Included in the assets and liabilities of Sea View Boat Club on 01/01/2021 were the following: Boathouse €680,000; equipment €36,000; investments €60,000; land €200,000; bar stock €10,100; members’ subscriptions prepaid €2,100; bar creditors €4,200; cash in hand €3,200 - Leaving Cert Accounting - Question 7 - 2022

The bar trading account is constructed as follows:

Bar Trading Account for the year ended 31/12/2021

Bar Sales: €46,600

Less Cost of Sales:

• Opening stock: €6,400
• Purchases: €24,000
• Add creditors at 31/12/2021: €3,100
• Less closing stock at 31/12/2021: €6,400

Total Cost of Sales: $6,400 + 24,000 + 3,100 - 6,400 = €27,100$

Bar Profit: $ext{Bar Profit} = ext{Bar Sales} - ext{Total Cost of Sales} = 46,600 - 27,100 = €19,500$

The income and expenditure account is outlined below:

Income:

• Bar profit: €19,500
• Subscriptions: €64,200
• Investment interest: €1,200
• Annual sponsorship: €18,000
• Lotto receipts (42,000 - 25,000): €17,000

Total Income: $19,500 + 64,200 + 1,200 + 18,000 + 17,000 = €119,900$

Expenses:

• General expenses: €26,200
• Insurance: €4,800
• Depreciation of boathouse (2% of €680,000): €13,600
• Depreciation of equipment (20%): €8,800

Total Expenses: $26,200 + 4,800 + 13,600 + 8,800 = €53,400$

Excess Income over Expenditure: $119,900 - 53,400 = €66,500$

The balance sheet can be structured as follows:

Balance Sheet of Sea View Boat Club as at 31/12/2021

Fixed Assets:

• Boathouse: €680,000 - Depreciation: €13,600 = €666,400
• Equipment: €36,000 - Depreciation (20%): €7,200 = €28,800
• Land: €200,000
• Investments: €60,000

Total Fixed Assets: $666,400 + 28,800 + 200,000 + 60,000 = €955,200$

Current Assets:

• Cash in bank: €90,600
• Bar stock: €6,400
• Insurance prepaid: €1,200

Total Current Assets: $90,600 + 6,400 + 1,200 = €98,200$

Total Assets: $955,200 + 98,200 = €1,053,400$

Current Liabilities:

• Bar creditors: €3,100
• Subscriptions prepaid: €3,600

Total Liabilities: $3,100 + 3,600 = €6,700$

Financed By:

• Accumulated fund: €985,100
• Excess income: €66,500

Total Financing: $985,100 + 66,500 = €1,051,600$

The closing balance in the receipts and payments account reflects the actual cash position of the club at the end of the year. In contrast, the balance in the income and expenditure account indicates the profit or loss for the year.

1. Reason for Difference: The income and expenditure account includes accrued income and expenses that haven't been settled in cash yet, while the receipts and payments account records only the cash that has physically moved in or out of the club's bank account.

2. Significance of Each Account: The receipts and payments account helps in understanding cash flow, whereas the income and expenditure account provides insights into the overall financial performance over the period.

3. Non-Cash Transactions: Items like depreciation do not affect cash flow but are reflected in the income and expenditure account. As a result, they contribute to the difference between the two balances.