O-LevelAccountingAccounting procedures7707/23 · Oct/Nov 2021 · Q520 Marks

The financial year of VL Sports Club ends on 31 December. The treasurer provided the following information about receipts and payments 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 provided the following information. 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 Of the subscriptions in arrears on 1 January 2020 an amount of $80 had not been paid by 31 December 2020 and is to be written off as irrecoverable. REQUIRED

(a)Prepare the subscriptions account for the year ended 31 December 2020. Balance the account and bring down the balances on 1 January 2021. VL Sports Club Subscriptions account Date | Details | $ | Date | Details | $[8]
(b)Prepare the income and expenditure account for VL Sports Club for the year ended 31 December 2020. VL Sports Club Income and Expenditure Account for the year ended 31 December 2020 $ | $[9]
(c)Advise the treasurer whether or not VL Sports Club should offer this reduction in annual subscription fees to members who pay in advance. Justify your answer with one advantage and one disadvantage.[3]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2021). The mark or mark type is shown in brackets.

[1] Subscriptions account: Bank 19 200
[1] Subscriptions account: Income and expenditure 19 080 OF
[1] Subscriptions account: Irrecoverable debts 80
[1] Subscriptions account: Balance c/d (arrears) 300
[1] Subscriptions account: Balance c/d (advance) 900
[1] Subscriptions account: Balance b/d (arrears) 300
[1] Subscriptions account: Balance b/d (advance) 900
[1] Dates (for accounts in 5a)
[1] Income & Expenditure Account: Subscriptions 19 080 OF
[1] Income & Expenditure Account: Net Competition income (7300-4100) 3 200
[1] Income & Expenditure Account: Net Dinner dance income (6500-6200) 300
[1] Income & Expenditure Account: General expenses (11500-400+500) 11 600
[1] Income & Expenditure Account: Irrecoverable debt 80
[1] Income & Expenditure Account: Depreciation of equipment (23000+12000-30000) 5 000
[2] Income & Expenditure Account: Surplus for the year 5 900 CF/(1)OF
[1] Cash received earlier (Advantage)
[1] Reduced risk of irrecoverable subscriptions/reduced risk of subscriptions in arrears (Advantage)
[1] Reduction in administration costs (Advantage)
[1] May encourage new members to join (Advantage)
[Max 1] Accept other valid points for advantages
[1] Less cash received (Disadvantage)
[1] Possible reduction in membership (Disadvantage)
[1] Difficulty of monitoring varying subscription rates (Disadvantage)
[1] Reduces the surplus for the year (Disadvantage)
[Max 1] Accept other valid points for disadvantages
[1] Recommendation

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