O-LevelAccountingPreparation of financial statements7707/22 · Oct/Nov 2020 · Q220 Marks

BH Sports Club provides sporting facilities and a café for the use of its members and guests. The club's financial year ends on 31 July. The following information is available. Assets and liabilities | At 1 August 2019 $ | At 31 July 2020 $ --- | --- | --- Bank | 840 | 1270 Café inventory | 520 | 770 Sports hall at book value | 17000 | 16560 Insurance prepaid – sports hall and sports equipment | 400 | 440 Sports equipment at book value | 3900 | ? Subscriptions in arrears | 360 | 720 Subscriptions received in advance | | 120 Wages accrued – café staff | 60 | 80 Receipts and Payments Account for the year ended 31 July 2020 Details | $ | Details | $ --- | --- | --- | --- Balance b/d | 840 | Purchases of café supplies | 8190 Subscriptions received | 9960 | Wages – café staff | 2750 Café takings | 13520 | Wages – sports staff | 5220 | | Insurance - sports hall and sports equipment | 1430 | | Sports equipment | 2100 | | Sports hall expenses | 3360 | | Balance c/d | 1270 | 24320 | | 24320 Additional information Sports equipment is depreciated at 10% per annum using the reducing balance method. REQUIRED

(a)Prepare the subscriptions account for the year ended 31 July 2020. Balance the account and bring down the balances on 1 August 2020. BH Sports Club Subscriptions account Date | Details | $ | Date | Details | $ --- | --- | --- | --- | --- | ---[6]
(b)Calculate the café profit for the year ended 31 July 2020.[4]
(c)Prepare the income and expenditure account for the year ended 31 July 2020. BH Sports Club Income and Expenditure Account for the year ended 31 July 2020 $ | $[7]
(d)(i)State what the balance on BH Sports Club's accumulated fund represents.[1]
(d)(ii)State the effect that the surplus or deficit on BH Sports Club's income and expenditure account for the year ended 31 July 2020 will have on the accumulated fund.[2]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

[1] (a) 2019 Aug 1 Balance b/d $360
[1] (a) 2020 Jul 31 Bank $9960
[1] (a) 2020 Jul 31 Income and Expenditure $10200 OF
[1] (a) 2020 Jul 31 Balance c/d $120
[1] (a) 2020 Aug 1 Balance b/d $720
[1] (a) 2020 Aug 1 Balance b/d $120
[1] (a) + (1) dates
[1] (b) Revenue $13520
[1] (b) Opening inventory $520
[1] (b) Purchases $8190
[1] (b) Less Closing inventory $770
[1] (b) Wages – café staff (2750 + 80 – 60) $2770
[1] (b) Profit for the year $2810 (1)(OF)
[1] (c) Income Subscriptions $10200 (1) OF
[1] (c) Income Profit on café $2810 (1) OF
[1] (c) Expenditure Wages – sports staff $5220
[1] (c) Expenditure Insurance – sports hall and sports equipment (1430 + 400 – 440) $1390
[1] (c) Expenditure Sports Hall expenses $3360
[1] (c) Expenditure Depreciation – sports hall (17000 – 16560) $440 (1)
[1] (c) Expenditure sports equipment (10% × (3900 + 2100)) $600 (1)
[1] (c) Surplus for the year $2000 (1) OF
[1] (d)(i) The difference between the assets and the liabilities
[1] (d)(i) The accumulated surpluses earned since the club started Max (1)
[1] (d)(ii) Increase (1)OF $2000 (1)OF

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