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9706 · 3.1.3

Clubs and Societies — practice questions

Practice and worked examples for 9706 Clubs and Societies. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

A sports club had subscriptions of $24,000 received during the year. At 1 Jan, $800 was owed by members (in arrears); at 31 Dec, $1,200 was owed. Subscriptions of $600 related to the next year were received in advance at 31 Dec. There were no subscriptions in advance at 1 Jan.

Calculate the subscriptions figure for the Income and Expenditure Account.

Show solution outline

To find the income for the year, we must adjust the cash received for opening and closing balances of subscriptions in arrears (asset) and in advance (liability).

Method 1: Using a formula Income=Cash Received+Closing Arrears−Opening Arrears−Closing Advance+Opening Advance\text{Income} = \text{Cash Received} + \text{Closing Arrears} - \text{Opening Arrears} - \text{Closing Advance} + \text{Opening Advance} Income=$24,000+$1,200−$800−$600+$0=$23,800\text{Income} = \text{\textdollar}24,000 + \text{\textdollar}1,200 - \text{\textdollar}800 - \text{\textdollar}600 + \text{\textdollar}0 = \text{\textdollar}23,800

Method 2: Using a T-Account

Subscriptions Account
Balance b/d (Arrears 1 Jan)800Balance b/d (Advance 1 Jan)0
------------
Income & Expenditure (bal. fig.)23,800Bank (Cash Received)24,000
Balance c/d (Advance 31 Dec)600Balance c/d (Arrears 31 Dec)1,200
25,20025,200

Final Answer: The subscriptions income for the Income and Expenditure Account is $23,800.

Worked example 2

A tennis club runs a small cafe. The following information is available for the year ended 31 December 2023:

  • Cafe takings (cash received): $45,000
  • Payments to cafe suppliers: $28,000
  • Cafe staff wages paid: $7,000
  • Inventory of cafe supplies at 1 Jan 2023: $3,000
  • Inventory of cafe supplies at 31 Dec 2023: $4,000
  • Trade payables for cafe supplies at 1 Jan 2023: $1,500
  • Trade payables for cafe supplies at 31 Dec 2023: $2,000

Calculate the profit from the cafe to be transferred to the Income and Expenditure Account.

Show solution outline

Step 1: Calculate credit purchases for the year We need to adjust payments to suppliers for the change in trade payables. Purchases=Payments to suppliers+Closing payables−Opening payables\text{Purchases} = \text{Payments to suppliers} + \text{Closing payables} - \text{Opening payables} Purchases=$28,000+$2,000−$1,500=$28,500\text{Purchases} = \text{\textdollar}28,000 + \text{\textdollar}2,000 - \text{\textdollar}1,500 = \text{\textdollar}28,500

Step 2: Prepare the Cafe Trading Account This calculates the gross profit from the cafe's operations.

| | ∣ | | :--- | :--- | | Revenue (Takings) | 45,000 | | Less: Cost of Sales | |

Opening Inventory3,000
Add: Purchases28,500
31,500
Less: Closing Inventory(4,000)
------
Cost of Sales(27,500)
Gross Profit17,500

Step 3: Calculate Net Profit from the Cafe We deduct the cafe's specific expenses from the gross profit.

| | ∣ | | :--- | :--- |

Gross Profit17,500
Less: Cafe staff wages(7,000)
Net Profit from Cafe10,500

Final Answer: The profit from the cafe to be shown in the Income and Expenditure Account is $10,500.

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