Subscriptions Account (Cambridge (CIE) IGCSE Accounting)

Exam Tip

Just remember that this is the same as an income account. This will reduce the amount you need to remember.

Worked Example

The Batters is a baseball club. Members pay a monthly subscription of $10 per month to use the facilities and equipment.  The treasurer wants to know the amount to be transferred to the income and expenditure account for the year ended 31 December 2023.  The following information was provided:

• 1 December 2022, nine members paid in advance for the month of January 2023

• 31 January 2023, six members  paid the amount owing for month of December 2022

• 31 December 2023, eight members owe the month of December 2023

• 16 December 2023, two members paid in full for the year ending 31 December 2024

• Received $3 730 in total from members for subscriptions during the year ended 31 December 2023

Prepare the subscription account for the year ended 31 December 2023. Bring down the balance on 1 January 2024.

Answer

Deal with each piece of information separately and identify which side to enter the amount.

• 1 December 2022, nine members paid in advance for January 2023

  • This is a prepayment from the previous year

  • This is the opening balance on the credit side

    • 9 × $10 = $90

• 31 January 2023, six members paid the amount owing for December 2022

  • This is an accrual from the previous year

  • This is the opening balance on the debit side

    • 6 × $10 = $60

• 31 December 2023, eight members owe the month of December 2023

  • This is an accrual for this year

  • This is the opening balance on the debit side for next year

  • Therefore the balance c/d is on the credit side

    • 8 × $10 = $80

• 16 December 2023, two members paid in full for the year ending 31 December 2024

  • This is a prepayment for the next year

  • This is the opening balance on the credit side for next year

  • Therefore the balance c/d is on the debit side

    • 2 × 12 × $10 = $240

• Received $3 730 in total from members for subscriptions during the year ended 31 December 2023

  • This is the amount received

  • Enter this on the right side

Calculate the amount to transfer to the income and expenditure account. You can find the balancing figure for the account. Alternatively, you can calculate it from the information by adding amounts which are due this year and subtracting amounts that are not due this year.

• Start with the amount received for the year

  • Subtract the accrual from last year

  • Add the prepayment from last year

  • Add the accrual at the end of this year

  • Subtract the prepayment at the end of this year

    • $3 730 - $60 + $90 + $80 - $240 = $3 600

Enter the details into the account.