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Club Accounts Included in the assets and liabilities of the Kilternan Golf Club on 01/01/2016 were the following: Clubhouse €650,000; land €290,000; equipment €25,000; investments €5,000; bar stock €8,130; bar creditors €3,800; members’ subscriptions prepaid €1,500; cash in hand €3,600 - Leaving Cert Accounting - Question 7 - 2017
Question 7
Club Accounts Included in the assets and liabilities of the Kilternan Golf Club on 01/01/2016 were the following: Clubhouse €650,000; land €290,000; equipment €25,0... show full transcript
Worked Solution & Example Answer:Club Accounts Included in the assets and liabilities of the Kilternan Golf Club on 01/01/2016 were the following: Clubhouse €650,000; land €290,000; equipment €25,000; investments €5,000; bar stock €8,130; bar creditors €3,800; members’ subscriptions prepaid €1,500; cash in hand €3,600 - Leaving Cert Accounting - Question 7 - 2017
Step 1
Prepare a statement showing the club’s accumulated fund on 01/01/2016.
Answer
To calculate the accumulated fund as of 01/01/2016, we will summarize the assets and liabilities.
Assets
- Clubhouse: €650,000
- Land: €290,000
- Equipment: €25,000
- Investments: €5,000
- Bar Stock: €8,130
- Cash in Hand: €3,600
Total Assets:
€650,000 + €290,000 + €25,000 + €5,000 + €8,130 + €3,600 = €981,730
Liabilities
- Bar Creditors: €3,800
Total Liabilities: €3,800
Accumulated Fund Calculation
Accumulated Fund = Total Assets - Total Liabilities
Accumulated Fund = €981,730 - €3,800 = €977,930
Thus, the accumulated fund on 01/01/2016 is €977,930.
Step 2
Prepare a bar trading account for the year ended 31/12/2016.
Answer
The Bar Trading Account for the year ending 31/12/2016 can be structured as follows:
Bar Trading Account
Bar Sales: €32,300
Less Cost of Sales:
- Opening Stock: €8,100
- Purchases: €28,600
- Less Closing Stock: (€2,900)
Cost of Sales Calculation:
Opening Stock + Purchases - Closing Stock
= €8,100 + €28,600 - €2,900 = €33,800
Gross Profit Calculation:
Gross Profit = Bar Sales - Cost of Sales
= €32,300 - €33,800 = (Loss of €1,500)
However, adjustments on losses or other factors can affect the final calculation, so further review may be necessary.
Step 3
Prepare the club’s income and expenditure account for the year ending 31/12/2016.
Answer
To construct the Income and Expenditure Account for the year ending 31/12/2016, we analyze the income and expenses as follows:
Income and Expenditure Account
Income:
- Bar Profit: €6,200
- Subscriptions: €62,400
- Investment Interest: €1,700
- Annual Sponsorship: €15,000
- Lotto: (Net of expenses) €8,000
Total Income = €6,200 + €62,400 + €1,700 + €15,000 + (€8,000) = €83,300
Less Expenses:
- General Expenses: €24,800
- Insurance: €5,600
- Depreciation of Clubhouse: (€5,720)
Total Expenses = €24,800 + €5,600 + €5,720 = €36,120
Net Income Calculation:
Excess of Income over Expenditure = Total Income - Total Expenses
= €83,300 - €36,120 = €47,180.
Step 4
Prepare the balance sheet of Kilternan Golf Club as on 31/12/2016.
Answer
The Balance Sheet for Kilternan Golf Club as of 31/12/2016 is summarized below:
Balance Sheet
Fixed Assets
- Clubhouse: €650,000
- Land: €290,000
- Equipment: €25,000
- Investments: €5,000
Total Fixed Assets: €650,000 + €290,000 + €25,000 + €5,000 = €970,000
Current Assets
- Cash: €82,400
- Bar Stock: €9,200
- Subscriptions due: €2,600
Total Current Assets: €82,400 + €9,200 + €2,600 = €94,200
Current Liabilities
- Bar Creditors: €2,400
- General Expenses Due: €1,100
Total Current Liabilities: €2,400 + €1,100 = €3,500
Capital & Reserves
Accumulated Fund: €977,930
Excess Income: €47,180
Final Calculation:
Net Worth = Total Fixed Assets + Total Current Assets - Total Current Liabilities - (Accumulated Fund + Excess Income) = €970,000 + €94,200 - €3,500 - (€977,930 + €47,180) = €34,590.
Step 5
Explain the difference between the closing balance in the receipts and payments account and the excess of income over expenditure.
Answer
The closing balance in the receipts and payments account represents the amount of cash available at the end of the financial year. Conversely, the excess of income over expenditure provides insight into how the income generated by the club is greater than its expenses during the year.
Key Differences:
- Nature of Amount: Closing balance reflects cash and bank balances, whereas excess income shows profitability.
- Purpose: The former evaluates liquidity, while the latter assesses operational efficiency.
- Income/Expenditure Inclusion: The receipts account includes cash movements, and the income and expenditure account recognizes income that is due but may not have been received yet (and expenses incurred but not yet paid).
Understanding both balances helps the management of the club gauge financial health from different perspectives.