The financial year of VL Sports Club finishes on 31 December. The treasurer supplied the following receipts and payments information for the year ended 31 December 2020.
Receipts: Subscriptions $19200; Competition receipts $7300; Dinner dance ticket sales $6500
Payments: Competition prizes $4100; Dinner dance costs $6200; Equipment $12000; General expenses $11500
The treasurer also supplied the following details.
1 January 2020 / 31 December 2020
Equipment at net book value $23000 / $30000
General expenses owing $400 / $500
Subscriptions in arrears $700 / $300
Subscriptions in advance $1100 / $900
From the subscriptions in arrears on 1 January 2020, $80 had still not been settled by 31 December 2020 and must be written off as irrecoverable.
(a)[8]
Prepare the subscriptions account for the year ended 31 December 2020. Bring the account into balance and carry the balances down on 1 January 2021.
(b)[9]
Prepare the income and expenditure account for VL Sports Club covering the year ended 31 December 2020.
(c)[3]
Advise the treasurer whether VL Sports Club ought to offer this reduction in annual subscription fees to members who pay in advance. Support your answer with one advantage and one disadvantage.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Dates entered correctly (1)” …