Question 3 OR (c)
Club funds: building fund, tournament fund, life membership, special subscription
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 3 OR (c) · 6 marksIn what way will you treat the items below while preparing for the Y cricket Club's income and Expenditure Account for the year that ends on March 31, 2024 and its Balance Sheet as on March 31, 2024.
| Particulars | ₹ | |
|---|---|---|
| (i) | Building Fund as on 01.04.2023 | 1,20,000 |
| Donations received for the building | 3,32,400 | |
| Expenditure on Building construction | 3,55,200 | |
| Construction work is continuing | ||
| (ii) | Tournament Fund as on April 01, 2023 | 2,256 |
| Donations received for Tournament | 11,040 | |
| Tournament Expenses | 18,120 | |
| Proceeds from Sale of Tournament Tickets | 6,000 | |
| (iii) | Life Membership Fees received during the year | 9,600 |
| (iv) | Subscription for Governor's Party received | 12,000 |
| Outstanding Subscription for Governor's Party | 3,000 | |
| (v) | Capital Fund as on 01.04.2023 | 6,00,000 |
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
What the paper leaves open
- The building is still under construction, so the expenditure on it is shown as an asset (construction in progress) and the building fund stays a liability until the work is finished.
- The tournament fund's expenses are met from the fund itself, with ticket proceeds and donations credited to it.
- Life membership fees are read as a capital receipt, added to the capital fund.
- The subscription for the Governor's Party is read as income of the year, received plus outstanding (₹15,000 in our version), with the outstanding part shown as an asset; the paper gives no expenses of the party or any fund for it. If it were treated as a special fund instead, the ₹15,000 would sit in the Balance Sheet as a liability and the year's income would be ₹15,000 lower.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Building fund as a liability; construction spent as an asset while work continues 2 marks 3 min
- 2 Tournament fund: expenses set against the fund; closing balance 2 marks 3 min
- 3 Life membership to capital fund; capital fund 1 mark 2 min
- 4 Governor's Party subscription: income and outstanding asset 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
(i) Building Fund: construction continuing. Donations for a specific purpose are special receipts and are shown in the Balance Sheet as a liability, not as income. The DU text's worked Balance Sheet shows donations to a special fund on the liabilities side. Because the building is not finished, the fund is not yet transferred to the capital fund. The amount spent so far is shown as an asset, building under construction (capital work in progress).
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Balance c/d | 4,52,400 | By Balance b/d (01.04.2023) | 1,20,000 |
| By Donations for the building | 3,32,400 | ||
| 4,52,400 | 4,52,400 |
| Dr | ₹ |
|---|---|
| To Balance c/d | 4,52,400 |
| 4,52,400 | |
| Cr | ₹ |
| By Balance b/d (01.04.2023) | 1,20,000 |
| By Donations for the building | 3,32,400 |
| 4,52,400 |
(ii) Tournament Fund. Expenses of a specific fund are set against the fund, and only an excess of expenses over the fund is charged to the Income and Expenditure Account, as the CBSE examiner key does with a tournament fund. Here the fund, with its donations and ticket proceeds, covers the expenses, so nothing reaches the Income and Expenditure Account.
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Tournament Expenses | 18,120 | By Balance b/d (01.04.2023) | 2,256 |
| To Balance c/d | 1,176 | By Donations for the tournament | 11,040 |
| By Sale of tournament tickets | 6,000 | ||
| 19,296 | 19,296 |
| Dr | ₹ |
|---|---|
| To Tournament Expenses | 18,120 |
| To Balance c/d | 1,176 |
| 19,296 | |
| Cr | ₹ |
| By Balance b/d (01.04.2023) | 2,256 |
| By Donations for the tournament | 11,040 |
| By Sale of tournament tickets | 6,000 |
| 19,296 |
(iii) Life Membership Fees ₹9,600. A non-recurring receipt of a capital nature: added to the capital fund, not credited to the Income and Expenditure Account.
(iv) Subscription for the Governor's Party. Read as income of the year (paper note): ₹12,000 received + ₹3,000 outstanding = ₹15,000 credited to the Income and Expenditure Account. The ₹3,000 still due is an asset, as subscriptions outstanding are.
(v) Capital Fund. ₹6,00,000 + life membership fees ₹9,600 = ₹6,09,600, to which the year's surplus is added (or deficit deducted). The surplus is not given, so it is left as a blank in the extract.
Extracts
Income and Expenditure Account for the year ended March 31, 2024 (extract, income side). Nothing from the building or tournament funds appears.
| Income | ₹ |
|---|---|
| Subscription for the Governor's Party received | 12,000 |
| Add: outstanding | 3,000 |
| Subscription for the Governor's Party | 15,000 |
Balance Sheet as on March 31, 2024 (extract)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital Fund 6,00,000 + life membership 9,600 (+ surplus / − deficit) | 6,09,600 | Building under construction (capital work in progress) | 3,55,200 |
| Building Fund | 4,52,400 | Subscription outstanding (Governor's Party) | 3,000 |
| Tournament Fund | 1,176 |
The other reading (paper note). If the Governor's Party subscription were treated as a special fund, the ₹15,000 would be a liability in the Balance Sheet and the year's income ₹15,000 lower.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Building fund as a liability; construction spent as an asset while work continues | 2 |
| 2 | Tournament fund: expenses set against the fund; closing balance | 2 |
| 3 | Life membership to capital fund; capital fund | 1 |
| 4 | Governor's Party subscription: income and outstanding asset | 1 |
| Total | 6 |
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