Question

Subscriptions received during the year ended March 31, 2016 by Royal Club were as under:

$\begin{array}{ccc}& & \text{Rs}\\ 2014-15& & 3,000\\ 2015-16& & 93,000\\ 2016-17& & \underset{–}{2,000}\\ & & \underset{–}{98,000}\end{array}$

The club has 500 members each paying Rs 200 as annual subscription. Subscriptions outstanding as on March 31, 2015 were Rs 8,000. Calculate the amount of subscriptions to be shown as income in the Income and Expenditure Account for the year ended March 31, 2016 and show the relevant data in the Balance Sheet as at 31st March 2015 and 2016.

Answer 1

Books of Royal club
Income and Expenditure Account
for the year ending March 31, 2016 Dr. Cr.
$\begin{array}{ccccc}\text{Expenditure}& \text{Rs}& \text{Income}& & \text{Rs}\\ & & \text{Subscritpions}& & \\ & & \text{(Received for 2015-16)}& 93,000& \\ & & \text{Add : Outstanding for the}& & \\ & & \text{year 2015-16}& & \\ & & \text{(See Note 1)}& \underset{–}{7,000}& 1,00,000\end{array}$

Balance Sheet
as at 31st March 2016
$\begin{array}{cccc}\text{Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ & & \text{Subscriptions Outstanding}& 8,000\end{array}$

Balance Sheet
as at 31st March 2016
$\begin{array}{ccccc}\text{Liabilities}& \text{Rs}& \text{Assets}& & \text{Rs}\\ \text{Subscription Received in}& & \text{Subscriptions Outstanding}& & \\ \text{Advance}& 2,000& \text{for 2014-15}& & \\ & & \text{(8,000 - 3,000)}& 5,000& \\ & & \text{for 2015-16}& \underset{–}{7,000}& 12,000\end{array}$

Notes :

(1) Total members are 500, each paying an annual subscription of Rs 200

Hence, total subscriptions receivable during the year 2015-16

$\begin{array}{cc}500\times \text{Rs 200}& 1,00,000\\ \text{Less : Amount received during the year 2015-16}& 93,000\\ \text{Outstanding subscription for the year 2015-16}& \underset{–}{\overline{7,000}}\end{array}$

(2) The outstanding subscription for 2014-15 is Rs 8,000 out of which Rs 3,000 has been received. Hence the balance of Rs 5,000 (i.e., Rs 8,000 - Rs 3,000) is still in arrear for 2014-15. It will be shown in the balance sheet on 31st March 2016 on assets side.