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Club Accounts Included among the assets and liabilities of the Tallones Basketball Club on 1/1/2012 were the following: Clubhouse and Arena €680,000, Bar stock €2,200, Equipment (at cost) €23,000, Life membership €25,000, Bar Debtors €621, Bar creditors €1,600, Levy Reserve Fund €21,000, Wages €2,800, Subscriptions received in advance €1,400 - Leaving Cert Accounting - Question 4 - 2013
Question 4
Club Accounts Included among the assets and liabilities of the Tallones Basketball Club on 1/1/2012 were the following: Clubhouse and Arena €680,000, Bar stock €2,... show full transcript
Worked Solution & Example Answer:Club Accounts Included among the assets and liabilities of the Tallones Basketball Club on 1/1/2012 were the following: Clubhouse and Arena €680,000, Bar stock €2,200, Equipment (at cost) €23,000, Life membership €25,000, Bar Debtors €621, Bar creditors €1,600, Levy Reserve Fund €21,000, Wages €2,800, Subscriptions received in advance €1,400 - Leaving Cert Accounting - Question 4 - 2013
Step 1
Show the Club's Accumulated Fund (Capital) on 1/1/2012.
Answer
To establish the Accumulated Fund on 1/1/2012, we need to calculate total assets and liabilities:
Assets:
- Clubhouse: €680,000
- Bar stock: €2,200
- Equipment: €23,000
- Life membership: €25,000
- Bar Debtors: €621
- Bank Current account: €11,300
- Levy due: €21,000
Total Assets = €680,000 + €2,200 + €23,000 + €25,000 + €621 + €11,300 + €21,000 = €763,121
Liabilities:
- Life membership: €25,000
- Bar creditors: €1,600
- Wages: €2,800
Total Liabilities = €25,000 + €1,600 + €2,800 = €29,400
Accumulated Fund/Capital on 1/1/2012 = Total Assets - Total Liabilities = €763,121 - €29,400 = €733,721.
Step 2
Show the Income and Expenditure Account for the year ending 31/12/2012.
Answer
The Income and Expenditure Account is organized to display total income and total expenditure alongside a calculated surplus:
Income:
- Bar profit: €13,999
- Investment interest: €1,200
- Arena rent: €1,500
- Catering receipts: €12,400
- Annual sponsorship: €75,000
- Subscriptions: €42,110
- Lotto: €2,500
- Life membership: €6,000
Total Income = €13,999 + €1,200 + €1,500 + €12,400 + €75,000 + €42,110 + €2,500 + €6,000 = €152,709.
Expenditure:
- Sundry expenses: €103,600
- Coaching expenses: €4,600
- Interest on the loan: €16,000
- Depreciation on Equipment: €4,600
- Depreciation on Clubhouse and Arena: €12,600
Total Expenditure = €103,600 + €4,600 + €16,000 + €4,600 + €12,600 = €141,400.
Surplus of Income Over Expenditure for the year = Total Income - Total Expenditure = €152,709 - €141,400 = €11,309.
Step 3
Profit and loss account.
Answer
The profit and loss account will take the net surplus identified and allocate it properly. This surplus shows the club’s ongoing financial health, allowing for future planning and budgeting for needs such as the proposed floor project. The calculation lends transparency to the club's financial efficiency, particularly considering any ongoing liabilities.
Step 4
Arguments against the Treasurer's proposal.
Answer
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Increased Membership Fees: €120 increase per month could deter current members and reduce new sign-ups, thereby decreasing overall membership.
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Financial Burden: Many current members may find it difficult to handle this fee hike, leading to loss of a loyal member base.
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Better Fundraising Alternatives: Other methods, such as fundraising events or sponsorship, could be explored instead of implementing high membership fees.
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Impact on Attendance: Higher fees could lead to reduced participation in club activities, negatively affecting community engagement and overall club vitality.
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Long-term financial plans: Assess whether increasing fees addresses the long-term needs of the club versus short-term financial gaps. Alternatives like improved marketing strategies or enhanced member benefits may offer better solutions.