NABTEB Accounting 2022 Theory — Question 6

Model answer

Subscription Account: Subscription in arrears b/d 120 + Income & Expenditure (subscription income) 4,020 + Subscription in advance c/d 60 (Dr side) = 4,200; Subscription in advance b/d 30 + Cash received 4,000 + Subscription in arrears c/d 170 (Cr side) = 4,200. => Subscription income transferred to Income & Expenditure = 4,020. Competition Prizes Trading Account: Opening stock 70 + Purchases 630 = Cost of prizes available 700; less Closing stock 80 = Cost of prizes sold 620; Sales of competition prizes 800; Gross profit on competition = 180. Competition Prizes Suppliers Account (workings): Owing b/f 90 + Purchases 630 = 720; Payments 600 + Owing c/d 120 = 720. Preliminary working - Equipment: Equipment b/f 1,950 less equipment c/f 1,500 = Depreciation 450. Income and Expenditure Account for year ended 31 December 2019: Income: Subscription 4,020; Refund of rent 1,000; Donation 300; Gross profit on competition prizes 180 = Total income 5,500 Expenditure: Rent 3,000; Secretariat expenses 200; Donation to charity 60; Stationery and printing 320; Depreciation 450; Honorarium to speaker 2,200 = Total expenditure 6,230 => Excess of expenditure over income (deficit) = 730 Balance Sheet as at 31 December 2019: Accumulated fund 2,020 less excess of expenditure over income (730) = 1,290 Add: Current liabilities - Creditors 120; Subscription in advance 60; Excess of payment over receipts 280 = 460 Total = 1,750 Represented by: Fixed asset - Equipment 1,500; Current assets - Stock 80; Subscription in arrears 170 = 250 Total assets = 1,750 (balances).