Question

QUESTION 1
The trial balance of The Parker Exclusive Mens Clubs at 31th May 2020 is as follows
		GHS
Accumulated fund (1/06/2019)		48002400
Massage Palour inventory at beginning (1/06/2019)		9153000
Massage Palour Purchases		17221200
Building (Cost)		43459800
Equipment (Cost)		5424000
Furniture and fittings (Cost)		3390000
Subscriptions		4068000
Affiliation Fees		508500
Savings Account		11526000
Venue of the "Weekend in Paradise Trip"		237300
Executive Mens Club Entrance fees		406800
Massuer's Wages and Salaries		1695000
Accumulated Depreciation	Building	17383920
	Equipment	1356000
	Furniture and Fittings	339000
Salaries		1627200
Rent		650880
"Weekend in Paradise Trip" expenses		406800
Administrative expenses		1179720
Interest on Savings account		644100
Sale of "Weekend in Paradise Trip" tickets		5152800
Bank account (Current)		8475000
Donation for "Weekend in Paradise Trip"		1254300
Revenue from Massage Palour		25764000
Life membership fees		1254300
Utilities		671220
		211251240
Additional Information
1. Massage Palour inventory (31st May 2020)		1830600
2. Subscription paid in advance by member for the year 2020/2021		813600
3. Depreciation : Building 2% per annum, Equipment 25% Furniture and fittings10% per annum
4. Interest on saving includes an amount from the 2018/2019 year		33900
5. Affiliation fees was paid for the next 3 years on 1 June 2019
6. Utilities were prepaid at the end of the year		94920
7. Salaries were accrued at the end at the end of the year		135600
8. Parker Exclusive Mens Club organised a "Weekend in Paradise Trip" for its members during the year
9. The Parker Exclusive Mens Club is affiliated to the International Association of Executive Clubs
REQUIRED:
1. Provide answers for the following
Profit or loss from Massage Palour Profit or loss from "Weekend in Paradise Trip" Subscription in the Income and expenditure Account Executive mens club entrance fees Interest on savings Affiliation fees Salaries Rent Administrative expenses Utilities Depreciation for Building Depreciation for Equipment Depreciation for Furniture and Fittings Surplus or Deficit for the year Net Book Value of Buildings Net Book Value of Equipment Net Book Value of Fixture and Fittings Savings Account Massage Palour Inventory Bank Current Account Total Prepayment Total Accruals Total Assets Total Current liabilities Total Long Term Liabilities Closing balance of Accumulated Fund

Answer 1

a. Profit or loss from Massage Parlour

Particulars	Calculation	Amount (GHS)
Revenue
Subscriptions	GHS 4068000 – GHS 813600	3254400
Executive Mens Club Entrance fees		406800
Revenue from Massage Parlour		25764000
Interest on Savings account	GHS 644100 – GH 339100	305000
Total Revenue		29730200
Less: Cost of goods sold		24543600
Gross profit		5186600
Less: Expenses
Affiliation Fees	GHS 508500/3	169500
Massuer's Wages and Salaries		1695000
Salaries	GHS 1627200 + GHS 135600	1491600
Rent		650880
Administrative expenses		1179720
Utilities	GHS 671220 - GHS 94920	576300
Depreciation		2564196
Total Expenses		8327196
Profit from Massage Parlour		3140596

W.N. 1

Calculation of cost of goods sold

Cost of goods sold = Opening Inventory + Purchases - Closing Inventory

                                  = GHS (9153000 + 17221200 – 1830600)

                                  = GHS 24543600

W.N. 2

Calculation of Depreciation

Particulars	Calculation	Amount (GHS)
Building	43459800 * 2%	869196
Equipment	5424000 * 25%	1356000
Furniture and fittings	3390000 * 10%	339000
Total Depreciation		2564196

b. Profit or loss from "Weekend in Paradise Trip"

Particulars	Amount (GHS)
Sale of "Weekend in Paradise Trip" tickets	5152800
Less: "Weekend in Paradise Trip" expenses	406800
Profit from "Weekend in Paradise Trip"	4746000

c. Subscription in the Income and expenditure Account

Total subscriptions received – Subscriptions received in advance

= GHS 4068000 – GHS 813600

= GHS 3254400

d. Executive mens club entrance fees

= GHS 406800

e. Interest on savings

Interest received – Interest from 2018-2019 year

= GHS 644100 – GH 339100

= GHS 305000

f. Affiliation fees

Affiliation fees paid from 2019-2020 to 2021-2022 = GHS 508500

Affiliation fees paid from 2019-2020 = GHS 169500

g. Salaries

= GHS 1627200 + GHS 135600

= GHS 1491600

h. Rent

= GHS 650880

i. Administrative expenses

= GHS 1179720

j. Utilities

Total Utilities paid – Prepaid utilities

= GHS 671220 - GHS 94920

= GHS 576300

k. Depreciation for Building

Cost * Depreciation % as per straight line method

= GHS 43459800 * 2%

= GHS 869196

l. Depreciation for Equipment

Cost * Depreciation % as per straight line method

= GHS 5424000 * 25%

= GHS 1356000

m. Depreciation for Furniture and Fittings

Cost * Depreciation % as per straight line method

= GHS 3390000 * 10%

= GHS 339000

n. Surplus or Deficit for the year

= Profit from Massage Parlour + Profit from "Weekend in Paradise Trip"

= GHS 3140596 + GHS 4746000

= GHS 7886596

o. Net Book Value of Buildings

= Cost – Accumulated Depreciation – Depreciation for the year

= GHS 43459800 – GHS 17383920 - GHS 869196

= GHS 25206684

p. Net Book Value of Equipment

= Cost – Accumulated Depreciation – Depreciation for the year

= GHS 5424000 – GHS 1356000 – GHS 1356000

= GHS 2712000

q. Net Book Value of Fixture and Fittings

= Cost – Accumulated Depreciation – Depreciation for the year

= GHS 3390000 – GHS 339000 - GHS 339000

= GHS 2712000

r. Savings Account

= GHS 11526000

s. Massage Parlour Inventory

Opening Inventory = GHS 9153000

Closing Inventory = GHS 1830600

t. Bank Current Account

= GHS 8475000

u. Total Prepayment

Affiliation Fees = GHS 339000

Utilities = GHS 94920

v. Total Accruals

Salaries = GHS 135600