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Included in the assets and liabilities of "Sliotar" hurling club on 1/1/2004 were the following: Clubhouse and land €340,000; Equipment €90,000; Bar Stock €2,900; Investments €20,000; Members Subscriptions due €630; Bar Creditors €1,200; Expenses due €720 - Leaving Cert Accounting - Question 6 - 2005
Question 6
Included in the assets and liabilities of "Sliotar" hurling club on 1/1/2004 were the following: Clubhouse and land €340,000; Equipment €90,000; Bar Stock €2,900; In... show full transcript
Worked Solution & Example Answer:Included in the assets and liabilities of "Sliotar" hurling club on 1/1/2004 were the following: Clubhouse and land €340,000; Equipment €90,000; Bar Stock €2,900; Investments €20,000; Members Subscriptions due €630; Bar Creditors €1,200; Expenses due €720 - Leaving Cert Accounting - Question 6 - 2005
Step 1
Prepare a statement showing the club's Accumulated Fund on 1/1/2004.
Answer
To determine the club's Accumulated Fund as at 1/1/2004, we must calculate the total assets and subtract the liabilities:
Assets
- Clubhouse/Land: €340,000
- Equipment: €90,000
- Bar Stock: €2,900
- Investments: €20,000
- Subscriptions due: €630
- Cash in hand: €3,960
Total Assets =
€340,000 + €90,000 + €2,900 + €20,000 + €630 + €3,960 = €457,490
Liabilities
- Bar Creditors: €1,200
- Expenses due: €720
Total Liabilities =
€1,200 + €720 = €1,920
Accumulated Fund as at 1/1/2004 = Total Assets - Total Liabilities
= €457,490 - €1,920 = €455,570.
Step 2
Prepare the club's Income and Expenditure Account for the year ended 31/12/2004.
Answer
The Income and Expenditure Account summarizes the club's income and expenses for the year.
Income
- Bar Profit: €8,360
- Interest: €3,400
- Subscriptions: €27,100
- Advertising Receipts: €1,500
- Raffle Profit: €5,000
Total Income =
€8,360 + €3,400 + €27,100 + €1,500 + €5,000 = €45,360
Expenses
- General Expenses: €25,730
- Depreciation (Equipment 20%): €3,400
- Depreciation (Clubhouse 2%): €6,800
Total Expenses =
€25,730 + €3,400 + €6,800 = €35,930
Surplus of Income/Expenditure = Total Income - Total Expenses
= €45,360 - €35,930 = €9,430.
Step 3
Prepare the club's Balance Sheet as on 31/12/2004.
Answer
The Balance Sheet presents the financial position of the club at the end of the year.
Fixed Assets
- Clubhouse/Land: €340,000
- Equipment (net after depreciation): €86,000
Total Fixed Assets =
€340,000 + €86,000 = €426,000
Investments = €20,000
Current Assets
- Bank: €25,900
- Bar Stock: €2,400
Total Current Assets =
€25,900 + €2,400 = €28,300
Total Assets =
€426,000 + €20,000 + €28,300 = €474,300
Liabilities due within 1 year
- Bar Creditors: €740
- Expenses due: €450
- Subscriptions prepaid: €2,009
Total Liabilities =
€740 + €450 + €2,009 = €3,199
Working Capital = Total Assets - Total Liabilities
= €474,300 - €3,199 = €471,101.
Step 4
Explain the difference between the closing balance in the Income and Expenditure Account and the closing balance in the Receipts and Payments Account.
Answer
The closing balance in the Receipts and Payments Account represents cash available at the end of the accounting period. This account simply tracks cash inflows and outflows without considering any unrecorded liabilities.
On the other hand, the Income and Expenditure Account reflects the surplus or deficit of the club’s income and expenditure during the year. It accounts for accrued income and expenses, and thus provides a more comprehensive view of the club's financial performance.
In this case, the difference of €25,000 in the Receipts and Payments Account suggests that this amount was still available as cash at year-end but does not accommodate other accrued expenses or unpaid liabilities, which are accounted for in the Income and Expenditure Account.