chegg

Question: The Following Information Pertains To The Gunner Supporters Club: Balances As At 30 September 20.20 R Membership

Question: The Following Information Pertains To The Gunner Supporters Club: Balances As At 30 September 20.20 R Membership…………………

The following information pertains to the Gunner Supporters Club:

Balances as at 30 September 20.20 R
Membership fees – received…………………………………………………………… 15 810
Accrued membership fees (30/09/20.19)……………………………………………… 1 860
Membership fees received in advance (30/09/20.19)……………………………….. 2 700
Advertising expenses…………………………………………………………………… 2 200
Thierry Henry fund – (30/09/20.19)…………………………………………………….. 24 000

Additional information

The following transactions must be taken into account for the year ended 30 September 20.20:

(a)     During the current year 12 new members joined the club. The entrance fee per member is R600 and 75% of the entrance fees received should be capitalised and the balance recognised immediately.

 

(b)     At year-end accrued membership fees amounted to R2 250 and membership fees already received for to the next financial year amounted to R5 400. 50% of the accrued membership fees balance outstanding at the beginning of the financial year should be written off.

 

(c)     On 1 October 20.19, Thierry Henry donated an amount R24 000 to the club, the funds were then invested on the same day in a fixed deposit account with Wenger Bank at an interest rate of 7,5%. The condition for the donation is that the income from the investment should be used to advertise the club and the capital amount can only be used after 10 year.

 

(d)     Advertising expenses incurred by the club were R2 200 for the 30 September 20.20 financial year.

Use the information provided to calculate the entrance fees that should be recognised as income in the statement of income and expenditure for the year ended 30 September 20.20:

 

  •  A.Entrance fees amount recognised as income is R7 200.
  •   B.Entrance fees amount recognised as income is R5 400.
  •  C.Entrance fees amount recognised as income is R1 800.
  •  D.Entrance fees amount recognised as income is R600.
  •  E.Entrance fees amount recognised as income is R Nil.

 

Answer:

 

 

Solution:

Correct option is C

Entrance fees amount recognised as income is R600

Explanation:

Total entrace fees received= number of new members× entrance fees per member

=12×600

=R7200

75% is capitalized and remaining 25% is recognised as income. So amount shown in income statement will be 25% of total amount received as entrance fees.

Amount recognised as income is:

=7200×25%

=1800

Related Articles