Form 3 Book Keeping – ACCOUNT OF NON TRADING ORGANIZATION

NON –TRADING ORGANIZATION
Non trading organizations are those organizations which their main purpose is not to make profit but to provide services and entertainment to their members, the organizations are such as ;- Sports club,  Trade union, Political organization … etc

SOURCE OF INCOME FOR NON TRADING ORGANIZATION

1.  Fees
   
2.  Subscription from members
3.  Government grants or aid
4.   Donation etc
   

edu.uptymez.com

The account recording involves the following;-

a)     Receipts and payment a/c

b)     Income expenditure a/c

c)     Balance sheet

 
 

A.    RECEIPTS AND PAYMENT A/C

Receipts and payments a/c is a summarized cash book recording cash and bank transaction for non trading organizations.

Receipts are recorded on the debit side while payments are recorded on the credit side of the account.

        Dr                                                                                      Cr

 
 

            RECEIPTS                                                        PAYMENTS

 
 

B.     INCOME AND EXPENDITURE A/C

   Is the same as profit and loss in a profit oriented organization, income and expenditure a/c  is drawn up and show either surplus or deficit for non trading organization.

SURPLUS

Is the excess of income over expenditure of non trading organizations.

DEFICIT

Is the excess expenditure over income of non trading organizations.

The format of income and expenditure account.

 

 
 

EXAMPLE 1

 The following information supplied to you so   as to prepare the receipts and payment account   and income and expenditure a/c of WINOME club as at 31^st Dec 1985.

                Bank 1/1/ 1985————————————————2360/=

                  Subscription for 1985—————————————11480/=

                Upkeep of sport stadium ————————————-2960/=

                Rent from sub letting ground ————————–1160/=

                  Committee expenses————————————580/=

                  Printing and stationary ——————————-330/=

                    Wages —————————————————7280/=

C.    BALANCE SHEET

Is the same as that of profit oriented organizations except that the capital of non trading organizations is known as ‘‘accumulated fund ”

Accumulated fund = assets +liabilities

 
ADJUSTMENT   OF SUBSCRIPTION   A/C

 Subscription account is adjusted so as to calculate   or determine   the amount to be transferred to income and expenditure account therefore the amount calculated in the subscription account ( the different between debit and credit side)

 In subscription   account will either be recorded in income and expenditure a/c   of the income side or expenditure side .

Example

The following information is provided to you by the treasures of a social regarding subscription on 31 December 1990.

Subscription occurred                                 2,050

Subscription received in advance             1,420

On 31^st December 1991

Subscription accrued                        1,890

Subscription received in advance    1,640

Subscription during the year             38,570

Required

Draw up the subscription a/c of the club for the year 1991.

            Dr                                 SUBSCRIPTION A/C                           CR

      Dr                                               SUBSCRIPTION A/C                                  Cr

            DR                              INCOME AND EXPENDITURE A/C                  CR

 
 

                                               BALANCE SHEET [EXTRACT

EXAMPLE 2

An Amateur theatrical group charges its members an annual subscription of Tshs 20 per member it accrues for subscription owing at the end of each of year and also adjust for subscription received in advance.

A)  On January, 2013, 18 members had not yet paid their subscription for the year 2012.

In December, 2012, 4 members paid Tshs 80 for the year 2013.

During the year 2013 it received Tshs 7,420 in each for subscription

For      2012          360

For      2013        6920

For       2014          140

                              7.420

Required

-Prepare subscription a/c , profit and loss a/c and balance sheet [ extract ]

At 31^st December 2013, 11 members had not paid their 2013 subscription.

   
    Dr                                     SUBSCRIPTION A/C                                   Cr

 
        DR                     INCOME AND EXPENDITURE A/C                                     CR

 
 

                                                           BALANCE SHEET [EXTRACT]

 
 

EXAMPLE3

The treasures of the long lane football clubs has prepared a receipts and payments account but members have complained about the inadequacy of such an account, she therefore asks an accountant to prepare trading account for the bar, an income and expenditure account and a statement of financial position the treasure gives the accountant a copy of the receipts and payment accounts together with the information on assets and liabilities at the beginning and end of the year.

LONG LANE FOOTBALL CLUB                                                                                                                                          

RECEIPTS AND PAYMENT ACCOUNTS FOR THE YEAR ENDED 31.12.2012                                                                                                                                   

    

 
 

 
 

1.      The lands and foot ball stands were valued at 31 December at land 40,000, football stands 20,000/= The stands are to be depreciated by 10% per annum.

2.      The equipment at 31^st December 2011 was valued at 2,500 and it is to be depreciated by 20% per annum.

3.      The subscription owing by members amounted to Tshs 1,400, 31^st December 2011 and Tshs 1,750 on 31^st December 2012.

STATEMENT OF AFFAIRS AT 01.01.2012                                                                                                                                                                  

            DR                           PURCHASES CONTROL                                     CR

                         
 

                          DR                                 BAR EXPENSES                         CR

 
 

 
 

         Dr                                              SUBSCRIPTION A/C                                             Cr

 
 

                     DR                                     TRANSPORT COSTS                                      CR

 
 

               Dr        BAR TRADING ACCOUNT AT 31.12.2012                            Cr

 
 

         Dr                       INCOME AND EXPENDITURE                         Cr

 
 

                                   BALANCE SHEET AT 31.12.2012                                 

 
 

EXERCISE

1.      Draw up a subscription account income and expenditure and balance sheet [extract] from the following information.

 Subscription received during 2001                                              39,900

Subscription received in advance   1 Jan                                     1,410

Subscription received in advance      31^st Dec                             1,290

Accrued subscription 1st January                                               2,180

Accrued subscription   31^st December                                        1,930

Exercise.2.      On January 1^st 1991 the financial position of the karate society was;-

 
 

During the year ended December 31^st 1991 receipts and payments were as follows;-

 
 

The following items must also be taken into account;-

-TShs 180 owing for subscription for this year or current year

-The balance of subscription for the previous year still outstanding is to be written off as bad debts.

-The balance of equipment at December 31^st 1991 was to be depreciated by 20%

-There is an amount of Tshs 120 owing for printing expenses

Required

Income and expenditure account for the year ended December 31^st 1992 and

Balance sheet as at that date

NB: All calculations should be shown in details

Solution for   QN.1.

     Dr                                                 SUBSCRIPTION A/C                                                     Cr

 
 

    DR                              INCOME AND EXPENDITURE A/C                                 CR

                                   BALANCE SHEET (EXTRACT)                                                                                                     

 
 

Solution for   QN.2.

    Dr                                 INCOME AND EXPENDITURE A/C                          Cr

 
 

                                                BALANCE SHEET AT 31.12.1992

WORKINGS;-

      Dr                                                  SUBSCRIPTION A/C                                            Cr

 
        Dr                                                            PRINTING A/C                                            Cr

 
 

EXERCISE.3

The necessary noise sport club had the following assets and liabilities on 31^st December of the year

 
 

The following summary of the club receipts and payment was prepaid by its treasure for 2007

                                                  CASH SUMMARY

Additional information;-

-Sport ground was acquired several years ago on a 100 years lease for 50,000

-The old sport kit sold during the year had a book value of Tshs 1,500

-Write down the furniture by Tshs 300 and uniforms Tshs 3,500.

     Dr                                      SALARIES A/C                                Cr

     
           Dr                                     SUBSCRIPTION         A/C                       CR

                    Dr                                          UNIFORM A/C                                    Cr

 

                  Dr                                           SPORT KIT A/C                          CR

        
           INCOME AND EXPENDITURE A/C FOR THE YEAR ENDED 31.12.2007

 
 

                                                      BALANCE SHEET AS AT 31.12.2007

EXERCISE

On 1^st January 2011, the happy Haddock angling club had the following assets

Cash at bank                       200

Snack bar inventory          800

Club house building     12,500

During the yeah to 31^st December 2011 the club received and paid the following amount

Notes;-

-The snack bar inventory on 31^st December 2011 was Tshs 900

-The games equipment should be depreciated by 20%

Required

a.      Prepare an income and expenditure account for the year ended 31^st December 2011, Show either in this account or separately then snack bar profit and loss.

b.      Prepare a statement of financial position as at 31^st December 2011.

     
     Dr                                        BAR TRADING A/C                                 Cr 

 
 

                             INCOME AND EXPENDITURE A/C AT 31 DEC 2011

 
 

                                                STATEMENT OF AFFAIRS AT 01.01.2011

                                               BALANCE SHEET AT 31 DEC 2011