The following financial information was extracted from the books of Metro Philharmonic Soc… — JAMB UTME

The following financial information was extracted from the books of Metro Philharmonic Society for the year ended 31st December 2025:

Cash Receipts and Payments Summary:
- Subscriptions received: $\text{₦}1,250,000$
- Rent paid for hall: $\text{₦}360,000$
- Printing and stationery expenses paid: $\text{₦}85,000$
- Proceeds from annual concert: $\text{₦}640,000$
- Direct expenses of annual concert: $\text{₦}290,000$
- Purchase of new musical instruments on 1st July 2025: $\text{₦}500,000$
- Life membership fees received: $\text{₦}200,000$

Additional Adjustments and Notes:
1. Subscriptions accrued on 1st January 2025 were $\text{₦}60,000$ , while subscriptions accrued on 31st December 2025 were $\text{₦}95,000$ . Subscriptions received in advance on 1st January 2025 were $\text{₦}40,000$ , and subscriptions received in advance on 31st December 2025 were $\text{₦}70,000$ .
2. Rent prepaid on 31st December 2025 was $\text{₦}40,000$ , and rent accrued on 1st January 2025 was $\text{��}30,000$ .
3. Stock of stationery on 1st January 2025 was $\text{₦}15,000$ , and on 31st December 2025 was $\text{₦}22,000$ . Creditors for stationery unpaid on 31st December 2025 amounted to $\text{₦}18,000$ .
4. According to the society's constitution, $25\%$ of life membership fees received should be recognized as income in the Income and Expenditure Account, while the balance is capitalized.
5. Musical instruments held on 1st January 2025 were valued at cost at $\text{₦}1,200,000$ . Depreciation is charged at $10\%$ per annum on cost, pro-rated for additions.

What is the net surplus to be credited to the Accumulated Fund in the Income and Expenditure Account for the year ended 31st December 2025?

Cevap: 1124000 ₦

Cevap

The net surplus for the year ended 31st December 2025 is ₦1,124,000.

To calculate the net surplus, all cash transactions must be adjusted to an accrual basis for revenue income and expenditure. Total income comprises subscription income (₦1,255,000), net concert proceeds (₦350,000), and the 25% revenue allocation of life membership fees (₦50,000), totaling ₦1,655,000. Total expenditure comprises adjusted rent (₦290,000), consumed stationery cost (₦96,000), and pro-rated depreciation on musical instruments (₦145,000), totaling ₦531,000. Subtracting total expenditure from total income gives a net surplus of ₦1,124,000.

Adım Adım Çözüm

Calculate Subscription Income for the period using accrual adjustments

₦1,255,000

Adjust cash subscriptions for opening/closing accrued and prepaid amounts: 1,250,000 - 60,000 + 95,000 + 40,000 - 70,000.

Determine total revenue income credited to the Income and Expenditure Account

₦1,655,000

Combine Subscription Income (1,255,000), Net Concert Profit (640,000 - 290,000 = 350,000), and 25% revenue portion of Life Membership Fees (50,000).

Determine total revenue expenses charged to the Income and Expenditure Account

₦531,000

Sum Rent Expense (360,000 - 40,000 - 30,000 = 290,000), Stationery Expense (15,000 + 85,000 + 18,000 - 22,000 = 96,000), and pro-rated Depreciation (120,000 + 25,000 = 145,000).

Subtract total expenses from total income to arrive at the net surplus

₦1,124,000

Net Surplus = Total Revenue Income (1,655,000) - Total Expenditure (531,000) = 1,124,000.

Anahtar Kavram

Accrual adjustments and capitalization rules in the Income and Expenditure Account for Non-Profit Organizations

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