From the following Receipts and Payments Account of Bombay sports club prepare Income Expenditure Accounts for the year ended 31st Dec. 2023.
Understand the Problem
The question is requesting the preparation of an Income and Expenditure Account using the provided Receipts and Payments Account for the Bombay Sports Club for the year ending December 31, 2023.
Answer
The deficit for the year is $14,520.
Answer for screen readers
The Income and Expenditure Account shows a deficit of $14,520 for the year ending December 31, 2023.
Steps to Solve
- Identify Total Receipts
Calculate the total receipts from the Receipts and Payments Account.
$$ \text{Total Receipts} = \text{Balance B/D} + \text{Entrance Fees} + \text{Subscriptions (2022, 2023, 2024)} + \text{Lockers Rent} $$
Substituting the values,
$$ \text{Total Receipts} = 300 + 550 + (200 + 5,330 + 300) + 500 = 6,680 $$
- Identify Total Payments
Calculate the total payments from the Receipts and Payments Account.
$$ \text{Total Payments} = \text{Rent} + \text{Stationery exp.} + \text{Wages} + \text{Billiards Table} + \text{Repairs} + \text{Interest} + \text{Balance C/D} $$
Substituting the values,
$$ \text{Total Payments} = 5,200 + 3,068 + 5,330 + 3,900 + 1,500 + 806 + 2,396 = 21,200 $$
- Prepare the Income and Expenditure Account
Formulate the Income and Expenditure Account using the total receipts and payments identified.
Income and Expenditure Account for the year ending December 31, 2023
| Income | Amount |
|---|---|
| Total Receipts | 6,680 |
| Expenditure | Amount |
| Rent | 5,200 |
| Stationery | 3,068 |
| Wages | 5,330 |
| Billiards Table | 3,900 |
| Repairs | 1,500 |
| Interest | 806 |
| Balance C/D | 2,396 |
- Calculate Surplus or Deficit
Determine the surplus or deficit by subtracting total expenditure from total income.
$$ \text{Surplus} = \text{Total Income} - \text{Total Expenditure} $$
For this case,
$$ \text{Surplus} = 6,680 - 21,200 = -14,520 $$
- Conclusion
Since the result is negative, this indicates a deficit for the year.
The Income and Expenditure Account shows a deficit of $14,520 for the year ending December 31, 2023.
More Information
This calculation reflects the club's financial performance for the year, indicating expenses outweighed income. It's essential for clubs or organizations to monitor this to maintain financial health.
Tips
- Confusing Receipts and Payments: Always ensure to clearly differentiate between income (receipts) and expenses (payments).
- Incorrect Summation: Double-check arithmetic when adding total receipts and payments to avoid errors.
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