Question

6. The books of Omiye Social Club showed the following information for the year ended 31st December 2015: Receipts and Payments Account — Balance 01/01/2015 N3,000; Subscriptions N130,000; Proceeds from concert N9,000; Interest on deposit N2,400; Income from dance N7,200; Salaries N10,600; Maintenance N13,000; Stationery N1,200; Postage N600; Dance expenses N4,000; General expenses N5,400; Balance c/d N116,800. Balances as at 1st January 2015: Accumulated fund N266,000; Bank deposit N80,000; Club house N160,000; Furniture and fittings N24,000. Additional information: (i) Outstanding as at 31st December 2015: Stationery N400, general expenses N1,200; (ii) Salaries of N10,600 paid including N1,000 owed since 2014; (iii) Depreciate club house by 10% and furniture and fittings by 15%. You are required to prepare: (a) Income and Expenditure Account for the year ended 31st December 2015; (b) Balance Sheet as at that date.

Accepted Answer

(a) See the Income and Expenditure Account table in the Diagram column. The surplus for the year is N93,600, after charging adjusted Salaries (N9,600, i.e. N10,600 paid less N1,000 owed from the prior year), Maintenance (N13,000), Stationery adjusted for the N400 outstanding (N1,600), Postage (N600), Dance expenses (N4,000), General expenses adjusted for N1,200 outstanding (N6,600), and Depreciation on Club house (N16,200) and Furniture and fittings (N3,600), against total income of Subscriptions (N130,200, net of arrears/prepayments per the subscription account), Proceeds from concert (N9,000), Interest on deposit (N2,400) and Income from dance (N7,200).
(b) See the Balance Sheet table in the Diagram column, showing Fixed assets (Club house and Furniture and fittings) at net book value of N164,400, plus Current assets (Bank N80,000, Cash N116,800), financed by the Accumulated fund (N266,000 opening plus N93,600 surplus = N359,600) and Current liabilities (accrued expenses N1,600), giving a balance sheet total of N361,200.

WAEC Accounting 2020 Theory — Question 6

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