Answer for No. 1 (a)

MODEL ANSWER TO QUESTION 1

(a)                                                                    Squash Club

Refreshments Trading Account for the year ended 31 May 2007

                                                                          £                 £                £

Sales                                                                                                 369,135

Less: Cost of sales

Stock at 31 May 2006                                   13,140

Add: Purchases (W1)                                     230,601       243,741

Less: Stock at 31 May 2007                                              17,415    226,326

Gross Profit                                                                                     142,809

Less: Wages (55,851 + 2,634)                                         58,485

        Depreciation on equipment (W2)                              10,881        69,366

Net profit                                                                                          73,443

Working

(1) (217,392 – 4,545) + 17,754 = 230,601

(2) (403,200 – 4,707) + 166,050 = 564,543

Depreciation = 564,543 – 531,900 = 32,643

Refreshments Trading depreciation = 32,643 = 10,881

     3

Income & Expenditure depreciation = 32,643 – 10,881 = 21,762

Question & Answer for LCCI Book Keeping Level 2

QUESTION 1

The treasurer of the Squash Club prepared the following Receipts and Payments Account for the year ended 31 May 2007:

Receipts and Payments Account    
                                                    £                                                   £

Balance at bank                          4,923   Grounds staff wages           219,261

Cash in hand                               171      Rent                                  158,400

Disposal of equip at book value  4,707    New equipment           166,050

Subscriptions: Insurance             6,102

For year ended 31 May 2006    7,370   Sundry expenses                 12,618

For year ended 31 May 2007  487,980 Refreshments supplies         217,392
For year ended 31 May 2008    11,160 Refreshments staff wages    55,851
Refreshments sales                  369,135 Cash in Hand                       324
Balance at Bank                        59,448
                                               895,446                                            895,446

 Additional information:
                                                          31 May 2006                        31 May 2007

£                                         £

Refreshments stocks                             13,140                              17,415

Subscriptions in arrears                         18,450                              24,255

Equipment at book value                       403,200                            531,900

Rent owing                                           -                                        22,995

Rent prepaid                                         12,600                               -

Creditors for refreshment supplies         4,545                                17,754

Refreshment staff wages owing              -                                        2,634

The subscriptions in arrears at 31 May 2006 have not been received and are to be written off as irrecoverable.

One third of the depreciation for the year is to be charged to the refreshments account.

REQUIRED

For the Squash Club:

(a) Prepare the Refreshments Trading Account for the year ended 31 May 2007. (8 marks)

(b) Prepare the Income and Expenditure Account for the year ended 31 May 2007. (9 marks)

(c) Calculate the opening Accumulated Fund and prepare the Balance Sheet at 31 May 2007. (8 marks)(Total 25 marks)