Question

QUESTION ONE The treasurer of Kakeldadi's Club has presented the following Information to you on 31" December, 2018 Cash transactions for the year ended 31 December, 2018 were as follows GH¢ GHE Cash -balance (1" January, 2018) 9,300 Insurance expenses 27.900 Members' subscription 26,500 Bar stock supplies 80,000 Bar Purchases 60,000 Bar expenses 16,300 Bar sales 154,000 Additional Information: 1. The insurance covers one and a half years to 30/03/2019. 20% depreciation is charged on cost of fixed asset 2. Other assets and liabilities were: 01/01/2018 31/12/2018 GH GH¢ Bar inventory 6,800 9,650 Owings to bar stock suppliers 6,000 7.750 Subscription in arrears 4,000 5,200 Subscription received in advance 800 1,000 Old Office Equipment 24,000 3. The bar keeper who had handled bar sales all for cash had disappeared taking with him some monies. It was not known how much money he had stolen, but all bar sales were sold at a profit margin of 25%. The cash stolen should be credited to Bar Trading Account and debited to the Income and Expenditure Account 4. The old office equipment was disposed on 31/08/2018 for GH€ 21,000 cash and new office equipment was purchased by GH¢ 12,000 cash on 30/09/2018 5. The treasurer is entitled to 10% of the surplus after considering all expenses and her entitlement. Kakeldadi's Club paid the treasurer all her entitlements before 1/01/2019. Page 1 of 4 Required: (Note: all decimals should be converted to a whole number) a. Prepare a Bar Trading Account for the year ended 31 December 2018. 12 marks b. Prepare an Income and Expenditure Account for the year ended 31 December 2018. 9 marks c. Prepare a Statement of Financial Position as at 31 December 2018 9 marks d. Ben Quayson Social Club has 160 members who contributed an amount of GH€ 150 each as Life membership fee on 01/01/2017. One tenth of the Life membership fee is charged to Income and expenditure account each year. But when a member dies, the whole amount is transferred to income and expenditure account. Unfortunately, 8 members died in 2017 and 10 members were enrolled in 01/01/2018. Ben Sarpong, the Accountant is confused on how to treat the fees. The club prepares account to 31" December each year. Required Show how Ben Sarpong should treat the Life membership fee in the financial Statements of Ben Quayson's Social Club for 2017 and 2018 years. 10 marks (Total: 40 marks)

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Answer 1

40 a) 41 154000 42 9650 43 Bar Trading 6800 Sales 60000 Ending Inventory 81750 Cash stolen 16300 38500 203350 Total Beginning Inventory Bar stock purchases Bar Stock Supplies (80000-6000+7750) Bar expenses Bar Trading Profit Total 39700 44 45 46 203350 47 48 b) Income & Expenditure Account 49 50 51 52 Insurance expense (27900 -27900*3/12) Depreciation on Equipment (24000*20%*8/12)+(12000*20%*4/12) Cash stolen Treasurer's Entitlement (66200-64625)*10/110 Surplus Total 20925 Subscription recived during current Year 4000 Gain on sale of Equipment 39700 Bar Trading Profit 143 1432 66200 Total 53 27500 (26500-4000+5200+800-1000) 200 38500 Cost price of Old Equipment Less Depreciation Book Value 66200 Less Sale Price Gain on sale of Equipment 24000 3200 20800 54 55 21000 56 200 57

58 ) 59 37300 60 1432 61 Statement of Financial Position Cash at Bank (9300+26500-60000+154000-27900-80000-16300+21000-1 14457 Accumulated fund Bar Stocks 9650 Add Surplus Outstanding Subscription 5200 Owing for Bar Stock Suppliers Prepaid Insurance expenses 6975 Subscriptio received in advance Equipment (24000-24000+12000 ) 12000 Less Depreciation on Equipment -800 7750 1000 62 63 64 65 66 Total Assets 47482 Total Liabilities 47482 67 68 69 9300 6800 24000 70 71 Cash at Bank Bar Stocks Equipment Subscription due Less Owing for Bar Stock Suppliers Subscription received in advance Accumulated fund at January 1,2018 4000 72 -6000 -800 73 74 37300 75