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The Swara Sports Club had the following assets and liabilities as at 30 September 2002

      

The Swara Sports Club had the following assets and liabilities as at 30 September 2002:
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The treasurer of the club, Mr. Lutomia is in process of drawing up the financial forecast of
the club for the coming year, ending on 30th September2003.
He wishes to prepare a forecast income and expenditure account for the year and a balance
sheet as at that date.
The following information has been collected to assist in the forecast:
1. The club has 300 members and it is intended to raise the subscriptions per member
from the current Sh.8,000 to Sh.10,000 per year. The members who have paid in
advance will be allowed subscriptions at the old rates. It is anticipated that the members
currently in arrears with their subscriptions will pay the arrears during the coming year.
It is also anticipated that the number of members whose subscriptions would be in
arrears and those who would have paid in advance on 30 September 2003 would be the
same as the corresponding numbers on 30 September 2002.
2. Extensions to the clubhouse are planned which will cost an estimated amount of
Sh.3,000,000. Of this sum, it is anticipated that Sh.2, 000,000 will be paid during the
year.
3. Some of the club's sports equipment which cost Sh.500,000 and has a written value of
Sh.200,000 will be sold for u estimated value of Sh.100,000 and replaced by new
equipment costing Sh.680,000. All equipment is depreciated on a straight-line basis over
four years and none of the equipment is more than three years old. A full year's
provision is charged in the year of acquisition and none in the year of disposal.
4. Bar purchases are made monthly on credit and paid for in the month following
purchase. It is anticipated that the same volume of business, which is fairly constant on
a monthly basis, will be realised during the coming year but that stock costs will rise by
25% from 1 October 2002. Bar stocks are normally held at the level of one half of one
month's purchases. The bar makes a gross profit margin of 20% on all sales regardless
of stock costs. Bar sales are on cash, all of which is banked daily. The barman, who is
paid Sh.20,000 per month, receives a commission of 5% of the gross profit for the year.
This is paid with his final wage cheque by the year end.
5. The club runs monthly social evenings and charges members Sh.2, 000 per head
admission. An average of 200 members attend each of these evenings. Expenses usually
amount to Sh. 1,400 per head.
6. The following expenditure payments are expected to be made by the club during the
coming year:
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The rates are paid on 1 January in respect of the following twelve months. The insurance
payment will be for the Period 1 April 2003 to 31 March 2004. One-fifth of electricity
consumption is in respect of the bar. All payments are made by cheque.
Required:
(a) Forecast bank account for the year ending 30 September 2003.
(b) Forecast bar. Trading, profit and loss account for the year ending 30 September 2003
(c) Forecast income and expenditure account for the year ending 30 September 2003.
(d) Balance sheet as at 30 September 2003.

  

Answers


Mutiso
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Mutiso answered the question on November 17, 2018 at 08:33


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    Date posted: November 16, 2018.  Answers (1)

  • Atieno, Babu and Chesire have been trading in partnership sharing profits/losses in the ration of 5:3:2 respectively. On 1 April 2000 they admitted their manager, Dagana...(Solved)

    Atieno, Babu and Chesire have been trading in partnership sharing profits/losses in the ration of
    5:3:2 respectively. On 1 April 2000 they admitted their manager, Dagana as a partner and the
    profit sharing ratio was changed to 4:3:2:1 FOR Atieno, Babu, Chesire and Dagana respectively.
    The partners valued the goodwill at Sh.510,000. Dagana paid Sh.200,000 as capital and his share
    of goodwill, which should be based on capital contributions.
    The partners do not wish to retain the goodwill account after admission of Dagana. The
    admission of Dagana has not been fully recorded other than the cash receipt of Sh.376,500.
    The following is the trial balance of the partnership as at 31 March 2001:
    famay2009.png
    Notes:
    1) Depreciation on furniture and fittings and motor vehicles is at 10% and 20% on reducing
    balance respectively.
    2) The closing stocks were valued at Sh.560,000.
    3) Accrued salaries and wages and telephone bills amounted to Sh.24,000 and Sh.14,000
    repectively.
    4) Prepaid subscriptions and rates amounted to Sh.5,000 and Sh.25,000 respectively.
    5) The partners decided that Dagana should be given a monthly salary of Sh.20,000 for the
    whole year from 1 April 2000 to 31 March 2001.
    6) Dagana took goods for own use at cost amounting to Sh.185,000. No entry has been made
    in the books.
    7) The old partners shared the cash paid by Dagana for part of his goodwill.

    Required:
    a) Trading, profit and loss account for the year ended 31 March 2001. (10 marks)
    b) Partners capital accounts.
    c) Partners current accounts.
    d) Balance sheet as at 31 March 2001.

    Date posted: November 16, 2018.  Answers (1)

  • State how liabilities, provisions and reserves are to be included and shown in the financial statements of a company(Solved)

    State how liabilities, provisions and reserves are to be included and shown in the financial
    statements of a company.

    Date posted: November 16, 2018.  Answers (1)