Receipts and Payments Account

 Receipts and Payments Account : A real cash receipts and payments summary taken from the cash book for a certain period is called a receipts and payments account.

Receipts and Payments Account

This account contains all money received and paid during the time, including capital and revenue.

Explanation

Under categories including admission fees, gifts, interest, lifetime subscriptions, annual subscriptions, and sundry receipts, all receipts are compiled.

Under categories like salaries and wages, office expenses, printing and stationery, rent, rates, and taxes, all payments are recorded on the credit side.

Format/Specimen

There is a receipts column on the debit side of an accounts receivable and payments account. This is how all receipts are kept track of.

On the credit side, there is another column called "payment," which is used to list all of the payments made by non-trading companies or non-profit organizations throughout a given accounting period, which is typically one year.

The format/specimen of a receipts and payments account is displayed in the table below.

Main Features

A receipts and payments account has some significant aspects.

Firstly, a cash book is condensed into a receipts and payments account. It begins with a starting bank and cash balance (the two can occasionally be combined), and it concludes with their closing balances.

All payments are recorded on the right (credit) side of an account titled "receipts and payments," and all receipts are recorded on the left (debit).

Advantages

The benefits of having a receipts and payments account are as follows:

• A receipts and payments account displays the total amount of money received and paid under several areas.
• You can utilize an accounts receivable and payments account to confirm the cash book.
• The account offers confidential records for many payment and receipt categories.

Preparation of Accounts

The process of creating a receipts and payments account involves taking the complete year's worth of receipts and payments out of the cash book.

Every item is separately documented in chronological order in a cash book. On the other hand, the items in an account for payments and receipts are sorted and listed under various titles.

To set up an account for payments and receipts, do the following:

Step 1: Write the account's title in the way indicated in the sample.

Step 2: Inscribe the initial bank and cash amounts on the left side of the top.

Step 3: Total all of the receipts under one heading that have varying dates.

Step 4: Total all of the payments made under the same heading on various dates. Another option is to use a different sheet for this.

Step 5: Totals for each head of payments should be written on the right side, and the sums for each head of receipts should be written on the left.

Step 6: Determine the closing amount by deducting all payments from all receipts.

For instance

On January 1st, 2017, a debating society and library were established. The following are the receipts and payments for the year that concluded on December 31, 2017:

Acceptances:

$1350.00 is the subscription amount.

$2600.00 in donations

Fees for entry: $480.00

Rent for a locker: $785.

Money Transfers:

Books from the library: $1210.00

$240.00 rent for the library hall; $35.00 for office supplies

$72.00 for stationery and postage

$934.00 was spent on furniture.

$1100.00 was invested.

Essential: Display the account of receipts and payments for the year that concluded on December 31, 2017.

Example 2

The following lists the cash transactions for a beach club:

Starting cash balance for the year: $4,500.00

$18,300.00 was received in entrance fees.

Upon receipt of the life membership subscription, $2,605.00

$465.00 was collected as locker rent.

Membership:

Awarded over the year: $3,500.00

$2,360.00 in arrears over the past year

Advance for this year: $346.00

Stationery and printing:

$2,160.00 was paid during the year.

Due this year: $94,000.00

Last year's payment: $312.00

Rates and Rent:

Expensed for the year: $370.00

To be paid this year: $230

Purchased sports merchandise: $348.00

Essential: For the year that concluded on June 30, 2017, create an account of receipts and payments.

Explanatory Note

The receipts and payments account does not include adjustments for subscriptions, past-due arrears, this year's advance, printing and stationery payable this year, payable last year, or rent and rates payable this year.

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