Question

From the following information, compute the outstanding subscription for the year 2012:
i.A club has 70 members, each paying annual subscription of Rs 1,000.
ii.Subscription received during 2012, Rs 70,000.
iii.Subscription received in advance as at 31st December,2011, Rs 12,000.
iv.Subscription received in advance as at 31st December, 2012, Rs 11,000.
v.Subscription outstanding as at 31st December, 2011, Rs 16,000.
vi.Subscriptions of Rs 8,000 are still in arrears for the year 2011.

Answer 1

Given data:

• A club with 70 members, each paying an annual subscription of Rs 1,000.
• Subscription received in 2012 is Rs 70,000.
• Subscription received in advance as  at 31st December 2011 is Rs 12,000.
• Subscription received in advance as at 31st December 2012 is Rs 11,000.
• Subscription outstanding as at 31st December 2011 is Rs 16,000.
• Arrears for 2011 is Rs 8,000.

To find: The outstanding subscription for the year 2012.

Answer:

In a subscription account, the items on the debit side would be

• subscriptions outstanding at the beginning of the year
• subscriptions in advance at the end of the year
• annual subscription payment

and the items on the credit side would be

• subscriptions in advance at the beginning of the year
• annual subscription payment to the bank
• subscriptions outstanding at the end of the year

As per the data we have,

• subscription outstanding at the beginning of the year = Rs 16,000
• subscription in advance at the end of the year = Rs 11,000
• annual subscription payment = Rs 70,000 [70 members × Rs 1,000]
• subscription in advance at the beginning of the year = Rs 12,000
• annual subscription payment to the bank = Rs 70,000
• subscription outstanding at the end of the year = Rs 8,000

We will be able to calculate the outstanding subscription for the year 2012 by adding items on either side and subtracting the side with the lesser amount from the one with the larger amount.

Debit side calculation:

[Subscription outstanding at the beginning of the year + Annual subscription payment + Subscription in advance at the end of the year]

Rs 16,000 + Rs 70,000 + Rs 11, 000 = Rs 97,000

Credit side calculation:

[Subscription in advance at the beginning of the year + Annual subscription payment to the bank + Subscription outstanding at the end of the year]

Rs 12,000 + Rs 70,000 + Rs 8,000 = Rs 90,000

Since the debit side is more, we'll subtract the credit amount from the debit amount to receive the outstanding subscription for the year 2012.

Rs 97,000 - Rs 90,000 = Rs 7,000

[A subscription account for the same has been prepared below.]