Review questions on NPOs QUESTION ONE (a) The treasurer of the Long Lane FC has prepared a receipts and

payments account, but members have complained about the inadequacy of such an account. She therefore asks an accountant to prepare a trading account for the bar, and an income and expenditure account and a statement of financial position. The treasurer gives the accountant a copy of the receipts and payments account together with information on assets and liabilities at the beginning of the year: Long Lane FC Receipts and payments Account for the year ended 31 December 2006 Receipts Bank balance at 1.1.2006 Subscriptions received for: 2005 (arrears) 2006 . 2007 (in advance) Bar sales Donations received 1,400 14,350 Shs 000 Payments 524 Payment for bar supplies Wages: Grounds man and assistant Barman 19,939 8,624 234 740 1,829 938 2,420 6,210 79,554 Shs 000 38,620

1,200 Bar expenses 61,280 Repairs to stands 800 Ground upkeep Secretary's expenses Transport costs Bank balance at 31.12.2006 79,554

Additional information: 1. The following balances are available: 31.12.2005 31.12.2006 Shs 000 Inventory in the bar-at cost Owing for bar supplies Bar expenses owing Transport costs 4,496 3,294 225 Shs 000 5,558 4,340 336 265

2. The land and football stands were valued at 31 December 2005 at: land: Shs. 40,000,000; football stands Shs 20,000,000; the stands are to be depreciated by 10 per cent per annum. 3. The equipment at 31 December 2005 was valued at Shs. 2,500,000, and is to be depreciated at 20 per cent per annum. 4. Subscriptions owing by members amounted to Shs. 1,400,000 on 31 December 2005, and Shs. 1,750,000 on 31 December 2006.

Required: Bar trading account (7 marks); income and expenditure statement (statement of operations) for the year ended 31 December 2006 (7 marks) and a statement of financial position as at 31 December 2006. (6 marks) QUESTION TWO (a) Explain the fundamental difference(s) between the accounting basis for a non-profit organization and a for-profit organization. (6 marks) (b) The following receipts and payments account was prepared by the treasurer of Wasomaji Members Club for the year ended 31 December 2010: Shs. 000 Shs. 000 January 1 2010: Cash in hand: 10 Grounds man wages 75 Balance as per bank: Purchase of mowing machine 150 Deposit a/c 223 Rent of ground 25 Current a/c 60 Cost of teas 25 December 31 bank interest on 40 deposit a/c 3 Reference books purchased Subscriptions 260 Secretarial expenses 28 Receipts from teas 30 Repairs 50 Contribution to travelling 10 Honoraria to treasurer for 2009 40 Sale of equipment 8 December 31: Balance at bank: Net proceeds from dinner dance 78 Deposit a/c 209 Current a/c 15 Cash in hand 25 682 682

The following additional information is also available: Jan. 1 2010 Shs. 000 Subscriptions due 15 Subscriptions in advance 10 Creditors for secretarial expenses 30 Creditors for repairs 10 Interest on deposit account Estimated value of machinery and equipment 85

Dec. 31 2010 Shs. 000 10 8 25 20 2 175

For the year ended 31 December 2010, the honoraria to the treasurer are to be increased by a total of Shs. 20,000 and the grounds man is to receive a bonus of Shs. 20,000. Overdue subscriptions amounting to Shs. 10,000 were written off. The reference books purchased during the year are to be capitalized as part of the library. The equipment disposed had a book value of Shs. 2,000. Required: (5 marks) (a) Wasomaji Members club statement of affairs as at 1 January 2010. (b) Income and expenditure statement for the year ended 31 December 2010.(12 marks) (c) Statement of financial position as at 31 December 2010. (7 marks) QUESTION THREE The following trial balance was extracted from the books of Scholars Members Club as at 30 September 2000: Sh. 724,800 3,700,000 62,000 1,874,000 284,000 1,450,800 920,000 358,000 108,000 17,000 190,400 54,400 277,000 367,200 495,000 Sh. 5,771,200

Balance at bank current account Accumulated fund 1 October 1999 Land and building at cost Debtors for subscription Furniture and fittings Provision for depreciation of furniture and fittings Subscriptions Lecturers fees Lecturers travel and accommodation expenses Donations Camera and projector repairs Projectors, cameras and audio equipment Depreciation of equipment Rates and water Lighting and heating Rental of rooms

Wages: Caretaker Restaurant Bar staff Purchase of food Stock- bar I October 1999 Bar receipts, Bar purchases Restaurant receipts Loan Deposit account - bank Interest payable Creditors for bar and food

880,000 1,600,000 800,000 1,565,800 473,600 4,032,000 2,842,000 3,642,000 1,600,000 1,000,000 36,000 178,400 17,651,800

17,651,800

Additional information: 1. The bar stock was valued at Sh.642.800 as at 30 September 2000. 2. It is expected that of the debtors for subscriptions, Sh.43.600 will not be collectable. 3. The interest account is net. The loan is at a concessional rate of 4% while I0% has been earned on the deposit account. No changes have taken place all year in the principal sums involved. 4. An invoice for Sh.43.000 of wine had been omitted from the records at the close of the year although the wine had been included in the bar stock valuation. 5. Depreciation for the rear is to be provided as follows: Furniture and fittings Sh. 194.000 Projectors, cameras etc. Sh. 19.000 Required: (a) Bar and restaurant trading account for the year ended 30 September 2000. (6 marks) (b) An income and expenditure account for the year ended 30 September 2000. (8 marks) (c) A statement of financial position as at 30 September 2000. (6 marks)