Topic

7
Club a/c’s
2 Athlone
3 Bray
4 Clara
5 Dunshaughlin
6 Elphin
7 Ferbane
8 Galway
 92 Graded Accounting Questions – Solutions

2 Athlone Athletics Solution

(a) Accumulated Fund on 1/1/2012
€ €
Assets:
Clubhouse & Grounds 850,000
Equipment 54,000
Bar Stock 4,600
Bar Debtors 900
Investment Income due 150
7½ Government Investments 38,000
Levies due 1,250
948,900
Liabilities:
Life Membership 30,000
Bar Creditors 2,650
Subs. in Advance 2,000
Levy Reserve Fund 24,000
Wages due 1,600
Bank Current Account 1,560
Loan 35,000
Loan Interest due 2,700 (99,510)
Accumulated Fund in 1/1/07 €849,390

(b) Income and Expenditure Account for year ending 31/12/12

€ €
Income:
Investment Income (W) 2,850
Catering Profit (W) 1,550
Bar Profit (W) 40,090
Subscriptions (W) 184,170
Entrance Fees 17,600
Annual Sponsorship 40,000
Life Membership (W) 4,500
290,760
Expenditure:
Sundry Expenses (W) 96,000
Loan interest (W) 1,080
Depr. of Equipment (W) 1,000
Depr. of Clubhouse (W) 25,500 123,580
Surplus of Income over Expenditure 167,180
 Topic 7 Club a/c’s 93

(c) Balance Sheet as on 31/12/2012

€ € €
Fixed Assets: Cost Depr. N.B.V.
Clubhouse & Grounds 1,200,000 1,200,000
Equipment 86,000 1,000 85,000
1,286,000 1,285,000
Investments:
7½% Government Investments 38,000
Building Society 100,000
1,423,000
Current Assets:
Bar Stock 5,200
Debtors 430
Bank 108,710
Less Creditors: Amounts falling due within 1 year. 114,340
Bar Creditors 3,270
Subs. prepaid 2,500 (5,770) 108,570
1,531,570
Financed by:
Creditors: Amounts falling due after 1 year.
Life membership (50,000 2 5,000) 40,500
Levy Reserve Fund (24,000 1 75,000) 99,000
Revaluation Reserve 375,500 515,000
Accumulated Fund 1/1/2012 849,390
1 Excess Income 167,180 1,016,570
Capital Employed 1,531,570

Notes to Accounts:
(1) Bar. Sales 115,780 2 900 1 430 5 115,310
   Purs. 75,200 2 2,650 1 3,270 5 75,820
   Trading 4,600 1 75,820 2 5,200 5 75,220 2 115,310 5 40,090
(2) Subs. 275,920 1 2,000 2 15,000 2 2,500 2 75,000 2 1,250 5 184,170
(3) life subs. 35,000 1 15,000 2 5,000 5 45,000
(4) Investment Interest 3,000 2 150 5 2,850
(5) loan Interest 38,780 2 35,000 5 3,780 2 1,080 5 2,700
(6) Depc. of Equip. 54,000 1 32,000 2 85,000 5 1,000
(7) Revaluation Reserve 350,000 1 25,500 5 375,500

(d) The purchase of land costing €250,000 could be funded as follows:

• Sell Investments 5 €38,000.
• Use Building Society A/c 5 €70,000.
• Apply for funding from National Lottery.
• Use the Levy Reserve Funding.
• Increase Life Membership Fee, or membership numbers.
• A Term Loan over five years should be easily granted as the Club is profitable and has adequate security
in the form of Clubhouse & Grounds.
 94 Graded Accounting Questions – Solutions

3 Bray Boxing Solution

(a) Accumulated Fund on 1/1/2012
Assets Liabilities
€ €
Clubhouse 340,000
Land 180,000
Machinery 34,000
Accumulated Deprec. Machinery 13,600
Bar Stock 10,700
Bar Debtors 700
Subscriptions due 750
8% Investments 12,000
Investment interest due 250
Bank current account 2,400
Levies due 420
Bar Creditors 1,780
Life Membership 6,000
Levy Reserve Fund 13,000
Loan Interest due 1,200
Loan 20,000
Accumulated Fund 1/1/2012 525,640
581,220 581,220

(b) Income and Expenditure Account for year ending 31/12/2012

€ €
Income
Bar Gross Profit W 18,330
Subscriptions W 62,950
Life Membership W 5,200
Catering Profit 13,160
Investment Int. W 960
Investment Bonds Int. W 625
101,225
Expenditure
Sundry Expenses 61,420
Loss on Sale of Machinery W 2,100
Interest on Loan W 2,400
Depreciation on Machinery (20% of €60,000) 12,000
Depreciation on Buildings (2% of €340,000) 6,800 (84,720)
Excess of Income over Expenditure 16,505

(c) Balance Sheet as at 31/12/2012

Fixed Assets € € €
Land 180,000 180,000
Clubhouse 340,000 6,800 333,200
Machinery 60,000 22,400 37,600
580,000 29,200 550,800
Investments (12,000 1 25,000) 37,000
587,800
 Topic 7 Club a/c’s 95

Current Assets
Bar Stock 12,800
Interest on Investments/Bonds 875
due (€625 1 €250)
Bar Debtors 850
14,525
Current Liabilities
Bank Overdraft 3,600
Bar Creditors 3,900
Subscriptions Prepaid 880 (8,380) 6,145
Net Current Assets 593,945
Financed By
Accumulated Fund 1/1/2012 525,640
Excess of Income over Expenditure 16,505
Life Membership W 20,800
Levy Reserve Fund (13,000 1 18,000) 31,000
593,945

Notes to Accounts
(1) Bar Profit
Sales 109,000 1 850 2 700 5 109,150
Purs. 90,800 2 1,780 1 3,900 5 92,920
Trading 10,700 1 92,920 2 12,800 5 90,820 2 109,150 5 18,330
(2) Subs. 103,000 2 20,000 2 880 2 18,000 2 420 2 750 5 62,950
(3) life subs. 6,000 1 20,000 2 5,200 5 20,800
(4) loan interest 23,600 2 20,000 5 3,600 2 2,400 5 1,200
(5) 8% Investment income 960 1 250 2 960 5 250
(6) 5% Bonds 5% of 25,000 for 6 months 5 625
(7) Disposal 8,000 2 3,200 (2 years) 5 4,800 2 2,700 5 (2,100) loss
(8) Acc. Depreciation 13,600 2 3,200 1 12,000 5 22,400
(9) Machinery 34,000 1 34,000 2 8,000 5 60,000

(d) The Club intends to undertake Capital Expenditure of €80,000 in the year 2012.
Would you anticipate any difficulties in the funding of such a project?
Funding for a Capital Expenditure Programme can be sourced as follows:
€
Realisation/Sale of Investments: 37,000
Term Loan 43,000
Capital Required: 80,000

The Club should have no difficulty in obtaining the required funding for the following reasons:
1. Investment can be sold realising €37,000.
2. A Term Loan (€43,000), possibly over 3/5 years, should be easily obtained from any financial institution,
as Club is a profitable concern with excellent security in the form of its Land and Clubhouse.
3. Based on the financial results for the year 2012, the Club had a Profit/Excess of Income of €16,505.
When this is added to the Depreciation €18,800, a non-cash item, it would indicate a Cash Inflow
from Operating Activities in the region of €35,305. This shows that the Club, based on existing
performance, is even capable of repaying the Term Loan within 2 years.
 96 Graded Accounting Questions – Solutions

4 Clara Curling Solution

(a) Accumulated Fund on 1/1/2012
Assets Clubhouse 290,000
Equipment 15,000
Bar Stock 4,100
Bar Debtors 260
8% Gov. Investments 16,000
Interest Due 420
Levies Due 1,000 326,780
liabilities life subs. 36,000
Subs. prepaid 1,050
Bar Creditors 1,450
Wages due 200
Bank Current 1,850
loan 16,000
Interest Due 800
levy Fund 40,000 (97,350)
Accumulated Fund 229,430

(b) Income & Expenditure for year ending 31/12/2012

Income Bar Profit 2,950
Subs. 26,450
life membership 4,200
Catering profit 1,700
Sponsorship 4,800
Entrance fees 700
Investment Income 1,280 42,080
Expenditure Coaching (2200) 1,400
loan interest 400
Depreciation Equipment 2,300
Depreciation Clubhouse 5,800 (9,900)
Surplus 1/E 32,180

(c) Balance Sheet on 31/12/2012

€ € €
Fixed Assets Clubhouse 450,000 — 450,000
Equipment 23,000 2,300 20,700
8% Investment 16,000
486,700
Current Assets Bank 19,620
Bar Stock 2,800
Bar Debtors 140 22,560
CRS falling Due Bar Creditors 250
Subs. Prepaid 1,800 (2,050) 20,510
Financed by 507,210
Accumulated Fund 229,430
Surplus 1/E 32,180
Revaluation Reserve 165,800
life membership 37,800
Levy Reserve Fund 42,000 507,210
 Topic 7 Club a/c’s 97

Notes to Accounts:
Subs. 36,200 1 1,050 2 6,000 2 1,800 2 2,000 2 1,000 5 26,450
life Subs. 36,000 1 6,000 2 4,200 5 37,800
• Bar Sales 12,400 1 140 2 260 5 12,280*
• Bar Purchases 9,230 1 250 2 1,450 5 8,030*
Bar Trading *12,2802 (4,100 1 *8,030 2 2,800) 5 2,950
Investment income 1,700 2 420 5 1,280/8 3 100 Investment 100% 5 16,000
loan interest 1,200 2 400 this yr/800 due 1/1/
Equipment Depc. 15,000 1 8,000/10 5 2,300 p.a.
Revaluations Reserve 160,000 1 5,800 5 165,800

(d) Indicate the points you, as treasurer, would made to a proposal to reduce subscriptions
by 10%
• If subs. were reduced by 10% 2 loss of €2,645 income
• Surplus of €32,180 indicates club could afford reduction
• Investments €16,000 available to compensate
• Bank a/c €19,620 shows further available funds.
• Capital life subs. €37,800 available for current use.
 98 Graded Accounting Questions – Solutions

5 Dunshaughlin Draughts Solution

(a) Accumulated fund on 1/1/2012
€ €
Dr Cr
Clubhouse & Land 560,000
Equipment 36,000
Provision for Deprec. on Equipment 20,000
Bar Stocks 29,000
Life Membership 40,000
Bar Creditors 7,700
Bar Debtors 100
Levy Reserve Fund 8,000
Insurance prepaid 400
Catering Stock 1,000
Bank Balance 1,300
Investment interest due 250
Levy due 200
Investment 20,000
Loan 12,000
Stock of Heating Oil 400
Accumulated Fund 558,350
€647,350 €647,350

Notes to Accounts
(1) Bar Profit
Sales 98,700 1 300 2 100 1 1,200 5 100,100
Purs. 64,700 1 6,100 2 7,700 5 63,100
Trading 29,000 1 63,100 2 22,000 5 70,100 2 100,100 5 30,000
(2) Subs. 49,200 2 8,000 2 200 2 1,000 5 40,000
(3) 7.5% Investment 1,750 2 250 5 1,500 5 7½%/100% 5 20,000
(4) Interest on loan 1,150 1 230 5 1,380
(5) Equipment 36,000 2 10,000 1 14,000 5 40,000
(6) Acc. Depc. on Equip. 20,000 1 3,800 2 5,000 5 18,800
(7) Catering 1,000 1 1,500 2 700 5 1,800 2 4,500 5 2,700
(8) Insurance 2,200 1 400 2 200 5 2,400
(9) Depc. Equip. 2,600 1 500 1 700 5 3,800
(10) Disposal 10,000 2 5,000 2 4,000 5 1,000 (loss)
(11) Light & heat 5,400 1 400 2 600 1 700 5 5,900
 Topic 7 Club a/c’s 99

(b) Income and Expenditure account for year ending 31/12/2012

€ €
Income Dr Cr
Gross Profit on Bar W 30,000
Interest W 1,500
Subscriptions W 40,000
Disco Profit (40,400 2 14,100) 26,300
Catering Profit W 2,700
Annual Grant 3,000
103,500
Less Expenditure
Light and Heat W 5,900
Insurance W 2,400
Interest on Loan W 1,380
Depreciation W 3,800
Loss on Sale of Equipment W 1,000 (14,480)
89,020

(c) Dunshaughlin Draughts Balance Sheet on 31/12/12

€ € €
Fixed Assets
Clubhouse 640,000
Equipment 40,000 18,800 21,200
Financial Assets 661,200
Investment 20,000
Prize Bonds 20,000 40,000
Current Assets
Bar Stock 22,000
Catering Stock 700
Oil Stock 600
Bar Debtors 300
Insurance prepaid 200 23,800
Creditors falling due less than 1 yr
Bank 1,600
Bar Creditors 6,100
Subs. prepaid. 1,000
Electricity Due 700
Loan Interest Due 230 (9,630) 14,170
Financed by 715,370
Creditors falling due for more than 1 yr.
Acc. Fund 558,350
1 Surplus 89,020
loan 12,000
life subs. 40,000
Levy Fund 16,000 68,000
715,370
 100 Graded Accounting Questions – Solutions

(d) What are the main differences between a levy and a subscription?
Levy 2 Non Regular income
2 Not part of ordinary activity
2 Appears in Balance sheet
2 Example of capital income
Subscription 2 Annual & Regular
2 Used for normal expenditure
2 Appears in Income & Expenditure

(e) Treasurer
• Looks after finances i.e. has control over receipts and payments
• Maintains proper records
• Prepares accounts
• Presents financial report to A.G.M.
 Topic 7 Club a/c’s 101

6 Elphin Equestrian Solution

(a) Accumulated Fund, on 1/1/2012
Assets Liabilities
€ €
Clubhouse 350,000
Land/Stables 400,000
Machinery 44,000
Bar Stock 11,700
Bar Debtors 1,250
Subscriptions due 1,200
8% Investments 20,000
Investment interest due 620
Levies due 300
Bank current account 4,400
Bar Creditors 5,550
Life Membership 16,000
Levy Reserve Fund 20,000
Loan Interest due 880
Loan 24,000
Accumulated Fund 1/1/2012 758,240
829,070 829,070

(b) Income and Expenditure account for year ended 31/12/2012

€ €
Income
Bar Gross Profit W 51,340
Subscriptions W 103,260
Life Membership (25%) W 5,000
Annual Grant 17,500
Catering Profit 10,000
Investment Interest W 1,600
Investment Bonds Interest 375
189,075
Expenditure
Sundry Expenses 85,900
Loss on Sale of Machinery 7,000
Interest on Loan (12 months) W 2,640
Deprec. on Machinery (20% of € 85,000) 17,000
Deprec. on Buildings (2% of € 350,000) 7,000 (119,540)
Excess of Income over Expenditure 69,535
 102 Graded Accounting Questions – Solutions

(c) Balance Sheet as at Club 31/12/2012

Cost Acc. Dep. NBV
Fixed Assets: € € €
Land & Stables 400,000 400,000
Clubhouse 350,000 7,000 343,000
Machinery (€64,000 2 9,000 1 30,000) 85,000 17,000 68,000
835,000 24,000 811,000
Investments (€20,000 1 €25,000) 45,000
856,000
Current Assets
Bar Stock 9,700
Interest on Investments/Bonds due (W) 1,395
Bar Debtors 1,540
Cash at Bank 18,580
31,215
Current Liabilities
Bar Creditors 8,800
Subscriptions Prepaid 640 (9,440)
Net Current Assets 21,775
Net Assets 877,775
Financed By:
Accumulated fund 1/1/2012 758,240
Excess if Income over Expenditure 69,535
Life Membership (W) 15,000
Levy Reserve fund (€20,000 1 €15,000) 35,000
877,775

Notes to Accounts:
(1) Bar Profit
Sales 127,500 1 1,540 2 1,250 5 127,790*
Purchases 71,200 1 8,800 2 5,550 5 74,450*
Bar Trading 11,700 1 74,450* 2 9,700 5 76,450 2127,790* 5 51,340
(2) Machinery 44,000 1 50,000 2 9,000 5 85,000
(3) life subs. 16,000 1 4,000 2 5,000 5 15,000
(4) loan interest 12 months 5 2,640 2 3,520 5 880
(5) Investment income 8% 1,200 2 620 1 1,020 5 1,600
(6) Subs. 124,400 2 1,200 2 640 2 4,000 2 15,000 2 300 5 103,260
(7) Investment Interest Due 375 1 1,020 5 1,395

(d) Special Purpose P&L a/c.

Sometimes nonprofit making organization such as a club prepare a Profit and Loss account for activities
that are carried out to make a profit e.g. running a club lottery, dances, bar, restaurants etc. All expenses and
revenues relating to that particular activities are entered in a special profit and loss account and the profit is
than transferred to the income and expenditure account.

(e) What is the difference between annual subscriptions and levy reserve fund?
Annual subcriptions collected yearly for Revenue purposes i.e. to pay expenses & run club for the year.
Levy Reserve fund is collected over a number of years for a one off capital project such as grounds development.
 Topic 7 Club a/c’s 103

7 Ferbane Fencing Solution

(a) Accumulated fund on 1/1/2012
Assets € €
7% Investment 15,000
Clubhouse 194,000
Bar Stock 6,700
Equipment 18,600
Debtors 240
Current a/c. 3,400
Debtors a/c 15,000
Interest due (3) 1,050
Levy due 600 254,590
Liabilities
Life subs. 20,000
Creditors 5,280
Levy reserve 6,840
Depreciation 5,000
Loan 12,000
Loan interest (6) 1,500 (50,620)
Acc fund 203,970

(b) Income & Expenditure for year ending 31/12/2012

Income € €
Bar profit (1) 29,550
Subs. (2) 31,000
Interest on Deposit 750
Interest on 7% Inv. (3) 1,050
Interest on 8% Inv. (4) 2,400
Disco. Profit 24,600
Profit on Equipment (5) 100 89,450
Expenditure
Sundry Exps. 19,840
Int. on Loan (6) 500
Depreciation (7) 2,000 (22,340)
Surplus 1/E 67,110
 104 Graded Accounting Questions – Solutions

(c) Balance Sheet as at 31/12/2012

€ € €
Fixed Clubhouse 194,000
Equipment (10) 20,000 5,400 14,600
Financial 7% Investments 15,000
8% Investments 60,000 75,000

Current Deposit a/c 15,000 283,600

Deposit interest due 250
Current a/c 3,600
Stock 5,300
Debtors 510
8% interest due 2,400 27,060
Illegible due
Creditors 4,900
Subscriptions 340 (5,240) 21,820
T.N.A 305,420
Financed by
Accumulated fund 203,970
1 Surplus 67,110
1 levy fund 13,840
1 life subs. 20,500
305,420

Notes to Accounts
(1) Bar
Sales 84,900 1 510 2 240 5 85,170
Purs. 42,100 1 4,900 1 5,280 5 41,720
Trading 6,700 1 41,720 1 12,500 2 5,300 5 55,620 2 85,170 5 29,550
(2) Subs. 39,440 2 500 2 600 2 7,000 2 340 5 31,000
(3) 7% 3 2 5 2,100 i.e. 1,050 Per annum 5 1,050
(4) 8% of 60,000 for ½ yr 5 2,400
(5) Sale of Equipment 1,100 2 1,000 5 100 profit
(6) Loan interest 14,000 2 12,000 5 2,000 i i.e. 500 this yr 5 500
(7) Equipment 18,600 2 2,600 1 4,000 5 20,000 @ 10% 5 2,000
(8) Levy fund 6,840 1 7,000 5 13,840
(9) life subs. 20,000 1 500 5 20,500
(10) Provision for Depc. 5,000 2 1,600 1 2,000 5 5,400

(d) The club intends to undertake capital expenditure of €60,000 in 2013. What advice
would you give for the handling of such a project?
Funds are available to finance this project through:
• Surplus of €67,110
• Bank deposit €15,000, Current €3,600
• Investments €15,000 & €60,000
• Loan repaid so club is ideal client for further borrowing
• Levy fund €13,840
• Bank deposit 1 investment 5 €90,000
No problem in Covering €60,000 Capital expenditure
 Topic 7 Club a/c’s 105

8 Galway Solution
(a) Accumulated Fund on 1/1/2012
€ €
Assets Clubhouse 300,000
Stock 6,000
Equipment 20,000
Acc. Depc. (12,000)
Debtors 566
Subs. Due 750
Investment interest Due 400
Investment 24,000
Bank 2,000
Levy Due 450 342,166
Liabs. Life Subs. 35,000
Creditors 6,500
Levy Fund 40,000
Wages Due 3,500
Loan 30,000
Loan interest due W 2,400 (117,400)
Acc. Fund 224,766

(b) Income and Expenditure a/c for year ending 31/12/2012

Income Bar profit W 25,862
Inv. interest 5% 1,200
Inv. interest 6% 1,050
Catering 24,672
Subs. W 67,450
Life subs. W 5,500
Disposal profit W 860 126,594
Exp. Sundry Expenses 41,500
Loan interest W 1,200
Depc. Equipment W 8,480
Depc. Clubhouse 6,000 (57,180)
Surplus 1/E 69,414
 106 Graded Accounting Questions – Solutions

(c) Balance Sheet on 31/12/2012

Fixed Assets Clubhouse 300,000 6,000 294,000
Equipment W 42,400 (14,720) 27,680
321,680
Financial 5% Investments W 24,000
6% Investments 30,000 54,000
Current Assets
Stock 5,600
Debtors 348
Bank 25,842
6% interest due 1,050 32,840
Crs. falling Due less than 1 yr
Creditors 7,890
Subs. prepaid 950 (8,840) 24,000
399,680
Financed by
Crs falling Due more than 1 yr.
Life Subs. W 49,500
Levy Fund 56,000
Acc. Fund 224,766
Surplus 1/E 69,414
399,680

Notes to Accounts
Investment: 1,600 2 400 5 1,200 5 5%/100% 5 Investment 5 24,000
Loan interest 3,600 5 2,400 for 12m Acc. Fund/1,200 6m 1/E. 5 1,200
Bar Sales 99,652 2 (Cost O/S 6,000 1 Purchases 73,390 2 c/s 5,600) 5 25,862
Disposal 9,600 2 5,760 5 3,840 2 4,700 5 860
Subs. 105,600 2 20,000 2 950 2 16,000 2 450 2 750 5 67,450
Life Subs. 35,000 1 20,000 2 5,500 5 49,500
Equipment 20,000 1 32,000 2 9,600 5 42,400 @ 20% 5 8,480
Acc. Depc. 12,000 2 5,760 1 8,480 5 14,720

(d) The club intends to undertake capital expenditure of €120,000 in 2012. What advice
would you give for the funding of such a project?
There would be no problem funding this project due to the following:
• Surplus of €69,414 more half of Expenditure planned
• Bank a/c €25,842 5 20% of payment
• Loan Repaid so new borrowing would not be a problem
• Sell investments €54,000 almost 50% of expenditure
• Use levy fund €56,000, even life subs. €49,500.