O-LevelAccountingPreparation of financial statements7707/22 · May/June 2018 · Q320 Marks

The W Sports Club provides sporting facilities for members. The club also runs a shop for the sale of sports clothing. The following information is available. Summarised Receipts and Payments Account for the year ended 30 April 2018 | | $ | | $ | |:----|:-----|:--------|:-----| | Balance b/d | 700 | Shop purchases of sports clothing | 1400 | | Subscriptions | 1820 | Catering for special event | 600 | | Sale of tickets for special event | 1080 | Wages | 1500 | | Shop sales of sports clothing | 2600 | General expenses | 1900 | | Other income | 1250 | Rent | 1150 | | | | Balance c/d | 900 | | | 7450 | | 7450 | Balance b/d 900 Balances at: | | 1 May 2017 | 30 April 2018 | |:----------------------|:-----------|:--------------| | Subscriptions in arrears | 75 | 45 | | Subscriptions in advance | 60 | 50 | | Inventory – sports clothing | 400 | 550 | | Trade payables – sports clothing | 200 | 140 | | Other payables – special event | | 250 | | Non-current assets (at valuation) | 6200 | 5900 | | Rent accrued | | 100 | Additional information 1 The subscriptions received in the year included all subscriptions in arrears on 1 May 2017. 2 The wages include $900 for the sports clothing shop and $180 for the special event. The special event was organised in March 2018. 3 20% of the rent and $130 of the general expenses relate to the sports clothing shop.

(a)Calculate the subscriptions for the year ended 30 April 2018.[4]
(b)Prepare the income statement of the sports clothing shop for the year ended 30 April 2018. W Sports Club Sports Clothing Shop Income Statement for the year ended 30 April 2018[5]
(c)Calculate the profit or loss on the special event.[2]
(d)Prepare the income and expenditure account for the year ended 30 April 2018. W Sports Club Income and Expenditure Account for the year ended 30 April 2018[7]
(e)Explain why subscriptions paid in advance will be shown as a liability in the statement of financial position of the W Sports Club.[2]

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

[1] 1820 – 75 + 60
[1] – 50 + 45
[1] = 1 800
[1] OF (for correct calculation using previous OFs)
[1] Purchases: 1400 + 140 (trade payables adj) – 200 (goods drawings) = 1340
[1] Rent: (1150 + 100) × 20% = 250
[1] Wages: 900
[1] General expenses: 130
[1] Profit for the year: 130 (OF) + W (for all correct calculations leading to 130)
[1] Catering: 600
[1] Other payables: 250
[1] Wages: 180
[1] Profit 50 (OF)
[1] Subscriptions 1800 (OF)
[1] Profit on sports clothing 130 (OF)
[1] Profit on special event 50 (OF)
[1] Other income 1250
[1] Wages (1500 – 900 – 180) = 420
[1] General expenses (1900 – 130) = 1770
[1] Rent (1150 + 100) × 80% = 1000 (OF)
[1] Depreciation 300 (OF)
[1] Deficit 260 (OF)
[1] W Sports Club has received the payment but must provide the service in a future period
[1] The requirement to provide the service in a future period is a liability.

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