Income and Expenditure account

Many organizations exist, not in order to make profits. E.g.:

a) Clubs and societies
b) Charitable organizations
c) Trusts
d) NGOs
e) Hospitals
Terminologies used in non profit organizations:
a. Statement of Comprehensive Income Income and Expenditure account
b. Profit Surplus
c. Loss Deficit
d. Capital/Equity of business Equity Fund/ General fund / Accumulated fund
e. Receipt and Payment account Means a combined cash +bank a/c

Non-Profit Organization:
Primary purpose of these organization is to provide services rather than to make profit.
e.g.: charitable hospitals

Sources of Income:
 Membership fee or subscription fee
 Surplus fund (investment income)
 Donation
 Legacy
 Supporting activities e.g.: sales of medicines, functions, cafeteria
 Life membership fee
Statement of Comprehensive Income income and expenditure account
Income and expenditure account
Expenses : Incomes:

Surplus (excess of income) OR Deficit (excess of

expense)

Capital Capital fund, General fund, Accumulated fund

In the questions of income and expenditure accounts a subscription account is usually required to
be prepared, which looks like as follows:
(related to members) Subscription account (Just like
debtor control account)
b/d (receivable from 15,000 b/d (advance from members) 500
members)
Cash 1,000
Bank 15,000
Subscription Income (Bal.) 19,000 Bad debt 2,000
Discount allowed 500

c/d (closing advance) 10,000 c/d (closing receivable) 25,000

44,000 44,000

Page 1 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Q. 1 Following is the Receipt and Payment Accounts of Sehat club for the year ended 30 June
2011:
Receipts and Payments Account For the year ended 30 June 2011
Receipt Rupees Payment Rupees
Opening balance 15,000 Salaries 63,500
Subscription 201,000 Rent 34,000
Entrance fees 63,000 Travelling expenses 1,500
Donations ' 38,000 Printing and stationery 1,000
Interest 16,000 General charges 2,500
Receipt on disposal of furniture 500 Periodicals 500
Investments 200,000
Closing balance 30,500
333,500 333,500

The club’s balance sheet as on 30 June 2010 was as follows:

Balance Sheet As on 30 June 2010
Liabilities Rupees Assets Rupees
General Fund 172,500 Furniture-net 40,000
Liabilities: Rent 11,000 Sports equipment – net 20,000
Salaries 17,500 Investments 100,000
Subscription receivable 15,000
Interest receivables 11,000
Bank balance 15,000
201,000 201,000

Other details for the year ended 30 June 2011 are as follows:
(i) Furniture purchased on 1 July 2009 costing Rs. 4,000 was disposed off on 1 January
2011 at a scrap value of Rs. 500.
(ii) On 1 July 2010, furniture having written down value of Rs. 6,000 was traded-in with
new furniture having fair value of Rs. 6,700.
(iii) Depreciation is charged on diminishing balance basis at 20% on furniture and 15% on
sports equipment.
(iv) Sports equipment worth Rs. 12,000 were received at year end as donation.
(v) Following amounts are receivable /outstanding as at 30 June 2011:
Rs.
Subscription receivable 8,000
Entrance fee receivable 3,000
Salaries outstanding 4,000
Rent outstanding 2,000

Required:
Prepare an income and expenditure account of Sehat Club for the year ended 30 June 2011 and
its balance sheet on that date.

Page 2 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Q. 2 The following balances have been obtained from the books of Gulshan Cricket Club:
June 30, 2007 June 30, 2008
Building 6,024,000 6,438,150
Furniture 3,012,000 2,710,800
Books 1,129,500 1,246,950
Sports equipment 1,807,200 1,595,200
Investments - 436,000
Advance subscription 86,000 92,000
Prepaid expenses 122,000 176,000
Expenses payable 186,900 207,600
Subscriptions receivable 326,000 357,000
Cash 1,204,800 1,586,500
The following information is also available in respect of year ended June 30, 2008:
i. Depreciation for the year has been credited directly to the asset accounts. The rates of
depreciation are as follows:
Building 5%
Furniture and books 10%
Sports equipment 20%
ii. The club had 600 members on June 30, 2008. No fresh members were admitted during
the year but 10 members left the club on January 1,2008. Subscription per member is Rs.
500 per month.
Required:
(a) Summary of receipts and payments made during the year ended June 30,2008.
(b) Income and Expenditure Account for the year ended June 30,2008.
(c) Statement of financial position as on June 30,2008.

A.1 Sehat Club

Income and Expenditure Account For the ye.ir ended 30 June 2011
Expenditure Amount (Rs.) Income Amount (Rs.)
Salaries (63.5+4-17.5) 50,000 Subscriptions (201+8-15) 194,000
Rent (34+2-11) 25.000 Entrance fees (63+3) 66,000
Travelling expenses 1,500 Donation (38+12) 50,000
Printing and stationary 1,000 Interest(16-11) 5,000
General charges 2,500 Gain on trade in of furniture 700
Periodicals 500
Depreciation on furniture 7,820
Depreciation on sports equipment 3,000
Loss on furniture disposed off 2.380
(2,880-500)
Excess of income over expenditure 222.000
315,700 315,700

Page 3 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Sehat Club
Balance sheet As on 30 |une 2011
Liabilities Rupees Assets Rupees
General fund: Furniture 30,000
Opening balance 172,500 Sports equipment (20-3+12) 29,000
Add excess of income over expense 222,000 Investments (100+200) 300,000
394,500 Subscription receivable 8,000
Liabilities : Entrance fee receivable 3,000
Salaries payable 4,000 Bank balance 30,500
Rent payable 2,000
400,500 400,500

Furniture
b/d 40,000 Disposal (4,000-800-320) 2,880
Addition 01.07.2010 6,700 Assets exchanged 6,000
(01.07.2010)
Depreciation expense 7,820*
c/d 30,000
46,700 46,700
*Depreciation:
(40,000 – 3,200 – 6,000) x 20% = 6,160
3,200 x 20% x 6/12 = 320
6,700 x 20% = 1,340
7,820
Disposal
Furniture 2,880 Cash 500
Loss (bal) 2,350
2,880 2,850

Salary payable
Cash 63,500 b/d 17,500
c/d 4,000 Expense (bal) 50,000
67,500 67,500

Rent payable
Cash 34,000 b/d 11,000
c/d 2,000 Expense(bal) 25,000
36,000 36,000

Entrance fee receivable

b/d - Cash 63,000
Income (bal) 66,000 c/d 3,000
66,000 66,000

Page 4 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Interest receivable
b/d 11,000 Cash 16,000
Income(bal) 5,000 c/d -
16,000 16,000

Equipment
b/d 20,000 Depreciation (20,000 x 3,000
15%)
Donation (30-06-2011) 12,000 c/d 29,000
32,000 32,000

A. 2 Gulshan cricket club

(a) Receipt and payment account for the year ended June 30, 2008
b/d 1,204,800 Building (W-4) 753,000
Book (W-5) 256,000
Subscription (W-2) 3,605,000 Shop equipment (W-6) 186,800
Investment 436,000
Expenses (Bal.) 1,591,500
c/d 1,586,500
4,809,800 4,809,800

(b)Income and expenditure account for the year ended June 30, 2008
Expenses (W-8) 1,558,200
Depreciation: Subscription Income (W-1) 3,630,000
Building 338,850
Furniture 301,200
Books 138,550
Sports equipment 398,800
Surplus (bal) 894,400
3,630,000 3,630,000

(c) Gulshan cricket club

Statement of financial position as on June 30,2008.
Non-current assets:
Building 6,438,150
Furniture 2,710,800
Books 1,246,950
Sports equipment 1,595,200
Investments 436,000 12,427,100
Current assets:
Prepaid expenses 176,000
Subscriptions receivable 357,000
Cash 1,586,500 2,119,500
14,546,600

Page 5 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Equity and liabilities:
Capital 13,352,600*
Surplus 894,400 14,247,000
Current liabilities:
Advance subscription 92,000
Expenses payable 207,600 299,600
14,546,600

*Note: Opening capital fund: 6,024,000 + 3,012,000 +1,129,500 + 1,087,200 – 86,000 +122,000
-186,900 + 326,000 + 1,204,800 = 13,352,600
Workings:
W-1 Subscription income
[600 x 500 x 6] + [610 x 500 x 6]
=3,630,000

(W-2) Subscription account

b/d 326,000 b/d 86,000
Subscription income 3,630,000 Cash (bal) 3,605,000
c/d 92,000 c/d 357,000
210,000 210,000

(W-4) Building account

b/d 6,024,000 Depreciation 338,850
(6,438,150/95x5)
Cash(bal) 753,000 c/d 6,438,150
6,777,000 6,777,000

(W-5) Books
b/d 1,129,500 Depreciation 138,550
(1,246,950/90x10)
Cash(bal) 256,000 c/d 1,246,950
1,385,500 1,385,500

(W-6) Sports Equipment

b/d 1,807,200 Depreciation 398,800
(1,595,200/80x20)
Cash(bal) 186,800 c/d 1,595,200
1,994,000 1,994,000

(W-7) Furniture
b/d 3,012,000 Depreciation 301,200
(2,710,800/90x10)
c/d 2,710,800
3,012,000 3,012,000

Page 6 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 (W-8) Expenses prepaid + Expenses payable
b/d 122,000 b/d 186,900
Cash 1,591,500 Expenses (bal) 1,558,200
c/d 207,600 c/d 176,000
1,921,100 1,921,100

ICAP question bank

6.1 GILTAN GOLF CLUB

The treasurer of the Giltan Golf Club has prepared the following receipts and payments account
for the year ended 31 March 2016.
Rs.(000) Rs.(000)
Balance at 1 April 2015 682 Functions 305
Subscriptions 2,930 Repairs 146
Functions 367 Telephone 67
Sale of land 1,600 Extension of club house (building) 600
Bank interest 60 Furniture 135
Bequest (legacy) 255 Heat and light 115
Sundry income 46 Salary and wages 2,066
Sundry expenses 104
Balance at 31 March 2016 2,402

5,940 5,940

(a) Subscriptions received included Rs.65,000 which had been in arrears at 31 March 2015
and Rs. 35,000 which had been paid for the year commencing 1 April 2016.
(b) Land sold had been valued in the club's books at cost Rs.500,000.
(c) Accrued expenses
31 March 2015 31 March 2016
Rs.(000) Rs.(000)
Heat and light 32 40
Wages 12 14
Telephone 14 10
58 64

(c) Depreciation is to be charged on the original cost of assets appearing in the books at 31
March 2016 as follows:

Buildings 5%
Fixtures and fittings 10%
Furniture 20%

The following balances are from the club's books at 31 March 2015:
Rs.(000)
Land at cost 4,000
Buildings at cost 3,200
Buildings allowance for depreciation 860
Fixtures and fittings at cost 470
Page 7 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Fixtures allowance for depreciation 82
Furniture at cost 380
Furniture allowance for depreciation 164
Subscriptions in arrears (including Rs.15,000 irrecoverable - 80
member had emigrated)
Subscriptions in advance 30

Required:
Prepare an income and expenditure account for the year ended 31 March 2016 and a Statement
of financial position as at that date.
6.2 LANGTON HOCKEY CLUB
The Langton Hockey club does not have any formal accounting records but the following
information is available.

(1) The payments that have been made by the club for the year ending 30 June 2016 are as
follows:
Rs.(000)
Purchase of second hand table tennis table 250
Rent 600
Tea stall purchases 900
Annual fair expenses 1,450
Outings expenses 370
Prizes for whist evenings 90
Repairs to snooker table 35
Refreshments at social evenings 240

(2)The club's income, apart from annual subscriptions, is as follows:

Rs.(000)
Contributions to outings 300
Takings at the annual fair 2,150

The club also run a tea stall in the village car park every Sunday in the summer months. This
sells tea and coffee, cakes, biscuits and ice creams etc. The profit margin on the tea stall is
normally 20% of selling price.

(3) All the club's transactions are in cash but if there are any surplus funds they are banked in a
local bank account. The balance on the bank account was Rs.30,000 at 1 July 2015.

(4) The club has an annual subscription rate of Rs.20,000 per annum per person or Rs.50,000 per
annum for a family membership. Members are asked to pay their subscription in the July at the
beginning of the club's accounting year.

There are 10 family members of the club. Of these two paid their 2016 subscription in June 2015
and all the rest were received before 30 June 2016.

No individual members had paid their 2016 subscriptions in advance but at 30 June 2016 four
members still owed their subscriptions. They had been contacted and all four had promised to
pay at the next evening social event. There are in total 80 individual members.
The club has the following other assets and liabilities:

Page 8 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 30 June 30 June
2015 2016
Rs. (000) Rs. (000)
Sports equipment 2,560 Note 6
Inventory for the tea stall 120 60
Payables for the tea purchases 110 190
Prepayment of rent 40 50

(6) The sports equipment is all depreciated at 20% per annum on net book value on the basis of
the equipment held at 30 June each year.
(7) The old table tennis table was sold during the year for Rs.40,000. Its value as recorded by the
club at 30 June 2015 was Rs. 30,000.
Required: You are required to prepare an income and expenditure account for the year ended 30
June 2016 and a statement of financial position at that date. (20)

6.5 AB SPORTS AND SOCIAL CLUB

You have agreed to take over the role of bookkeeper for the AB sports and social club.
The summarized statement of financial position on 31 December 2014 as prepared by the
previous bookkeeper contained the following items.
Assets Rs.
Heating oil for clubhouse 1,000
Shop and cafe inventories 7,000
New sportswear, for sale, at cost 3,000
Used sportswear, for hire, at valuation 750
Equipment for groundsman
Cost 5,000
Depreciation 3,500 1,500
Subscriptions due 200
Bank
Current account 1,000
Deposit account 10,000
Capital and liabilities
Accumulated fund 23,150
Payables
Shop and cafe inventories 1,000
Sportswear 300

The bank account summary for the year to 31 December 2015 contained the following items.
Receipts Rs.
Subscriptions 11,000
Bankings
Shop and café 20,000
Sale of sportswear 5,000
Hire of sportswear 3,000

Page 9 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Interest on deposit account 800
39,800

Payments Rs.
Rent and repairs of clubhouse 6,000
Heating oil 4,000
Sportswear 4,500
Grounds person 10,000
Shop and cafe purchases 9,000
Transfer to deposit account 6,000
39,500

You discover that the subscriptions due figure as at 31December 2014 was arrived at as follows.
Subscriptions unpaid for 2013 10
Subscriptions unpaid for 2014 230
Subscriptions paid for 2015 40

Corresponding figures at 31 December 2015 are:

Subscriptions unpaid for 2013 10
Subscriptions unpaid for 2014 20
Subscriptions unpaid for 2015 90
Subscriptions paid for 2016 200

Subscriptions due for more than 12 months should be written off with effect from 1 January
2015.
Asset balances at 31 December 2015 include:
Heating oil for club house 700
Shop and cafe inventories 5,000
New sportswear, for sale, at cost 4,000
Used sportswear, for hire, at valuation 1,000

Closing payables at 31 December 2015 are for:

shop and cafe inventories 800
Sportswear 450
heating oil for clubhouse 200

Two thirds of the sportswear purchases made in 2015 had been added to inventory of new
sportswear in the figures given in the list of assets above, and one third had been added directly
to the inventory of used sportswear for hire.
Half of the resulting 'new sportswear for sale at cost' at 31 December 2015 is actually over two
years old. You decide, with effect from 31 December 2015, to transfer these older items into the
inventory of used sportswear, at a valuation of 25% of their original cost.

Page 10 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
No cash balances are held at 31 December 2014 or 31 December 2015. The equipment for the
grounds person is to be depreciated at 10% per annum, on cost.

Required:
Prepare the income and expenditure account and statement of financial position for the AB sports
club for 2015. (23)

6.6 GD SPORTS CLUB

The GD Sports Club do not keep any accounting records other than notes concerning the
subscriptions of members and the amounts paid for expenses. During discussions with the club
committee you discover the following:

(1) The club does not have a bank account and conducts all its transactions in cash, any surplus
being paid into a building society account. The interest credited to this account for the year to 31
March 2015 was Rs.350.
(2) A summary of the payments for the year is:
Rs.
Deposit to building society account 250
Purchase of dartboards (sports equipment) 100
Heat/light 262
Repairs to snooker tables 176
Cafe payables 7,455
Rental of premises 1,000
Club match referees’ fees and expenses 675
Trophies, etc (treated as an expense) 424
Refreshments for visiting teams 235

(3) The club has 100 members who each pay Rs.5 per annum subscription. However, on 31
March 2014 ten members had already paid their subscriptions for 2015.

On 31 March 2015 two members who had not been seen in the club since August 2014 had not
paid their subscriptions for 2015 and it has been decided that the amount due be written off and
that their names be removed from the list of members.
(4) The club has only two sources of income from club members - subscriptions and cafe sales.
A profit margin of 30% of selling price, is normally applied to determine cafe selling prices but
during the year Rs.397 of goods were sold at cost.
(5) The club has the following other assets/liabilities:
1 April 2014 31 March 2015
Rs. Rs.
Equipment 4,000 ?
Building society account 4,600 5,200
Cafe inventories 840 920
Cafe payables 630 470
Cash in hand Nil Nil
Creditor for heat/light 34 41
Equipment is depreciated at 10% of the value of equipment held on 31 March each year.
Required:
 Prepare a cafe trading account for the year ended 31 March 2015; (8)

Page 11 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
  Prepare an income and expenditure account for the year ended 31 March 2015;(7)
 Prepare a statement of financial position at 31 March 2015. (5)

6.7 HB TENNIS CLUB

The HB Tennis Club was formed on 1 April 2015 and has the following receipts and payments
account for the six months ended 30 September 2015:
Receipts Rs. Payments Rs.
Subscriptions 12,600 Purchase of equipment 4,080
Tournament fees 465 Groundsman’s wages 4,520
Bank interest 43 Rent and business rates 636
Sale of club ties 373 Heating and lighting 674
Life membership fees 4,200 Postage and stationery 41
Court maintenance 1,000
Tournament prizes 132
Purchase of club ties 450
Balance c/d 6,148
17,681

Notes:
(1) The annual subscription fee is Rs.300. On 30 September there were five members who had
not paid their subscriptions, but this money was received on 4 October 2015.

(2) The equipment is expected to be used by the club for five years, after which time it will need
to be replaced. Its estimated scrap value at that time is Rs.50.

(3) During the six months, the club purchased 100 ties printed with its own design. Forty of these
ties remained unsold at 30 September 2015.

(4) The club has paid business rates in advance on 30 September 2015 of Rs.68.

(5) The club treasurer estimates that the following amounts should be accrued for expenses:
Rs.

Groundsman’s wages 40
Postage and stationery 12
Heating and lighting 53

(6)The life membership fees received relate to payments made by four families. The scheme
allows families to pay Rs.1,050 which entitles them to membership for life without further
payment. It has been agreed that such receipts would be credited to income and expenditure in
equal instalments over 10 years.

Required:
(a) Prepare the club’s income and expenditure account for the six months ended 30
September 2015. (8)
(b) Prepare the club’s statement of financial position at 30 September 2015. (7)

Page 12 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
6.8 MONARCH SPORTS CLUB
The Monarch Sports Club has the following summary of its cash book for the year ended 30 June
2015:
Rs. Rs.
Opening bank balance 12,500
Receipts:
Subscriptions 18,000
Life membership fees 3,000
Competition receipts 7,500
Entrance fees 2,500
Equipment sold 1,000 32,000
44,500
Payments:
Transport to matches 3,700
Competition prizes 4,300
Coaching fees 2,100
Repairs to equipment 800
Purchase of new equipment 4,000
Purchase of sports pavilion 35,000
(49,900)
Closing balance (overdrawn) (5,400)

The following information is available regarding the financial position at the beginning and end
of the accounting year:
1 July 2014 30 June 2015
Rs. Rs.
Subscriptions in advance 1,100 900
Subscriptions in arrears 200 300
Coaching fees outstanding 150 450

Of the subscriptions outstanding at the beginning of the year, only half were eventually received.
The equipment sold during the year had a net book value of Rs.1,200 at 1 July 2014. Equipment
is to be depreciated at 20% per annum straight line. Life membership fees are taken to cover 10
years.
The treasurer insists that no depreciation needs to be charged on the sports pavilion, as buildings
do not decrease in value. He says that the last club of which he was treasurer did charge
depreciation on its buildings but that when the club came to replace them, there was still
insufficient money in the bank to pay for the new building.
Required: Prepare an income and expenditure account for the Monarch Sports Club for the year
ended 30 June 2015. (10)

6.9 LH SPORTS CLUB

The LH Sports Club opened on 1 May 2014 having purchased premises for Rs.80, 000 and
furniture for Rs.18,000, both financed by an interest-free loan from a member. The club secretary
has produced the following income and expenditure account for the year to 30 April 2015.

Page 13 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Income Rs. Rs.
Joining fees (89 members x Rs.200 each) 17,800
Annual subscriptions 12,000
Cafe profits 8,450
Dinner surplus (means profit) 830
Equipment hire receipts 1,750 40,830
Expenditure
Premises costs 10,990
Equipment costs 5,590
Secretary’s expenses 470
Bank charges 125 (17,175)
Surplus for the year 23,655

The income and expenditure account has been prepared after taking into account the following
items at 30 April 2015:
□ cafe inventories Rs.1,400
□ payables for cafe supplies Rs.1,320
□ rates and insurances prepaid Rs.2,280

The following items have not been taken into account:

 the equipment costs figure includes Rs.4,000 for the purchase of equipment
 depreciation is to be provided as follows:
 at 2% on premises
 at 10% on furniture
 at 20% on equipment
 joining fees are to be spread over a five-year period
 the annual subscriptions figure includes Rs.960 paid in advance
 Subscriptions outstanding at the end of the year, and expected to be collected, amount to
Rs.300.

The bank balance at 30 April 2015 was Rs.21,295.

Required:
 Calculate the correct surplus for the year. (6)
 Prepare the statement of financial position at 30 April 2015.(8)

Page 14 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
ANSWERS
6.1 GILTAN GOLF CLUB
Income and expenditure account for Giltan Golf Club for year ending 31 March 2016
Income Rs.(000) Rs.(000)
Functions surplus (367 - 305) 62
Sale of land (1,600 - 500) 1,100
Bank interest 60
Bequest 255
Sundry income 46
Subscriptions (W1) 2,860
4,383
Expenditure
Bad debts 15
Repairs 146
Telephone (67 - 14 + 10) 63
Heat and light (115 - 32 + 40) 123
Salaries and wages (2,066 - 12 + 14) 2,068
Sundry expenses 104
Depreciation – building 190
Depreciation – furniture 103
Depreciation - fixtures and fittings 47 (2,859)
Surplus for the year 1,524

Giltan golf club: Statement of financial position as at 31 March 2016

Non-current assets Cost Accumulated Carrying
depreciation Amount
Rs.(000) Rs.(000) Rs.(000)
Land (4,000 - 500) 3,500 - 3,500
Buildings (W3) 3,800 (1,050) 2,750
Fixtures and fittings (W4) 470 (129) 341
Furniture (W5) 515 (267) 248
8,285 (1,446) 6,839
Current assets
Bank 2,402
9,241
Accumulated Fund (W2) 7,618
Surplus for the year 1,524
9,142
Current liabilities
Accruals 64
Subscriptions in advance 35
9,241

Page 15 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Workings
W1 Subscriptions account
Rs.(000) Rs.(000)
Subs in arrears b/d 80 Subs in advance b/d 30
Income and expenditure 2,860 Bank 2,930
Subs in advance c/d 35 Bad debts 15
2,975 2,975

W2 Opening statement of affairs 2015

Assets Rs (000)
Bank 682
Subscriptions in arrears 80
Land 4,000
Buildings (3,200 - 860) 2,340
Fixtures (470 - 82) 388
Furniture (380 - 164) 216
Liabilities 7,706
Accruals (58 + 30) (88)
7,618

W3 Buildings
Cost Acc. Depreciation
Rs.(000) Rs.(000)
Balance b/d 860
3,200
Extension to club house 600
Depreciation (3,800 x 5%) 190
3,800 1,050
W4 Fixtures and fittings
Cost Acc.
Depreciation
Rs.(000) Rs.(000)
Balance b/d 470 82
Depreciation (10% x 470) 47
470 129
W5 Furniture
Cost Acc. Depreciation
Rs.(000) Rs.(000)
Balance b/d 380 164
Additions 135
Depreciation (20% x 515) 103
515 267
Telephone payable account
Rs.(000) Rs.(000)
cash 67 b/d 14
Expense (bal) 63
c/d 10
77 77

Page 16 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Heat and light payable
Rs.(000) Rs.(000)
cash 115 b/d 32
Expense (bal) 123
c/d 40
155 155
Telephone payable account
Rs.(000) Rs.(000)
Cash 2,066 b/d 12
Expense (bal) 2,068
c/d 14
2,070 2,070

6.2 LANGTON HOCKEY CLUB

Income and Expenditure Account for the year ended 30 June 2016
Income Rs.(000) Rs.(000)
Profits from tea stall (W1) 260
Profit from annual fair (2,150 - 1,450) 700
Subscriptions (W4) 2,100
Profit on sale of table tennis table (40 - 30) 10
3,070
Expenditure
Rent (600 + 40 - 50) 590
Net expense of outings (370 - 300) 70
Prizes for whist evenings 90
Repairs to snooker table 35
Refreshments 240
Depreciation (W2) 556 (1,581)
Excess of income over expenditure 1,489
Statement of financial position as at 30 June 2016
Rs.(000) Rs.(000)
Assets
Non-current assets
Sports equipment 2,224

Current assets
Inventories for tea stall 60
Subscriptions due (4 x 20) 80
Prepayments – rent 50
Bank (W3) 1,805 1,995
Total assets 4,219
Equity and liabilities
Accumulated fund b/f (W5) 2,540
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Excess of income over expenditure 1,489
4,029
Current liabilities
Trade payables (tea stall) 696
Total equity and liabilities 4,219

Workings
(W1) Tea stall
Inventory
Rs.(000) Rs.(000)
b/d 120 Cost of sale 1,040

Purchases 980 c/d 60

1,100 1,100

Trade payables
Rs.(000) Rs.(000)
Cash 900 b/d 110
Expense (bal) 980
c/d 190
1,090 1,090

Sports equipment
Rs.(000) Rs.(000)
b/d 2,560 Disposal 30
Depreciation (2,560 +
250) x 20% 556
Cash 250 c/d 2,224
2,780 2,780

Prepaid rent
Rs.(000) Rs.(000)
b/d 40 Expense (bal) 590
Cash 600 c/d 50
640 2,780

Bank + Cash account

Rs.(000) Rs.(000)
Opening balance 30 Table tennis table 250
Contribution to outings 300 Rent 600
Annual fair takings 2,150 Tea stall purchases 900
Tea stall sales (W1) 1,300 Annual fair 1,450
Subscriptions (1,520 + Outings 370
400) 1,920 Prizes 90
Sale of table tennis 40 Repairs 35

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Table Refreshments 240
Bal c/f (bal fig) 1,805
5,740 5,740

Subscriptions account
Rs.(000) Rs.(000)
Bal. b/f - Family (2 x 50,000) 100
Income and expenditure (bal fig) 2,100 Bank - Family (8 x Rs.50,000) 400
Bank - Individual (76 x 20,000) 1,520
Bal. c/f - Individual (4 x 20,000) 80
2,100 2,100

Opening accumulated fund

Rs.(000)
Sports equipment 2,560
Inventory for tea stall 120
Subscriptions in advance (2 x 50,000) (100)
Rent prepaid 40
Bank 30
Payables for the tea stall (110)

2,540

6.5 AB SPORTS AND SOCIAL CLUB

AB Sports and social club: Income and expenditure account
Rs. Rs.
Incomes
Subscriptions (W1) 10,720
Shop and cafe profit (W2) 9,200
Sale of sportswear (W3) 1,400
Hire of sportswear (W4) 1,700
Interest on deposit account 800 23,820
Expenditure:
Rent of clubhouse 6,000
Heating oil (1,000 + 4,000 + 200 - 700) 4,500
Grounds person 10,000
Bad debts (unpaid subscriptions = 10 +20) 30
Depreciation (5,000 x 5%) 500 (21,030)
Net surplus 2,790

AB Sports and Social Club statement of financial position as at 31 December 2014

Non-current assets Rs. Rs.
Equipment for grounds person
Cost 5,000
Depreciation (3,500 + 500) 4,000
1,000

Page 19 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Current assets
Heating oil 700
Shop and cafe inventories 5,000
New sportswear (4,000 – 2,000) 2,000
Hire sportswear (1,000 + 500) 1,500
Subscriptions due 90
Bank
Current account (1,000 + 39,800 – 39,500) 1,300
Deposit account (10,000 + 6,000) 16,000 26,590
27,590
Capital and liabilities
Accumulated fund b/f 23,150
Surplus for year 2,790 25,940
Current liabilities
Shop and café 800
Sportswear 450
Heating oil 200
Subscriptions in advance 200 1,650
27,590

Workings
Inventory of heating oil
Rs.(000) Rs.(000)
b/d 1,000 Cost of sale 4,500
Purchases 4,200 c/d 700
1,100 1,100

Trade payables (heating oil)

Rs.(000) Rs.(000)
Cash 4,000 b/d -
purchase (bal) 4200
c/d 200
77 77

Subscriptions account
Rs.(000) Rs.(000)
b/d (10+230) 240 Bal. b/f 40
Income (bal fig) 10,720 Bank 11,000
Bad debts 30
c/d 200 Bal. c/f 90
11,160 11,160

Page 20 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Shop and cafe results Rs. Rs.
Sales 20,000
Opening inventory 7,000
Purchases (9,000 + 800 - 1,000) 8,800
Closing inventory (5,000) (10,800)
Profit (gross) 9,200
Sale of sportswear Rs. Rs.
Sales 5,000
Opening inventory 3,000
Purchases (4,500 + 450 - 300) x 2/3 3,100
Closing inventory (4,000) 2,100
Profit (gross) 2,900
Loss on sportswear transferred (1,500)
Profit 1,400
Hire of sportswear Rs. Rs.
Rentals 3,000
Opening balance 750
Additions of cost (4,500 + 450 - 300) x 1,550
1/3
Closing inventory at valuation (1,000) 1,300
Surplus 1,700

6.6 GD SPORTS CLUB

(a) The GD sports club: Cafe trading account for the year ended 31 March 2015
Rs. Rs.
Sales 10,137
Opening inventory 840
Purchases 7,295
Closing inventory (920) 7,215
Cafe profit 2,922

(b) Income and expenditure account for the year ended 31 March 2015
Income Rs. Rs.
Subscriptions 500
Profit
From café 2,922
Building society interest 350
3,772
Expenditure:
Rent of premises 1,000
Heat and light (262 - 34 + 41) 269
Repairs to snooker tables 176
Referees’ fees and expenses 675
Trophies etc. 424
Refreshments for visitors 235
Bad debts (unpaid subscriptions) 10
Depreciation (10% x (4,000 + 100)) 410 3,199
Page 21 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Surplus for the year 573
(c) Statement of financial position at 31 March 2015
Rs. Rs.
Assets
Non-current assets:
Equipment at 1 April 2015 4,000
Additions in year – Dartboards 100
Less: Depreciation (410) 3,690
Current assets:
Cafe inventory 920
Building society deposit 5,200 6,120
9.810

Capital and liabilities

Accumulated fund:
Surplus at 1 April 2015 (W4) 8,726
Surplus for the year 573 9,299
Current liabilities:
Café 470
Heat and light 41 511
9,810
Workings
(W1)
Cash account
Rs. Rs.
Balance b/d Cash Nil Payments as per note 2 10,577
440 Balance c/d Cash Nil
Cafe sales
Subscriptions (W2) 10,137
10,577 10,577

(W2)
Subscriptions account
Rs. Rs.
Balance b/d -
Cash receipts
Income and expenditure
account (bal fig) Subs in advance (10 x
500 50
Rs.5))

(100 - 10 - 2) x 440
Rs.5)
Bad debt (2 x Rs. 5) 10
500 500

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
(W3)

Cafe payable account

Rs. Rs.
Cash payments 7,455 Balance b/d 630
Balance c/d 470 Purchases (bal fig) 7,295
7,925 7,925

(W4) Accumulated fund at 31 March 2015

Rs.

Equipment 4,000
Cafe inventory 840
Building society account 4,600
Payables – Café (630)
Payables - Heat and light (34)
Subscriptions in advance (50)
8,726

(W5)
Café inventory account
Rs. Rs.
b/d 840 Cost of sales 7,215
Purchases 7,295 c/d 920
8,135 8,135

Calculation of sales:
Cost of sales 7,215
Less sold at cost (397)
6,818
Sale at normal price:
6,818 / 70 x 100 9,740
Sale at cost 397
10,137

6.7 HB TENNIS CLUB

(a) HB Tennis Club income and expenditure account for the six months ended 30
September 2015

Income Rs. Rs.

Subscriptions (W1) 7,050
Net income from tournaments (465 - 132) 333
Bank interest 43

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Profit from sale of club ties (W2) 103
Life membership (W3) (4,200 / 10 x 6 / 12) 210
7,739
Expenditure
Groundsman’s wages (4,520 + 40) 4,560
Rent and rates (636 - 68) 568
Heating and lighting (674 + 53) 727
Postage and stationery (41 + 12) 53
Court maintenance 1,000
Depreciation of equipment (W4) 403 (7,311)
Excess of income over expenditure 428

(b) HB Tennis Club statement of financial position as at 30 September 2015

Non-current assets Rs. Rs.
Equipment at cost 4,080
Accumulated depreciation (403)
3,677
Current assets
Inventory of ties (40 / 100 x 450) 180
Subscriptions in arrears (5 x 300 x 6/12) 750
Rates paid in advance 68
Balance at bank 6,148
7,146
10,823
Accumulated fund
Excess of income over expenditure 428

Life membership fund (W3) (4,200 - 210) 3,990

Current Liabilities
Subscriptions in advance (12,600 x 6/12) 6,300
Accrued expenses (40 + 12 + 53) 105
6,405
10,823
(W1) The subscriptions received of Rs.12, 600 are for a full year and we are also told that 5
subscriptions were paid after 30 September.
Rs.
Subscriptions paid for 6 month period (6 /12 x 12,600) 6,300
Subscriptions in arrears (5 x %2 x 300) 750

Subscription income 7,050

Alternatively this may be presented:

Page 24 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Subscriptions account
Rs. Rs.
Income and expenditure 7,050 Bank 12,600
Bal c/d subscriptions in 6,300 Bal c/d subscriptions in 750
advance (6 /12 x 12,600) arrears (5 x 300 x 6/12)
13,350 13,350
Note also that the remaining Rs.6,300 that has been paid for subscriptions but which relates to
the six months from 1 October 2015 to 31 March 2016 will be shown as a liability, subscriptions
in advance, in the statement of financial position.
(W2)
Rs. Rs.
Sale of ties Cost of sales 373
Purchases 450
x
Closing inventory (%)0 450) (1,840) 2,470
Profit on sale of ties 1,043

(W3) The life membership fees paid of Rs.4, 200 are to be taken to the income and expenditure
account over 10 years or 120 months. Therefore the amount to be taken to income and
expenditure in this 6 month period is 6/120 x Rs.4, 200 = Rs.210.
This will leave Rs.4,200 - Rs.210 = Rs.3,990 in the Life membership fund on 30 September
2015.
(W4)
Rs.
Cost of equipment 4,080
Less: Estimated scrap value (450)
4,030
This is to be depreciated over 5 years or 60 months

Depreciation charge /60 x 4,030 Rs.403

6.8 MONARCH SPORTS CLUB

Monarch Sports Club: Income and expenditure account year ended 30 June 2015
Income Rs. Rs.
Annual subscriptions (W1) 18,400
Life membership (3,000 x 10%) 300
Entrance fees 2,500
Surplus from competitions (W2) (7,500 – 4,350) 3,200
24,400
Expenditure
Transport 3,700
Coaching fees (2,100 - 150 + 450) 2,400
Repairs 800
Bad debts 100
Loss on disposal of equipment (W3) 200
Depreciation (W4) 800 (8,000)
Surplus for the year 16,400
Page 25 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
Workings
(W1)
Subscriptions account
Rs. Rs.
Balance b/d (in arrears) 200 Balance b/d (in advance) 1,100
Income (bal) 18,400 Cash
Balance c/d (in advance) 900 Bad debts 100
Balance c/d (in arrears) 300
19,500 19,500

(W2) Competitions
Rs.
Receipts 7,500
Prizes (4,300)
Surplus 3,200

(W3) Sale of equipment

Disposal account
Rs. Rs.
Assets 1,200 Cash 1,000
Loss to I & E a/c 200
1,200 1,200

(W4) Depreciation
20% x 4,000 = 800
Equipment account
Rs. Rs.
b/d 1,200 Disposal 1,200
Cash 4,000 Depreciation 800
c/d 3,200
5,200 5,200

6.9 LH SPORTS CLUB

(a) Surplus for the year
Rs. Rs.
Surplus per draft income and expenditure account 23,655
Add capital expenditure 4,000
Deduct depreciation
Premises (80,000 x 20%) 1,600
Furniture (18,000 x 10%) 1,800
Equipment (4,000 x 20%) 800
(4,200)

Page 26 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Less 80% joining fee (14,240)
Less net subscriptions in advance (960 - 300) (660)
New surplus for year 8,555
(b) LH Sports Club: Statement of financial position as at 30 April 2015
Rs. Rs.
Assets
Non-current assets
Premises (80,000 – 1,600) 78,400
Furniture (18,000 - 600) 16,200
Equipment (4,000 - 800) 3,200 97,800
Current assets
Inventory 1,400
Subscriptions in arrears 300
Prepaid rates and insurance 2,280
Bank 21,295 25,275
123,075

Capital and liabilities

Accumulated fund at 1 May 2014 -
Surplus for year 8,555
Accumulated fund at 30 April 2015 8,555
Joining fees (17,800 – 3,560) 14,240
Loan from member 98,000
Current liabilities
Payables 1,320
Subscriptions in advance 960 2,280
123,075
Working
Non-current assets Cost Depreciation Net
Rs. Rs. Rs.
Premises 80,000 (1,600) 78,400
Furniture 18,000 (1,800) 16,200
Equipment 4,000 (800) 3,200
102,000 4,200 97,800
Extra practice questions of Income and expenditure account:
1.Answer the following short questions
1. Sale of Rs.100,000 includes sale return of 500
2. Purchase of Rs.100,000 includes purchase return of 500
3. Administrative expenses of Rs.100,000 includes depreciation of 500
4. Cash and bank of Rs.100,000 includes bank overdraft of 500
5. WDV of Rs.100,000 includes accumulated depreciation of 500
6. Subscription receivable of Rs.100,000 includes subscription in advance of 500
7. Debtors of Rs.100,000 includes stock of 500
8. Sale of Rs.100,000 includes gain on disposal of 500
2. Define the 100% amount in the following data:
1. Profit is 15% of sales
2. Profit is 15% of cost
3. Depreciation is 15% of WDV

Page 27 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 4. Depreciation is 15% of cost
5. Commission is 15% of profit before commission
6. Commission is 15% of profit after commission

Q.1 The treasurer of a golf club has produced the following receipts and payments account for
the year ended 31 December 2012:
Receipts Rupees Payments Rupees
Balance at 1 January 2012 157,800 Canteen payments 213,000
Subscriptions 654,900 Wages & salaries – clubhouse 284,000
Canteen receipts 331,400 Wages & salaries – canteen 78,900
Golf course fees 284,000 Course repairs 149,900
Events receipts 86,800 Insurance 72,000
Competition fees 46,600 Electricity 47,300
Course equipment sold 19,800 Telephone 19,700
Events expenses 47,300
Sundry expenses 15,000
Competition expenses 12,600
Balance at 31 December 2012 641,600
1,581,300 1,581,300

(i) Opening and closing balances of current assets and liabilities are as follows:

1 January 2012 31 December 2012

----------Amount in Rupees----------
Canteen trade payables 71,000 55,200
Canteen inventory 60,000 39,500
Subscriptions in arrears (receivable) 15,800 27,600
Subscriptions in advance 55,200 35,500
Telephone due (payable) 3,900 5,900
Competition expenses due (payable) 3,200 3,900

(ii) Fixed assets balances at 1 January 2012, and the applicable depreciation rates are as
follows:

Cost Accumulated Rate of dep.

depreciation on cost
-----Amount in Rupees-----
Clubhouse and course 3,156,000 214,600 5%
Fixtures and fittings 552,000 166,000 10%
Course equipment 1,262,000 542,000 20%
(iii) The value of clubhouse and course comprises of freehold land and buildings in the
ratio of 60:40.
(iv) Course equipment costing Rs. 55,000 was disposed of during the year for Rs. 19,800.
The equipment had been purchased on 1 January 2008. No depreciation is charged in
the year of sale.
(v) The insurance premium paid during the year covers the period 1 October 2012 to 30
September 2013. The premium for the previous year amounted to Rs. 48,000.
(vi) The canteen manager is entitled to a bonus equal to 20% of canteen profits after
charging his bonus.
Page 28 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 (vii) Canteen trade payables at 31 December 2012 include a debit balance of Rs. 6,000.
(viii) NRV of the opening canteen inventory was Rs. 55,200.

Required:
(a) A Canteen Trading Account for the year ended 31 December 2012
(04)
(b) An Income & Expenditure Account for the year ended 31 December 2012 and a balance
sheet of the club as at that date.
Results of canteen, competition and events should be shown separately as a line item.
(20)
Note: canteen trading account means an income statement of canteen.

Q. 2
Seaview Club started its operations on 1 February 2015. Sponsor of the club contributed Rs. 50
million towards general fund for the start of operations and placed the amount in the bank.
Following is the receipts and payments summary for the period from 1 February 2015 to 31
December 2015:
Receipts Rs. In Payments Rs. In
‘000’ ‘000’
Sponsor’s contribution 50,000 Furniture & fixtures 1,200
Joining fees 20,800 Van 1,500
Subscription from members 29,952 Salaries 1,000
Sale of beverages 1,500 Rent 3,600
Utilities 570
Insurance 120
Repairs and maintenance 275
Purchase of beverages 1,367
Advance for plot of land 65,000
Balance 27,620
102,252 102,252
Additional information:
(i) The joining fee for award of membership is Rs. 50,000. Annual subscription is Rs. 24,000.
All new members pay three years subscription in advance. The memberships were awarded
as follows:
Month March June September December
No. of members 112 98 101 105
(ii) The club sells beverages at a gross profit margin of 20%. All sales are billed in the first
week of the next month and the payment is received in the same month. Sale of beverages
during December 2015 amounted to Rs. 150,000.
(iii) 25% of total purchases of beverages made during the year remained unsold at year-end.
(iv) Salaries are paid on the first day of next month. The amount of salaries includes an
advance amounting to Rs. 10,000 paid to an employee on 1 December 2015. the advance is
repayable on 1 February 2016.
(v) Rent for three years was paid in advance on 1 February 2015.
(vi) Presently the club is operating on rental premises. However, a plot of land has been
purchased on which construction would commence shortly. Title of land would be
transferred after completion of legal formalities.

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
(vii) Payments for utilities include security deposit paid to utility companies amounting to Rs.
20,000. Utility bills are paid on the 7th day of the next month.
(viii) Insurance premium was paid on 1 February 2015 covering a period of 12 months.
(ix) Repairs and maintenance include an advance of Rs. 100,000 paid to a contractor for
construction of a parking shed. Repair bills amounting to Rs. 7,000 were outstanding at
year-end.
(x) Furniture & fixtures and van were purchased on 1 February 2015. Depreciation on these
assets is to be charged at 10% and 20% respectively.
Required:
Prepare statement of financial position as at 31 December 2015 and income & expenditure
account of Seaview Club for the period ended 31 December 2015. (20)

Question 3
The accountant of Leisure Club was terminated on account of charges of fraud on 31 December
2016 and Mr. Emad has been appointed in his place. Emad has gathered the following
information in respect of the year ended 31 December 2016:

(i) The club has 3,300 members and the membership fee is Rs. 10,000 per annum. The fee
payable by each member becomes due on the first day of the quarter in which he became a
member. The fee received in each quarter was as follows:
Quarter First Second Third Fourth
Subscription received 9,900,000 8,250,000 5,500,000 9,350,000
(Rs.)
Last year the fee was Rs. 9,000 per annum. However, the number of members was the
same.
(ii) A summary of the bank account for the year is shown below;
Deposits Rupees Withdrawals Rupees
Balance as at 1 Jan. 2016 3,700,500 Insurance 175,000
Cash deposited into bank 37,848,500 Rent and rates 4,200,000
Written off amount recovered 1,860,000 Utilities 4,365,000
Disposal of fixed assets 750,000 Freehold land purchased 17,000,000
Members subscription Cash withdrawals from bank 6,120,000
received directly in bank 19,800,000 Payment to creditors 18,155,000
account
Repairs and maintenance 700,000
Exercise equipment 7,350,000
Balance as at 31 Dec. 2016 5,894,000
63,959,000 63,959,000
(iii) Amounts paid from petty cash were as follows:
Rupees
Salaries 2,300,000
Sundry expenses 640,000
(iv) The club has a tuck shop which earns a profit margin of 20% of sales. All sales of tuck
shop are made on cash. During the year, stock costing Rs. 500,000 was destroyed by fire.
(v) The opening WDV of fixed assets was Rs. 28,000,000. Exercise equipment was purchased
on 1 October 2016. Fixed assets having opening WDV of Rs. 800,000 were disposed off

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 on 31 March 2016. Fixed assets are depreciated @ 20% under the reducing balance
method.
(vi) The opening and closing balances of cash in hand were Rs. 300,000 and Rs. 25,000
respectively.
(vii) The following balances have been extracted through a scrutiny of the available records:
2016 2015
Rupees
Creditors 3,330,000 2,500,000
Prepaid rent 175,000 168,000
Stock- tuck shop 2,500,000 2,300,000
Required:
(a) Determine the amount of loss incurred by the club due to fraud committed by the previous
accountant. (09)
(b) An income and expenditure account for the year ended 31 December 2016. (05)
(c) Statement of financial position as at 31 December 2016. (06)

Page 31 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
A.1 Golf Club
Canteen trading account for the year ended 31 December 2012
Amount in
rupees
Sales (receipt is sale) 331,400
Less: Cost of sales
Opening inventory (at lower NRV) 55,200
Purchases (working) 197,200
Closing inventory (39,500) (212,900)
Gross profit 118,500
Expenses:
Canteen staff wages (78,900)
39,600
Canteen manager’s bonus (20/120x39,600) (6,600)
Net profit of canteen 33,000

Golf Club
Income and Expenditure account for the year ended 31 December 2012
Income Amount in Rupees
Profit of canteen 33,000
Subscription 686,400
Golf course fees (receipt is income) 284,000
Profit on sale of course equipment 8,800
Profit on competition [46,600-(12,600+3,900-3,200)] 33,300
Profit on events (86,600-47,300) 39,500
Total Income 1,085,000

Expenditure
Wages and salaries – clubhouse 284,000
Course repair 149,900
Insurance 54,000
Electricity 47,300
Telephone (19,700+5,900-3,900) 21,700
Sundry expenses 15,000
Depreciation:
Clubhouse building (3,156,000x40%x5%) 63,120
Furniture and fitting (552,000x10%) 55,200
Course equipment [20%x(1,262,000-55,000)] 241,400
Total expenditure 931,620
Excess of income over expenditure 153,380

Page 32 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Golf club
Balance sheet as of 31 December 2012
Description 31 December
2012

Assets :
Clubhouse & course:
 Land (3,156,000x60%) 1,893,600
 Building (3,156,000x40% - (214,600+63,120)) 984,680
Fixture &fittings(552,000-166,000-55,200) 330,800
Course equipment (1,262,000-55,000) – (542,000+241,000- 467,600
44,000)
Subscription in arrears 27,600
Advance payment for canteen supplies 6,000
Prepaid insurance 54,000
Inventory 39,500
Bank 641,600
4,445,380
Club fund
Club Fund 1-Jan2012 (4,312,000-133,000) 4,178,900
Excess of income over the expenditure 153,380
Club Fund 31-Dec 2012 4,332,280
Liabilities:
Trade payables 61,200
Subscription in advance 35,500
Telephone due 5,900
Competition expense due 3,900
Bonus payable to canteen manager 6,600
4,445,380

(W-1) Subscription account

b/d 15,800 b/d 55,200
Subscription income 686,400 Cash 654,900
c/d 35,500 c/d 27,600
737,700 737,700

(W-2) Canteen trade payable

Cash 213,000 b/d 71,000
c/d 55,200 Purchases 197,200
268,200 268,200

(W-3) Insurance
b/d (48,000x9/12) 36,000 Expense 54,000
Cash 72,000 c/d (7,200x9/12) 54,000
108,000 108,000

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 (W-4) disposal account
Equipment 55,000 Bank 19,800
Gain 8,800 Acc. Depreciation 44,000
63,800 63,800

A.2
Seaview Club
Income & Expenditure Account
For the period ended 31 December 2015
Expenditure Rs. In Income Rs. In
‘000 ‘000
Salaries and wages (1,000 – 10 + 99) 1,089 Joining fees (Given) 20,800
Rent (3,600/3 × 11/12) 1,100 Subscription income 4,630
(W-1)
Utilities (570 – 20 + 55) 605 Profit on sale of 330
beverages (W-2)
Insurance (120/12 × 11) 110
Repairs and maintenance (275–100+7) 182
Depreciation expense
(1,200×10%×11/12+1,500×20%11/12(110+275) 385
Excess of income over expenditure 22,289
25,760 25,760

Seaview Club
Statement of Financial Position
As at 31 December 2015
Assets Rs. In
‘000
Non-Current Assets
Land Advance 65,000
Furniture & fixtures (1,200 – 110) 1,090
Van (1,500 – 275) 1,225
Advance for parking shed 100
Long term deposits – Utility 20
Long term prepayment – Rent 1,300
68,735

Current Assets
Stock (W-2) 440
Debtors for beverages (credit sale) 150
Advance & prepayments (W-3) 1,220
Bank 27,620
29,430
Total Assets 98,165

General Fund & Liabilities Rs. In ‘000

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
General fund 50,000
Excess of income over expenditure 22,289
72,289

long term advance (W-1) 15,338

Current Liabilities
Creditors (1,760 – 1,367) 393
Accrued expenses (7 + 55 + 99) 161
Advance subscription (W-1) 9,984
10,538
Total General Fund & Liabilities 98,165

W-1: Subscription Income

Subscription for 3 years is Rs. 72,000 so subscription for 1 year is Rs. 24,000 or Rs. 2,000 per
month.
Month No. of No. of Subscription Income Advance subscription
members Months for the year income
A B A × B × 2,000 A × (36 – B) × 2,000
-------------------- Rupees -----------------------
March 112 10 2,240,000 5,824,000
June 98 7 1,372,000 5,684,000
September 101 4 808,000 6,464,000
December 105 1 210,000 7,350,000
4,630,000 25,322,000
Less: short term (9,984,000)
[(112+98+101+105)×24,000]
Long term 15,338,000
or
Months
March 112 × 24,000 = 2,688,000 × 3 = 8,064,000
June 98 × 24,000 = 2,352,000 × 3 = 7,056,000
September 101 × 24,000 = 2,424,000 × 3 = 7,272,000
December 105 × 24,000 = 2,520,000 × 3 = 7,560,000
29,952,000
[29,952,000 – 4,630,000] = 25,322,000

W-2: Beverage Sale Results Rs. In ‘000’

Sales (1,500 + 150) 1,650
Less: Cost of sales
Purchases (1,320/0.75) 1,760
Closing stock (1,760 × 25%) (440) 1,320
330
Debtors
b/d -- Cash 1,500
Sales 1,650
c/d 150

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
 Payable
b/d --
Cash 1,367 Purchases 1,760
c/d 393
Stock
b/d -- Cost of sales 1,320
Purchases (bal) 1,760 (1,650 / 100 x 80)
c/d (1,320 / 75 x 25) 150

A.3
(a) Determination of Amount of Loss incurred due to fraud [it means a Cash Account in a
Statement form to find out the missing cash]
Opening balance 300,000
Receipts:
Collections from members [(3,300 × 10,000) – 19,800,000] 13,200,000
Bank withdraws 6,120,000
Tuck shop sales (W) 22,856,250
42,176,250
Payments:
Salaries (2,300,000)
Sundry Expenses (640,000)
Cash Deposited in Bank (37,848,500)
(40,788,500)
Closing balance that should have been 1,687,750
Closing Cash – Actual (Given) 25,000
Difference – Loss due to fraud 1,662,750
(b) Income and Expenditure Account
Incomes:
Subscription Income (W) 31,817,500
Income from tuck shop [22,856,250 – 18,285,000] 4,571,250
Other income – bad debts recovered 1,860,000
38,248,750
Expenditures:
Salaries (2,300,000)
Insurance (175,000)
Rent expense (4,193,000)
Utilities (4,365,000)
Repair & Maintenance (700,000)
Depreciation (W) (5,847,500)
Sundry Expenses (640,000)
Loss on disposal (10,000)
Loss of inventory due to fire (500,000)
Loss due to fraud [from (a)] (1,662,750)
(20,393,250
Surplus 17,855,500

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
(c) Statement of Financial Position
Non-Current Assets:
Fixed Assets – WDV 45,742,500
Current Assets:
Stock 2,500,000
Prepaid rent 175,000
Cash at bank 5,894,000
Cash in hand 25,000
54,336,500
Fund and Liabilities:
Accumulated Fund – Opening [168 + 2,300 + 28,000 + 300 + 3,700.5 – 21,326,000
2,500 – 10,642.5]
Add: Surplus 17,855,500
39,181,500
Liabilities:
Creditors 3,330,000
Unearned subscription Income (W) 11,825,000
54,336,500
Workings:
(W-1) Subscription Income:
Opening balance of unearned subscription [11,825,000/10,000 × 9,000] 10,642,500
Add: Receipt for the year (3,300 × 10,000) 33,000,000
Less: Closing unearned subscription (W – 1.1) (11,825,000)
Subscription Income 31,817,500
(W-1.1) Closing Balance:
Quarter 1 --
Quarter – 2 [8,250,000 × 3/12] 2,062,500
Quarter – 3 [5,500,000 × 6/12] 2,750,000
Quarter – 4 [9,350,000 × 9/12] 7,012,500
11,825,000
(W-2) Creditors
Bank 18,155,000 b/d 2,500,000
Purchases 18,985,000
c/d 3,330,000
(W-3) Prepaid Rent

b/d 168,000 Expense 4,193,000

Bank 4,200,000
c/d 175,000
(W-4) Stock
b/d 2,300,000 Loss 500,000
Cost of sales 18,285,000
Purchases 18,985,000
c/d 2,500,000
Sales from cost of sales:
18,285,000
× 100 = 22,856,250
80

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Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE
(W-5) Fixed Assets Account
b/d 28,000,000 31-3 Disposal (W) 760,000
1-10 Bank 7,350,000 Depreciation (W) 5,847,500
Bank (Land) 17,000,000
c/d 45,742,500
(W-6) Disposal Account
Fixed Asset 760,000 Bank 750,000
Loss 10,000

Depreciation for the year:

[28,000,000 – 800,000] × 20% = 5,440,000
800,000 × 20% × 3/12 = 40,000
7,350,000 × 20% × 3/12 = 367,500
5,847,500
WDV of Disposal:
Opening WDV = 800,000
Depreciation [800,000 × 20% × 3/12] = (40,000)
760,000

Page 38 of 38
Prepared by: Dawood Shahid CA(f), CPA, MPhil, MBA, OCE