Chongwe Drivers’ Club at the begging of the financial year (1st April, 2014) had

Question

Chongwe Drivers’ Club at the begging of the financial year (1st April, 2014) had the following assets and liabilities:

Cash in hand 36 000

Subscriptions receivable 56 000

Inventory(sports materials) 170 000

Play grounds 1 000 000

Printing and stationery 22 000

Inventory of sports materials amounting to ZMK 153 000 and those of printing and stationery amounting to ZMK 51 800 were available on 31st March 2015. Subscriptions due on 31st March 2015 amounted to ZMK 84 000.

Donations and surpluses on tournaments are to be kept in Reserve for a permanent pavilion. It is the policy of the club to write off 50% of its sports materials and 30% of printing and stationery every year-end.

During the year ended 31 March 2015, the club accountant prepared the following.

Receipts and Payments Account Receipts :

Balance b/d 36,000 Hire of ground 56,000 Donations 1,200 Members’ subscriptions 30,000 Members’ admission fee 500,000 Subscription-tournament 120000 Sale-old sports materials 5,000 Life membership fee 40,000 Balance c/d ?

Payments:

Balance b/d 32,000 Printing and stationery 52,000 Postage charges 4,000 Secretary’s honorarium 60,000 Upkeep of field/pavilion 230,000 Telephone 7,000 Miscellaneous expenses 8,800 Rates and insurance 20,000 Grass seed 5,200 Tournament expenses 80.000 Investment 1,200,000 Acquisition-sports material 136,000 Balance c/d ? Required:

Determine the closing cash balance on the Receipts and Payments Account .

Prepare the Income and Expenditure Account and Statement of Financial Position, as at 31st March 2015. Show all workings. (25 Marks)

Explanation / Answer

WN Balance Sheet as at 1st april 2014 Liability Amount-ZMK Assets Amount-ZMK Play Ground (Land) 1000000 abbreviations I &E Income and Expenditure Cash 36000 R & P Receipts and Payments Capital Fund 1252000 Sports Material 170000 bal fig Stock of Printing and Stationery 220000 Bank Overdraft 32000 Subscription receivable 56000 1284000 1284000 Printing and Stationery To Op Stock 22000 By Income and Exp 22200 consumed To Receipt and Payment 52000 [(22000+52000)*30%)] By Closing Stock 51800 74000 74000 Investment To Bal B/D To R & P -Purchase 1200000 By Bal C/D 1200000 1200000 1200000 Note : Depreciation is not charged on Investment Sports Material To Bal b/d 170000 By I & Exp 153000 consumed To R & P -Purchase 136000 [(170000+136000)]*50% To I & E -Profit on sale 5000 By R & P sale 5000 By Bal C/D 153000 311000 311000 Subscription To Bal B/D 56000 By R & P 50000 To I & E -Bal fig 528000 By Bal C/D-OS 84000 584000 584000 Income and Expenditure for the yr ended 31st March 2015 Expenditure Amount Income Amount To Printing and Stationary 22200 By Hire of Ground 56000 To Postage charges 4000 By Subscription 528000 To Secretary honararium 60000 By Sports Material (Sold) 5000 To Telephone 7000 By Member admission fees 30000 To Misc Exp 8800 To Rates and Insurance 20000 To Grass Seeds 5200 To Sports Material Consumed /dep 153000 To Upkeep of field 230000 To Surplus 108800 619000 619000 Calculation of closing balance of Receipts and Payments [(36000+56000+1200000+500000+30000+120000+5000+40000)-(32000+52000+4000+60000+230000+7000+8800+20000+5200+80000+120000+136000)] 152000 Balance Sheet as at 31st March 2015 Liabilities Amount Amount Assets Amount Amount Capital Fund Play Ground -Land 1000000 Op Bal 1252000 Surplus 108800 1360800 Investment 1200000 Reserve Subscription Receivable 84000 Donations 1200000 Subs for Tournament 120000 Sports Material 153000 1320000 Tournament Exp -80000 Cash in Hand 152000 Life Membership Fees 40000 Stock of Printing and Stationery 51800 2640000 2640000 Note 1 Life membership is capitalised.Therefore shown in BS 2 Depreciation is not charged on land.

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