Question Two

The following is the receipts and payments account of the Friendship Club for the year ended 31 December 2020:

	K000		K000
Balance at bank
31 December 2019	112	Bar purchases	4,877
Entrance fees	46	Wages	458
Subscriptions: 2019	28	Rent	205
2020	336	Heating and lighting	141
2021	39	Postage and stationery	36
Bar Sales	5,750	Insurance	20
Sale of investments	825	General expenses	51
		Payments on account of new furniture	495
		Balance at bank,	-
		31 December 2017	853
	7,136		7,136

The following information is also supplied:

(1)	31 December 2019	31 December 2020
	K	K
Bar inventory, at cost	300	347
Payables for bar purchases	337	394
Rent due	20	40
Heating and lighting expenses due	18	21
Subscriptions due	28	44
Insurance paid in advance	6	8

2) On 31 December 2019, the club held investments which cost K550. During the year ended 31 December 2020, these were sold for K825.

3) Furniture was valued at K330 on 31 December 2019. On June 2020, the club purchased additional furniture at a cost of K572. Depreciation of all furniture is to be provided for at the rate of 10% per annum.

Required:

(a) Prepare an income and expenditure account for the year ended 31 December 2020.

(b) Prepare a statement of financial position as at 31 December 2020.