1 CLUB ACCOUNTS

1.1 Features

• Non profit making
• Club, association, society
• Managed by committee
• Rudimentary records kept by treasurer
• No statutory duty to produce accounts
• Accounts provide useful information for members

2 RECEIPTS AND PAYMENTS ACCOUNT

2.1 Description

• Summarises bank and cash transactions
• Provides a statement of finances at end of year.

2.2 Suitability

• Club with

• simple and straightforward activities
• cash as only major asset.

• Examples

• local sports club
• small charities.

2.3 Proforma

Illustration

3 INCOME AND EXPENDITURE ACCOUNT

3.1 Description

• Similar to income statement
• Non profit making "profit" = surplus of income over expenditure
• Usually an accruals based statement.

3.2 Suitability

• Club with

• more complicated activities
• major assets other than cash.

3.3 Proforma

WORKINGS

(1) Subscriptions

Example 1

At 31 March 1998 a gym club had membership subscriptions in arrears amounting to $4,800 and had received $1,200 subscriptions in advance. During the year to 31 March 1999 the club received $62,400 including 26 memberships for the year to 31 March 2000 at $120 per annum. At 31 March 1999 16 members owed subscriptions of $120 each.

Required

Record the transactions in the subscriptions ledger account for the year to 31 March 1999.

Solution

Subscriptions
	$			$
In arrears b/f			In advance b/f
(ß) I & E a/c			Cash received
In advance c/f			In arrears c/f
	^______			^_____
	^______			^_____

(2) Bar profit

Example 2

An amateur rugby club runs a bar. Bar takings for the month of March were $6,960 and $4,800 was paid to bar suppliers. Inventory and amounts owing for bar supplies were as follows.

The bar steward’s wages gross wages for the month were $1,200.

Required:

Determine bar profit for the month.

Solution

	$	$
Bar revenue
Bar cost of sales
Opening bar inventories
Bar purchases
Less Closing bar inventories
	^______
		^______
Gross profit
Bar steward wages
		^______
Bar profit to income and expenditure account
		^______

(3) Event profit

Illustration

4 ACCOUNTING TREATMENTS

4.1 Subscriptions

4.1.1 Cash basis

• Is more prudent.

4.1.2 Accruals basis

• Receivable (debtor) = subscription due but not yet received
• Payable (creditor) = subscription received in advance
• Less prudent – assumes non-payment is due to oversight (and therefore a timing difference) but could indicate termination of membership.

4.2 Life membership

(1)     Cash basis – treat as revenue when received

Income is now, but associated costs of membership (members entitlements) will result in club/society incurring costs in later years

(2)     Capitalise

Credit to income over a suitable period

(3)     Take to accumulated fund

Example 3

Ten year’s ago a zoo introduced individual life membership for $1,200. On 1 January 1999 there were 2,150 life members in respect of which deferred income amounted to $1,935,000. 250 new subscriptions were received in 1999. Life membership is credited to income in equal annual instalments over 25 years.

Required

Draft extracts to the income and expenditure account and balance sheet in respect of life memberships.

Solution

Income and expenditure account at 31 December 1998 (extract)

	$
Life membership subscriptions

Balance sheet at 31 December 1998 (extract)

	$
Deferred income

4.3 Donations

5 BALANCE SHEET

5.1 Description

• Similar to business balance sheet
• Showing financial position of club at year end.

5.2 Proforma

EXAMPLE SOLUTIONS

Solution 1 – Annual subscriptions

Subscriptions
	$			$
In arrears b/f	4,800		In advance b/f	1,200
(ß) I & E a/c	57,600		Cash received	62,400
In advance c/f (26 $120)	3,120		In arrears c/f (16 $120)	1,920
	^______			^_____
	65,520			65,520
	^______			^_____

Solution 2 – Bar profit

	$	$
Bar revenue		6,960
Bar cost of sales
Opening bar inventories	960
Bar purchases ($4,800 + $720 – $480)	5,040
Less Closing bar inventories	(1,440)
	^______	(4,560)
		^______
Gross profit		2,400
Bar steward wages		(1,200)
		^______
Bar profit to income and expenditure account		1,200
		^______

Solution 3 – Life membership

Income and expenditure account at 31 December 1998 (extract)

	$
Life membership subscriptions	115,200

Balance sheet at 31 December 1998 (extract)

	$
Deferred income (	2,119,800

WORKINGS

(1)

Note: There is income to be credited in respect of all life members because life membership was only introduced 10 years ago.

(2)