1
The accounting records of the Happy Tickers Sports and Social Club are in a mess. You
manage to find the following information to help you prepare the accounts for the year to
31 December 2008.
Notes
:
(i) Ownership and all expenses of the motorised roller are agreed to be shared equally with the
Carefree Conveyancers Sports and Social Club which occupies a nearby site. The roller cost a
total of £2,000 on 1 January 2006 and had an estimated life of 10 years.
(ii
) Life subscriptions are brought into income equally over 10 years, in a scheme begun 5 years
ago in 2003. Since the scheme began the cost of £200 per person has been constant. Prior to
31 December 2007 10 life subscriptions had been received.
(iii
) Four more annual subscriptions of £20 each had been promised relating to 2008, but not yet
received. Annual subscriptions promised but unpaid are carried forward for a maximum of
12 months.
(iv) New sports equipment is sold to members at cost plus 50%. Used equipment is sold off to
members at book valuation. Half the sports equipment bought in the year (all from a cash and
carry supplier) has been used within the club, and half made available for sale, new, to members.
The ‘used equipment at valuation’ figure in the 31 December 2008 balance sheet is to
remain at £700.
(v) Closing café stocks are £850, and £80 is owed to suppliers at 31 December 2008. Required:
(a) Calculate the profit on café operations and the profit on sale of sports equipment.
(b) Prepare a statement of subscription income for 2008.
(c) Prepare an income and expenditure statement for the year ending 31 December 2008, and balance
sheet as at 31 December 2008.
(d) Why do life subscriptions appear as a liability?
(Association of Chartered Certified Accountants)