RIA Music Club owns the premises, which include a shop and several music rooms. Shop sales are made for cash, while shop purchases are bought on credit. Mark-up is 20%. The treasurer supplied the following data.
Figures at 1 January 2020 and 31 December 2020:
Subscriptions in advance: $1200 / $1050
Subscriptions in arrears: $5215 / $5830
Total shop trade payables: $4275 / $4990
Shop inventory: $2500 / $2500
Balance at bank: $240 / $110
For the year ended 31 December 2020:
Subscriptions received $36700
Shop purchases $34200
Shop purchases returns $1710
Interest charged on overdue shop trade payables accounts $200
(a)[6]
Prepare the subscriptions account for the year ended 31 December 2020. Balance it off and bring down the balances on 1 January 2021.
(b)[6]
Prepare the total shop trade payables account for the year ended 31 December 2020 in order to work out the amount paid to shop trade payables.
(c)[3]
Calculate the revenue from shop sales for the year ended 31 December 2020.
(d)[5]
Advise the treasurer whether renting out part of the premises is the best way to improve cash flow, or whether other methods could be more suitable. Justify your answer.
Worked solution & mark scheme
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