The K Music Club provides facilities for listening to music and also provides a refreshment bar for members. The club had the following assets and liabilities at 1 April 2019. $ Subscriptions in advance 250 Subscriptions in arrears 845 Cash at bank 1570 Cash in hand 130 Wages outstanding (refreshment bar) 140 Inventory (refreshment bar) 615 Fixtures and fittings at book value 11200 REQUIRED

Mark scheme

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

1. [1] Subscriptions in arrears 845
2. [1] Total Assets 14360
3. [1] Total Liabilities 390
4. [1] Accumulated fund 13970 (OF)
5. [1] from the annual surpluses
6. [1] less any annual deficits
7. [1] 1250 + 115-140
8. [1] = 1225 (OF)
9. [1] 2019 Apr 1 Balance b/d 845
10. [1] 2020 Mar 31 Income and Expenditure 8820 (OF)
11. [1] 2020 Mar 31 Balance c/d 215 (Dr side)
12. [1] 2019 Apr 1 Balance b/d 250
13. [1] 2020 Mar 31 Bank 8500
14. [1] 2020 Mar 31 Irrecoverable debts 155
15. [1] 2020 Mar 31 Balance c/d 975 (Cr side)
16. [1] 2020 Apl 1 Balance b/d 975 (OF) (Dr side)
17. [1] 2020 Apl 1 Balance b/d 215 (OF) (Cr side)
18. [1] Advantages: Subscriptions in arrears have risen from $845 to $975, so this may be a concern
19. [1] Advantages: Subscriptions in arrears are significantly higher than subscriptions in advance
20. [1] Advantages: Irrecoverable debts would be minimised particularly if the direct debits were set up for the start of the year
21. [1] Advantages: The timing of cash receipts from members will be known
22. [1] Advantages: Administration costs may be reduced
23. [1] Disadvantages: Members may prefer to choose their own method of payment
24. [1] Disadvantages: They may prefer to pay their subscription at a time of their choosing
25. [1] Disadvantages: Some members may decide not to renew their membership
26. [1] Recommendation (1)