Question 3 OR (b)

Subscriptions credited to Income & Expenditure

6 marks

Time to write: About 12 minutes
Topic: Not-for-profit organisations
Notes: Crux notes

Question

Question 3 OR (b) · 6 marks

In 2023, the subscriptions received by Sunrise Club of Pune were Rs. 32,600 including 400 for 2022 and Rs. 800 received in advance for 2024. At the end of 2023, total subscriptions outstanding were Rs. 1,200. At the end of the previous year, i.e., 31.12.2022, the subscriptions due but not received were 600, while those received in advance on the same date were 1,400. Calculate the amount of subscriptions to be credited to the Income and Expenditure Account for the year that ends 31.12.2023.

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

12 minfor 6 marks

Read from the question

CalculateFormula first, then the working, then the answer with its unit (₹, %, units).

Write it in this order

Read the data; note exactly what is asked 1 min
1 Verdict and reason opening/closing outstanding and advance adjustments 3 marks 5 min
2 Subscription Account and the credited income 3 marks 5 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.

A not-for-profit body prepares a Receipts and Payments Account, an Income and Expenditure Account and a Balance Sheet. The Receipts and Payments Account records receipts relating to a previous or a future year whenever they take place during the year. The Income and Expenditure Account is drawn up on the accrual basis: income for the year on the credit side: so the cash subscriptions must be adjusted for amounts that belong to other years: the Income and Expenditure Account records only the revenue items of the current year, and transactions of previous or subsequent years are omitted. The subscription income is the balancing figure of the Subscription Account:

Subscription Account for the year ended 31 December 2023 (foots ✓)

Dr	₹	Cr	₹
To Outstanding subscription b/d	600	By Advance subscription b/d	1,400
To Advance subscription c/d	800	By Bank (subscriptions received)	32,600
To Income & Expenditure A/c (bal.)	33,800	By Outstanding subscription c/d	1,200
	35,200		35,200

Dr	₹
To Outstanding subscription b/d	600
To Advance subscription c/d	800
To Income & Expenditure A/c (bal.)	33,800
	35,200
Cr	₹
By Advance subscription b/d	1,400
By Bank (subscriptions received)	32,600
By Outstanding subscription c/d	1,200
	35,200

Working logic. Of the ₹32,600 collected, ₹400 is 2022 income (already earned last year) and ₹800 is 2024 income received early: both are stripped out. The ₹1,400 advance held at the start of the year is now earned (2023 income), and the ₹1,200 outstanding at the year-end is 2023 income still to be received.

Subscriptions credited to Income and Expenditure = ₹33,800.

Where the 6 marks sit

#	Component	Marks
1	Correct opening/closing outstanding and advance adjustments	3
2	Subscription Account and the credited income (₹33,800)	3
	Total	6

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