Income and expenditure account

FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

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

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Topic: Preparation of not-for-profit accounts

FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

Question

The Sankofa Hockey Club does not have any formal accounting records but the following information is available.

(1) The payments that have been made by the club for the year ending 30 June 20Y0 are as follows:

Description	GH¢(000)
Purchase of second hand table tennis table	250
Rent	600
Tea stall purchases	980
Annual fair expenses	1,450
Outings expenses	370
Prizes for whist evenings	190
Repairs to snooker table	110
Refreshments at social evenings	180

(2) The club’s income, apart from annual subscriptions, is as follows:

Description	GH¢(000)
Contributions to outings	300
Takings at the annual fair	2,150

The club also runs a tea stall in the community park every Sunday in the summer months. This sells tea and coffee, cakes, biscuits, and ice creams, etc. The profit margin on the tea stall is normally 20% of selling price.

(3) All the club’s transactions are in cash, but if there are any surplus funds, they are banked in a local bank account. The balance on the bank account was GH¢30,000 at 1 July 20X9.

(4) The club has an annual subscription rate of GH¢20,000 per annum per person or GH¢50,000 per annum for a family membership. Members are asked to pay their subscription in July at the beginning of the club’s accounting year.

There are 10 family members of the club. Of these, two paid their 20Y0 subscription in June 20X9, and all the rest were received before 30 June 20Y0.

No individual members had paid their 20Y0 subscriptions in advance, but at 30 June 20Y0, four members still owed their subscriptions. They had been contacted, and all four had promised to pay at the next evening social event. There are in total 80 individual members.

(5) The club has the following other assets and liabilities:

Description	1 July 20X9 (GH¢(000))	30 June 20Y0 (GH¢(000))
Sports equipment	2,560	–
Inventory for the tea stall	110	190
Payables for the tea purchases	100	–
Prepayment of rent	50	50

(6) The sports equipment is all depreciated at 20% per annum on carrying amount on the basis of the equipment held at 30 June each year.

(7) The old table tennis table was sold during the year for GH¢40,000. Its value as recorded by the club at 30 June 20X9 was GH¢30,000.

You are required to prepare an income and expenditure account for the year ended 30 June 20Y0 and a statement of financial position at that date.

Answer

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Tags: Cash Transactions, Depreciation, Income and expenditure account, Not-for-profit accounts, Statement of Financial Position, Subscriptions, Tea stall profit
Level: Level 1

Topic: Preparation of not-for-profit accounts

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FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

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FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

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FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

You're reporting an error for "FA – L1 – Q87 – Preparation of not-for-profit accounts"

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