Bukit View 2023 3N EOY

2023 Holiday Revision Paper – Bukit View 2023 Sec 3N EYE SOLUTIONS -PAPER 1- Q1a (i) Assets are resources a business owns or controls that are expected to provide future benefits [1] (ii) Liabilities are obligations such as debts or amounts owing by a business to others that are expected to be settled in the future [1] Q1b Total assets = 67 000 + 23 500 + 12 700 + 19 000 = $122 200 [1] Total liabilities = 50 000 + 11 340 = $61 340 [1] Capital = 122 000 – 61 340 = $60 860 [1] Q1c Effects of transactions on Assets ($) Liabilities ($) Equity ($) 2 Cash at bank + 30,000 Loan from XYZ bank +30,000 3 Trade receivables +1,500 Inventory -850 Sales revenue +1,500 Cost of sales -850 4 Inventory -5,000 Trade payables -5,000 1 mark for each entry [8] [Total: 12]

Q2a To check on the accuracy of recording in the ledgers. [1] To facilitate the preparation of the financial statements. [1] Q2b A balanced trial balance is not an absolute proof of accuracy. There may be errors not revealed by a trial balance. [1] Q2c Amanda Dresses Trial balance for as at 31 July 2023 Dr $ Cr $ Capital [0.5] 58 000 Cash at bank (overdraft) [4500 + 1800] [0.5] 6 300 Cash in hand [1100 – 800] [0.5] 300 Discount received [800 + 200] [0.5] 1 000 Motor vehicles [0.5] 110 000 Trade receivables [0.5] 3 600 Trade payables [2370 – 2000] [0.5] 370 Office equipment [50000 + 800] [0.5] 50 800 Sales revenue [0.5] 128 800 Utilities [0.5] 36 420 Drawings [4000 + 250] [0.5] 4 250 Inventory [5400 – 250] [0.5] 5 150 Bank loan [0.5] 28 050 Sales returns [0.5] 12 000 222 520 222 520 [7] Q2d Amanda Dresses Statement of Financial Position as at 31 July 2023 $ Current Liabilities Cash at bank (overdraft) 7 050 [2] [Total:12]

Q3a Accounting provides financial information for stakeholders to make informed decisions regarding the management of resources and performance of businesses. [1] Q3b Identify and record, adjust, report, close [2] [1m for any 2] Q3c Scenario Accounting theory The business prepares its financial statements quarterly Accounting period theory [1] Activities of a business are separate from the actions of the owner Accounting entity theory [1] Transactions should be recorded at their original cost Historical cost theory [1] Q3d Date 2023 Transaction Source document Sept 1 Cash sales Receipt Sept 11 Bought a new oven on credit Invoice [1] Sept 20 Returned spoilt cake ingredients to credit supplier Credit Note [1] Sept 25 Transferred funds to credit supplier for amount owing Bank statement/Payment voucher [either one 1m] [Total:9]

Q4a (i) On 1 August 2023, Nur owed Kaleb $5,000 [1] (ii) On 11 August 2023, Nur returned goods previously bought for $800 from Kaleb on credit. [1] (iii) On 21 August 2023, Kaleb discovered that the cheque of $4,750 paid by Nur on 18 August was dishonoured and withdrew the cash discount of $250. [1] [1] Q4b Specific industry outlook Economic outlook Reputation of customers New customers’ history of repayment [1m for any acceptable answers] [2] [Total:7]

-PAPER 2- Q1a Yun Nee Traders Statement of Financial Performance for the year ended 30 April 2023 $ $ Sales revenue 98 800 Less: Sales returns 23 900 Net sales revenue 74 900 [1] Less: Cost of sales 32 300 Gross Profit 42 600 [1] Add: other income Discount received 550 [1] Rent income [11 900 x 12 14] 10 200 10 750 [1] Less: Other expenses Utilities expense 27 800 [1] Insurance [500 x 12] 6 000 [1] Salaries expense 9 250 [1] Advertising expense [5 800 + 660] 6 460 [1] Interest expense 12 860 [1] Impairment loss on inventory 2 200 [1] 64 570 Loss for the year 11 220 [10]

Q1b Yun Nee Traders Statement of financial position as at 30 April 2023 Assets $ $ Non-current assets Office equipment 17 000 Motor vehicle 36 000 53 000 [1] Current assets Trade receivables 13 000 Inventory 12 250 [1] Prepaid insurance expense [7 500 – 6 000] 1 500 [1] Cash at bank [12 120 – 2800 ] 9 320 [1] 36 070 Total assets 89 070 Equity and liabilities Owner's equity Capital [55 230 – 11 220– 5 800] 38 210 [2] Non-current liabilities Long-term borrowings 40 000 [1] Current liabilities Trade payables 8 500 [1] Rent income received in advance [11 900 x 2 14] 1 700 [1] Advertising expense payable 660 [1] 10 860 Total equity and liabilities 89 070 [10] [Total: 20]

Q2a Updated Cash at bank 2023 Dr $ Cr $ Balance $ Feb 28 Balance b/d 4 610 Dr Feb 28 Commission income 1 800 6 410 Dr Feb 28 Rent expense 1 850 4 560 Dr Feb 28 TR – Coco Trading (dishonoured cheque) 4 110 450 Dr Feb 28 Interest income 80 530 Dr Feb 28 Trade payable – Orange Store 300 830 Dr Mar 1 Balance b/d 830 Dr [5] Q2b Bank Reconciliation Statement as at 28 Feb 2022 $ Balance as per bank statement 1 480 [1] Add: Deposits in transit - Trade receivables – Papaya Ltd 230 [1] Less: Cheques not yet presented - Drawings (880) [1] Balance as per updated cash at bank 830 [1] [4] Q2c 1800 – 1850 + 80 = $30 [1] Profit increases by $30. Q2d Cash is highly portable and has a high chance of getting stolen [1]. Internal controls over cash reduces the possibility of theft or likelihood of error and ensures that cash is well-protected and accurately reported. [1] Q2e One type of internal controls for cash is segregation of duties [1]. It involves the separation of cash handling and cash recording duties among different employees so that no single person has control over the entire cash process. [1] Another type of internal controls for cash is authorisation [1]. It refers to obtaining proper approvals for all payments from authorised personnel. A business may require at least two persons to review and approve payments involving large amounts [1]. Custody of cash [1]. Secure cash and cheques in a locked storage and limit access of cash to authorised personnel [1]. [Total:13]

Q3a Payment is made at the same time or immediately [1] during a cash sale or purchase but payment is delayed or postponed [1] during a credit sale or purchase. Q3b Trade payable: Lim Furnishings Date Particulars Dr $ Cr $ Bal $ 2022 Aug 4 Balance b/d 2 500 Cr [1] 11 Inventory [5500 x 90%] 4 950 7 450 Cr [1] 12 Cash at Bank 2 500 4 950 Cr [1] 16 Inventory [300 x 90%] 270 4 680 Cr [1] 24 Cash at bank [(95% x 4 680) 4 446 234 Cr [1] 24 Discount received 234 [1] Sep 1 Balance b/d 0 [6] Q3c Trade discount is a reduction to the listed price to encourage bulk purchase or to encourage patronage / loyalty. It is not recorded in the ledger account. Cash discount a reduction to the invoiced price to encourage prompt payment. It is recorded in the ledger as either discount allowed or discount received. [2] Q3d Profit for the year: Understated by $234 [1] [Total: 11]

Q4a FIFO means goods bought earliest are assumed to be sold first. [1] Q4b Sales revenue = 1160 + 1400 = $2560 [1] Cost of sales = 300 + 540 + 280 + 850 = $1970 [1] Gross profit = 2560 – 1970 = $590 [1] Q4c Date Particulars Dr $ Cr $ 2023 Jun 29 Impairment loss on inventory 350 [1] Inventory 350 [1] (Inventory value is reduced to its net relisable value) [1] Q4d Profit will be overstated by $350. [1] Q4e Prudence theory [1] -states that inventory should be