Clubs and Societies

1. Clubs and Societies

2. They are organisations that provide facilities to their members. For example, sports clubs, social clubs, amateur dramatics societies, etc. The accounts of non-profit making organisations

3. These organisations may receive income in the form of: Membership fees or annual subscriptions Donations Funds raised from raffles, fetes, etc. Revenue from the sale of food and drink to members

4. The money raised is used to meet running expenses, such as rent, light and heat, etc. Clubs, associations and other non-profit making organisations do not have trading profit and loss accounts as their main purpose is not trading or profit making.

5. An income and expenditure account is prepared in place of a profit and loss account. Surplus of income over expenditure is used in place of net profit. Excess of expenditure over income is used in place on net loss. Accumulated fund is used in place of the capital account. Receipts and payments account summarises all the transactions that have passed through the bank account. New terms used in the accounts of clubs and societies

6. Profit or loss for a special purpose When an event is organised to raise money to supplement the income of the organisation, for example a golf club organising a dinner dance. Profits are transferred to the income and expenditure account as income, e.g. profit on bar, disco, etc.

7. £ Subscriptions 8,000 Dinner dance 3,200 Bar receipts 16,300 The following information is available for the McKinnon Tennis Club for the year ended 31 December 2007 £ Balance b/d 600 Dinner dance cost 1,900 Wages bar staff 6,200 Maintenance 3,000 Heat and light 1,300 Bar purchases 4,800 General expenses 2,500 The following information is also available: ££ 1/1/07 31/12/07 Heat & light accrued 200 160 Bar stock 2,500 2,100 Creditors’ bar purchases 1,400 800 Subs due and unpaid 200 400 Subs paid in advance 1,500 900 Equipment 9,400 7,600 1) Bar staff salaries are the only expenses in the bar trading account. Prepare: The Bar trading account for the year ended 31 December 2007. The income and expenditure account for the year ended 31 December 2007. The balance sheet as at 31 December 2007.

8. ££ Sales 16,300 Opening stock 2,500 Purchases (4,800-1400+800) 4,200 6,700 Closing stock 2,100 4,600 Gross profit 11,700 Less bar staff salaries 6,200 Bar profit 5,500 McKinnon Bar trading account for the year ended 31 December 2007

9. Balance b/d 200 Balance c/d 900 To calculate the subscriptions we will need to draw Dr Subscriptions account Cr Balance b/d 1,500 Bank 8,000 Balance c/d 400 If we balance the account we can find the subscriptions that relate to the year ended 31 December 2007.

10. Balance b/d 200 Income & exp 8,800 Balance c/d 900 9,900 Dr Subscriptions account Cr Balance b/d 1,500 Bank 8,000 Balance c/d 400 9,900

11. Income Subscriptions 8,800 Profit from bar 5,500 Profit from dinner dance 1,300 15,600 Expenses Heat & light (1300 -200 + 160) 1,260 Maintenance 3,000 General expenses 2,500 Depreciation – equipment 1,800 8,560 Surplus of income over expenditure 7,040 McKinnon income and expenditure account for the year ended 31 December 2007

12. Fixed assets Equipment 7,600 Current assets Stock 2,100 Bank 7,200 Subs in arrears 400 9,700 Current liabilities Creditors 800 Accruals – heat & light 160 Subs in advance 900 1,860 Working capital 7,840 15,440 Financed by: Accumulated fund 8,400 Plus surplus of income over expenditure 7,040 15,440 Balance sheet as at 31 December 2007

13. Different terms are used - marks are awarded for the use of different terms. You will probably have to calculate the value of subscriptions, using a ‘T’ will help. A specific subscriptions account may be required. Net values where there is income and expenditure for the same activity. Tips

14. Complete task sheet and OCR exam question. Tasks