The treasurer of Kay Club and Ray Society has prepared the following receipts and payments account for the year ended 31 December 2020:

	Sh.		Sh.
Receipts Opening balance Subscriptions (see note 1) Kay Club Ray Society Annual Dinner - Ticket sales Sale of mobile huts Kay Club festivals - admissions Sales Clothes Refreshments Purchases	880,000 1,205,000 845,000 170,000 335,000 470,000 1,050,000 4,150,000 _______ 9,105,000	Payments: Purchase of Amplifier (bought 1 July 2020) Kay Club: Musician fees Coaching fees Hall rent Rates for the year to 31 December 2020 Decorating Cleaning Annual Ray expedition Annual dinner - hotel & catering Kay Club festival Prizes Adjudicator’s fees Clothes Refreshments Closing balance	350,000 450,000 410,000 165,000 400,000 55,000 80,000 660,000 205,000 85,000 45,000 900,000 3,500,000 1,800,000 9,105,000

Note. It is the policy of the Society NOT to take into account subscriptions in arrears until they are paid.

1) The mobile hut which was sold during 2020 had been valued at Sh.400,000 on 31 December 2019, and was used for the society's activities until sold on 30 June 2020.

2) Immediately after the sale of the mobile hut, the Society rented a new hall at Sh.165,000 per annum.

3) The above receipts and payments account is a summary of the society's bank account for the year ended 31 December 2020; the opening and closing balances shown above were the balances shown in the bank statements on 31 December 2019 and 2020 respectively.

4) All cash is banked immediately and all payments are made by cheque.

5) A cheque for Sh.l00,000 drawn by the society on 28 December 2020 for stationery was not paid by the bank until 4 January 2021.

6) The Society's assets and liabilities at 31 December 2019 and 2020, in addition to those mentioned earlier, were as follows:

2020 2019

Stocks for goods for resale at cost:

Clothes 650,000 550,000

Refreshments 155,000 300,000

Sundry creditors Annual dinner - catering 35,000

Purchases- Clothes 300,000 200,000

Refreshments 150,000 250,000

It is proposed to provide for depreciation on the amplifier at the rate of 20% per annum on cost, prorata to time.

Required:

a)The Society's Income and Expenditure Account for the year ended 31 December 2020, and balance sheet as at that date. (Comparative figures are not required).

(20 marks)

b)Outline the advantages of income and expenditure accounts as compared with receipts and payments accounts. (10 marks)

(Total: 30 marks)

Answer rating: 100% (QA)

a Kay Club and Ray Society Income and Expenditure Account for the year ended 31 December 2020 Sh Inc... View the full answer