2020 NAS 3E POA EOY P1 Q3

3 Fitness Legend operates a gym and collects monthly membership fees from its customers. They also sell gym memberships to corporate clients on credit. The following ledger accounts were extracted from Fitness Legend’s books for the financial year ended 31 May 2020.

Membership Fee Revenue Account

2020

 

Dr ($)

Cr ($)

Bal ($)

May  1

Balance b/d

  

76 200 Cr

 

Membership fee received in advance

 

5 400

81 600 Cr

          8

Trade receivable – SIA Group

 

3 700

85 300 Cr

        25

Cash at bank

 

9 800

95 100 Cr

        31

Membership fee received in advance

2 600

 

92 500 Cr

 

Income summary

92 500

 

Trade Receivable – SIA Group Account

2020

 

Dr ($)

Cr ($)

Bal ($)

May  1

Balance b/d

  

21 900 Dr

          8

Membership fee revenue

3 700

 

25 600 Dr

        12

Cash at bank

 

16 575

9 025 Dr

 

Discount allowed

 

425

8 600 Dr

        17

Cash at bank

16 575

 

25 175 Dr

 

Discount allowed

425

 

25 600 Dr

Cash at Bank Account

2020

 

Dr ($)

Cr ($)

Bal ($)

May  1

Balance b/d

  

4 200 Dr

         4

Capital

5 000

 

9 200 Dr

        12

Trade receivable – SIA Group

16 575

 

25 775 Dr

        15

Equipment

 

6 200

19 575 Dr

        17

Trade receivable – SIA Group

 

16 575

3 000 Dr

        25

Membership fee revenue

9 800

 

12 800 Dr

        29

Cash in hand

 

300

12 500 Dr

REQUIRED

a. Interpret the entries on the following dates:

i. 4 May 2020

[1]

ii. 8 may 2020

[1]

iii. 15 May 2020

[1]

iv. 17 May 2020

[1]

v. 29 May 2020

[1]

vi. 31 May 2020

[2]

b. Calculate the percentage of discount allowed to SIA Group on 12 May 2020.

[1]

[TOTAL 8]

SOLUTION
Lorem ipsum dolor sit amet, consectetur adipisicing elit. Optio, neque qui velit. Magni dolorum quidem ipsam eligendi, totam, facilis laudantium cum accusamus ullam voluptatibus commodi numquam, error, est. Ea, consequatur.
a)

(i) Owner contributed personal cash/cheque of $5 000 ✔ into the business
bank account. ✔

 

(ii) Sold gym membership worth $3 700 ✔ to SIA Group on credit. ✔

 

(iii) Purchased equipment costing $6 200 ✔ by cheque. ✔

 

(iv) Cheque of $16 575 received from SIA Group was dishonoured ✔ and discount ✔
cash discount given of $425 was withdrawn. ✔

 

(v) Withdrew $300 cash from business bank account ✔ for office use. ✔

 

(vi) Membership fee of $2 600 received during the year ✔ was not earned yet. ✔
Transfer of membership fee revenue of $92 500 earned ✔ in this financial
year to the income summary account. ✔

b)

425 / (16 575 + 425) x 100% ✔ = 2.5% ✔