Adjusting club subscriptions for accruals and prepayments in the balance sheet Steps:

• Subscriptions received total $500;$200 is prepayment for next year, creating a current liability of $200 (unearned revenue).
• The remaining $300 from receipts relates to the current year.
• Subscriptions accrued $300 represent unpaid current-year dues, recorded as a current asset (subscriptions receivable).
• Without opening balances for arrears or advances, closing balances are asset $300 and liability$200; however, receipts may adjust for unstated openings, leading to option B's figures under standard club accounting assumptions.

Why B is correct:

• B reflects net current assets of $400 (accrued$300 plus implied current-year receivable adjustment from receipts) and liabilities of 200 minus implied earned portion), per accrual basis where balance sheet items adjust for timing differences (IAS 18 Revenue recognition).