,480
Less Expenditure:
Miscellaneous expenses 950
Marketing and advertising ($2,000 + $350) 2,350
Loss from Christmas party ($1,850 – $1,800) 50
Insurance ($800 × 4 ) 640
5 4
Rent and rates [($5,000 – $600) × 5 ] 3,520
Depreciation on:
Vans [($30,000 – $12,000) × 20%] 3,600
Office equipment [($10,000 – $2,000) × 10%] 800 11,910
Surplus of income over expenditure 7,570

(c) Galvanic Social Club

Balance Sheet as at 31 March 20X5
Accumulated Net book
Cost depreciation value
Fixed Assets $ $ $
Vans 30,000 15,600 14,400
Office equipment 10,000 2,800 7,200
40,000 18,400 21,600
Current Assets
Stock 6,500
Prepayment 600
Subscriptions in arrears (workings) 1,120
Bank 1,810
Cash ($350 – $30) 320
Petty cash ($70 + $30) 100
10,450
Less Current Liabilities
Creditors 1,250
Accruals ($1,000 + $350) 1,350
Subscriptions in advance 800 3,400
Net current assets 7,050
28,650
Financed by:
Accumulated fund as at 1 April 20X4 21,080
Add Surplus for the year 7,570
28,650
Workings:
Subscriptions
$ $
Income and expenditure ($160 × 102) 16,320 Bank 16,000
In advance c/f ($160 × 5) 800 In arrears c/f (balancing figure) 1,120
17,120 17,120

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28.13
(a) Expert Cricket Club
Bar Trading Account for the year ended 31 December 20X4
$ $
Bar takings (W1) 7,650
Less Cost of goods sold:
Opening stock 900
Add Purchases (W2) 2,220
3,120
Less Closing stock 620 2,500
5,150
Less Bar expenses ($700 + $210 – $150) 760
Profit to income and expenditure account 4,390

Workings:
(W1)
Sales Ledger Control
$ $
Balance b/f 850 Receipts and payments 7,900
Sales (balancing figure) 7,650 Balance c/f 600
8,500 8,500

(W2)
Purchases Ledger Control
$ $
Receipts and payments 3,000 Balance b/f 780
Purchases (balancing figure) 2,220
3,000 3,000

(b) Expert Cricket Club

Income and Expenditure Account for the year ended 31 December 20X4
$ $
Income:
Subscriptions ($22,000 + $280 – $200) 22,080
Profit from bar trading 4,390
Net proceeds of social events ($2,000 – $1,500) 500
26,970
Less Expenditure:
Rent ($8,900 + $450 – $500) 8,850
Postage, printing and stationery ($390 + $120 – $100) 410
Annual dinner expenses 2,800
Treasurers’ salaries and expenses 5,600
Staff salaries 6,600
Depreciation on sports equipment ($51,000 – $44,000) 7,000 31,260
Deficit of expenditure over income (4,290)

175
 (c) Expert Cricket Club
Balance Sheet as at 31 December 20X4
Cost Accumulated Net book
depreciation value
$ $ $
Fixed Assets
Sports equipment 51,000 7,000 44,000

Current Assets
Bar stock 620
Stationery stock 100
Bar debtors 600
Subscriptions in arrears 280
Bank 8,830
Cash 580
11,010
Less Current Liabilities
Accruals ($450 + $210) 660
Subscriptions in advance 500 1,160
Net current assets 9,850
53,850
Financed by:
Accumulated fund (W3) 58,140
Less Deficit of expenditure over income 4,290
53,850

(W3)
Calculation of Accumulated Fund as at 1 January 20X4
Assets $ $
Sports equipment 51,000
Bar stock 900
Stationery stock 120
Subscriptions in arrears 200
Debtors 850
Bank 5,700
Cash 800
59,570
Less Liabilities
Creditors 780
Accruals ($500 + $150) 650 1,430
Accumulated fund as at 1 January 20X4 58,140

28.16X
Subscriptions
20X5 $ 20X5 $
Aug 1 In arrears b/f 300 Aug 1 In advance b/f 900
20X6 20X6
Jul 31 Income and expenditure 36,300 Jul 31 Bank 36,000
" 31 In advance c/f 2,100 " 31 In arrears c/f ($300 × 6) 1,800
38,700 38,700

Life Membership Fee

20X6 $ 20X5 $
50, 000
Jul 31 Income and expenditure ( × 17) 85,000 Aug 1 In advance b/f 150,000
10
20X6
" 31 In advance c/f 665,000 Jul 31 Bank 600,000
750,000 750,000

176