Task 2: (5 marks) (Word limit: 200 - 250 words)

The Claremont Cricket Club collects membership fees of $100 in advance from its members at the beginning of October each year for the summer season, which ends in April. This entitles members to free entry to all games played at the home ground for the season. The club?s financial year ends on 31 December.

Required:

Should the club make any adjusting entry in its accounts at the end of the year in relation to membership fees received? Why or why not? Explain.

[and one another question is attached as a file.]

Task 3: (10 + 10 = 20 marks) Lana Priest set up a home sewing business on 1 July 2016. Usually, Lana collects $20 per hour for sewing on the completion of each day's work and pays for the maintenance of her machine with cash. Lana did an accounting subject at secondary school and so has kept her own accrual-based accounting records. At the end of the first year, Lana produced the following unadjusted trial balance: Unadjusted Trial Balance as at 30 June 2017 Account Cash at bank Accounts receivable Sewing machines Motor vehicle Lana Priest, Capital Lana Priest, Drawings Sewing revenue Sewing supplies expense Insurance Repairs to machines Sundry expenses Debit $ 2550 40 3000 24000 Credit $19000 17570 38400 4840 2300 2560 540 $57400 $57400 The following adjustments were required at the year-end. Sewing supplies on hand at year-end, $230. An account was received for repairs done to machines before year-end but not recorded, $270. Ignore the GST in your answers. Required 1. Prepare an income statement for the year ended 30 June 2017 using accrual accounting. 2. Lana was not sure whether she could use cash accounting rather than accrual accounting for her business records. From the information provided, decide whether Lana should use accrual or cash accounting, and explain to her the reasons for your decision. ACC201 FA1/3T2015/Assignment Page 3 of 4