- 20 Marks
FA – L1 – Q88 – Preparation of not-for-profit accounts
Question
You have agreed to take over the role of bookkeeper for the XY Healthcare Co Sports and Social Club.
The summarised statement of financial position on 31 December 20X8 as prepared by the previous bookkeeper contained the following items.
| Assets | GH₵ |
|---|---|
| Heating oil for clubhouse | 700 |
| Shop and cafe inventories | 5,000 |
| New sportswear, for sale, at cost | 4,000 |
| Used sportswear, for hire, at valuation | 1,000 |
| Equipment for groundsman | |
| Cost | 10,000 |
| Depreciation | (2,000) |
| Subscriptions due | 200 |
| Bank | |
| Current account | 800 |
| Deposit account | 20,000 |
| Capital and liabilities | GH₵ |
| Accumulated fund | 29,200 |
| Payables | |
| Shop and cafe inventories | 600 |
| Sportswear | 900 |
The bank account summary for the year to 31 December 20X9 contained the following items.
| Receipts | GH₵ |
|---|---|
| Subscriptions | 11,000 |
| Bankings | |
| Shop and cafe | 10,000 |
| Sale of sportswear | 6,000 |
| Hire of sportswear | 4,500 |
| Interest on deposit account | 400 |
| Payments | GH₵ |
|---|---|
| Rent and repairs of clubhouse | 6,000 |
| Heating oil | 4,000 |
| Sportswear | 4,500 |
| Grounds person | 9,000 |
| Shop and cafe purchases | 9,000 |
| Transfer to deposit account | 3,000 |
You discover that the subscriptions due figure as at 31 December 20X8 was arrived at as follows.
| Subscriptions due | GH₵ |
|---|---|
| Subscriptions unpaid for 20X7 | 10 |
| Subscriptions unpaid for 20X8 | 230 |
| Subscriptions paid for 20X9 | (40) |
Corresponding figures at 31 December 20X9 are:
| Subscriptions due | GH₵ |
|---|---|
| Subscriptions unpaid for 20X7 | 10 |
| Subscriptions unpaid for 20X8 | 20 |
| Subscriptions unpaid for 20X9 | 90 |
| Subscriptions paid for 20X0 | (200) |
Subscriptions due for more than 12 months should be written off with effect from 1 January 20X9.
Asset balances at 31 December 20X9 include:
| Assets | GH₵ |
|---|---|
| Heating oil for clubhouse | 700 |
| Shop and cafe inventories | 5,000 |
| New sportswear, for sale, at cost | 4,000 |
| Used sportswear, for hire, at valuation | 1,000 |
| Closing payables at 31 December 20X9 are for: | |
| Shop and cafe inventories | 800 |
| Sportswear | 450 |
| Heating oil for clubhouse | 200 |
Two thirds of the sportswear purchases made in 20X9 had been added to inventory of new sportswear in the figures given in the list of assets above, and one third had been added directly to the inventory of used sportswear for hire.
Half of the resulting ‘new sportswear for sale at cost’ at 31 December 20X9 is actually over two years old. You decide, with effect from 31 December 20X9, to transfer these older items into the inventory of used sportswear, at a valuation of 25% of their original cost.
No cash balances are held at 31 December 20X8 or 31 December 20X9. The equipment for the grounds person is to be depreciated at 10% per annum, on cost.
Required:
Prepare the income and expenditure account and statement of financial position for the XY Healthcare Co Sports and Social Club for 20X9.
Answer
Workings
(W1) Subscriptions
| Summary subscriptions account | |||
|---|---|---|---|
| GH₵ | GH₵ | ||
| Opening balance (10 + 230) | 240 | Opening balance | 40 |
| Income for period | 10,720 | Bank | 11,000 |
| Irrecoverable debts (10 + 20) | 30 | ||
| Closing balance | 200 | Closing balance | 90 |
| 11,160 | 11,160 |
(W2) Shop and cafe results
| GH₵ | |
|---|---|
| Sales | 10,000 |
| Opening inventory | 5,000 |
| Purchases (9,000 + 800 – 1,000) | 8,800 |
| Closing inventory | (5,000) |
| Profit (gross) | 1,200 |
(W3) Sale of sportswear
| GH₵ | |
|---|---|
| Sales | 6,000 |
| Opening inventory | 4,000 |
| Purchases (4,500 + 450 – 300) × 2/3 | 2,900 |
| Closing inventory | (2,000) |
| Profit (gross) | 1,100 |
| Loss on sportswear transferred | (1,000) |
| Profit | 100 |
(W4) Hire of sportswear
| GH₵ | |
|---|---|
| Rentals | 4,500 |
| Opening balance | 1,000 |
| Additions of cost (4,500 + 450 – 300) × 1/3 | 1,450 |
| Closing inventory at valuation | (1,000) |
| Surplus | 4,950 |
(W5) Opening accumulated fund
| GH₵ | GH₵ | |
|---|---|---|
| Sports equipment | 8,000 | |
| Inventory for tea stall | 5,000 | |
| Subscriptions in advance (2 × 50,000) | 100 | |
| Rent prepaid | 700 | |
| Bank | 20,800 | |
| Payables for the tea stall | (600) | |
| 33,900 |
XY Healthcare Co Sports and Social Club: Income and expenditure account
| GH₵ | GH₵ | |
|---|---|---|
| Subscriptions (W1) | 10,720 | |
| Shop and cafe profit (W2) | 1,200 | |
| Sale of sportswear (W3) | 100 | |
| Hire of sportswear (W4) | 4,950 | |
| Interest on deposit account | 400 | |
| 17,370 | ||
| Rent of clubhouse | 6,000 | |
| Heating oil (1,000 + 4,000 + 200 – 700) | 4,500 | |
| Grounds person | 9,000 | |
| Irrecoverable debts (unpaid subscriptions = 10 + 20) | 30 | |
| Depreciation | 1,000 | |
| 20,530 | ||
| Net surplus | (3,160) |
Statement of financial position as at 31 December 20X9
| Assets | GH₵ | GH₵ |
|---|---|---|
| Non-current assets | ||
| Equipment | 10,000 | |
| Depreciation | (3,000) | 7,000 |
| Current assets | ||
| Subscriptions due | 100 | |
| Heating oil | 700 | |
| Shop and cafe inventory | 5,000 | |
| Sportswear for sale | 2,000 | |
| Sportswear for hire | 1,000 | |
| Bank | ||
| Current account | 0 | |
| Deposit account | 17,000 | |
| 25,800 | ||
| Total assets | 32,800 |
| Capital and liabilities | GH₵ | GH₵ |
|---|---|---|
| Accumulated fund b/d | 29,200 | |
| Surplus for year | (3,160) | 26,040 |
| Current liabilities | ||
| Shop and cafe | 800 | |
| Sportswear | 450 | |
| Heating oil | 200 | |
| Subscriptions prepaid | 200 | |
| 1,650 | ||
| 27,690 |
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