MJR 4E5N PRE POA P2 2023

Name Register Number Class Calculator Model MANJUSRI SECONDARY SCHOOL PRELIMINARY EXAMINATION 2023 Subject: Principles of Accounts Paper: 7087 / 02 Level: Secondary 4 Express / 5 Normal (Academic) Date: 28 August 2023 Duration: 2 hours Setter: Miss Tan Ai Hua Additional Materials: Writing Paper (4 sheets) READ THESE INSTRUCTIONS FIRST Write your Register Number, Name and Class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for rough working. Do not use staples, paper clips, glue or correction fluid. Answer all questions. The use of an approved calculator is allowed. The businesses described in this question paper are fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page. [Turn over For Examiner’s Use Q1 /20 Q2 /16 Q3 /10 Q4 /14 Total /60

2 4E5NA/7087/02/PRELIM/2023 [Turn over Answer all questions. 1 The following balances were extracted from the books of Qi Qi Trading on 3 0 April 2023. $ Equipment at cost 80 000 Motor vehicles at cost 40 000 Accumulated depreciation: Equipment 12 000 Motor vehicles 10 000 Sales revenue 294 650 Sales returns 11 250 Cost of sales 78 230 Wages and salaries 20 300 Motor vehicle expenses 8 960 Rent and rates 25 000 Discount allowed 10 630 Insurance expense 19 800 Commission received 2 150 Trade receivables 46 700 Trade payables 36 290 Cash at bank (debit balance) 2 890 Inventory 36 200 Capital 40 470 Drawings 15 600 Additional information 1 Monthly rent and rates expense was $2 500. 2 The insurance relates to a fifteen-month period ending on 31 July 2023. 3 Commission owing to the company was $1 200. 4 Equipment is depreciated at 2 0% per annum using the straight -line method. Motor ve hicles are depreciate d at 25% per annum using the reducing -balance method. 5 The accountant reviewed the trade receivables and found that 6% of the balance was unlikely to be collectible. 6 Cost of repairs to Qi Qi ’s perso nal car, $1 60 0, was included in mo tor vehicle expenses. REQUIRED (a) Prepare the statement of financial performance for the year ended 30 April 2023 . [10] (b) Prepare the statement of financial position as at 30 April 2023. [10] [Total: 20]

3 4E5NA/7087/02/PRELIM/2023 [Turn over 2 Jun Ming is a retailer o f computers. At 1 April 2022, his inventory valuation was $20 000 for 80 computers. Jun Ming ’s purchases for the financial year ended 31 March 2023 were as follows. Date Number of computers purchased Cost 2022 $ July 12 130 29 900 November 18 150 33 000 2023 January 13 110 26 400 March 6 90 22 950 Additional information 1 Jun Ming uses the First-In-First-Out (FIFO) method of inventory valuation. 2 During the year ended 31 March 2023, Jun Ming sold 470 computers for $270 600. REQUIRED (a) Calculate the cost of sales for the year ended 31 March 2023. [4] (b) Calculate the inventory value at 31 March 2023. [1] (c) Calculate the rate of inventory turnover for the year ended 31 March 2023. Show your answer to two decimal places. [1] The rate of inventory turnover for the year ended 31 March was 9.25 times for 2021 and 7.17 times for 2022. REQUIRED (d) With your answer to (c), comment on the trend of the rate of inventory turnover over the three years from 2021 to 2023. [1] (e) Suggest two possible causes for the change in the rate of inventory turnover. [2] [Turn over

4 4E5NA/7087/02/PRELIM/2023 [Turn over Jun Ming provided the following information regarding expenditure on motor vehicles. 1 Purchase date Quantity Payment method Cost of each vehicle $ 1 June 2020 2 Cheque 24 000 2 On 8 February 2023, Jun Ming sold one of the vehicles and a cheque of $12 100 was received. On the same day he bought a replacement vehicle for $30 000, on credit from Siaw Hung Motoring. 3 Jun Ming uses the reducing-balance method to depreciate his vehicles at 20% per annum. A full year ’s depreciation is charged in the year of purchase, but no depreciation is charged in the year of sale. REQUIRED (f) State the accounts and amounts to be debited and credited on 8 February 2023 to record the following. (i) Sale proceeds of vehicle [2] (ii) Purchase of vehicle [2] The sale of non -current asset accou nt for the year ended 31 March 2023 showed a debit balance of $3 260. REQUIRED (g) State the effect and amount of a debit balance on t he sale of non -current asset account would have on Jun Ming’s profit for the year ended 31 March 2023. [2] Jun Ming is confused between capital expenditure and revenue expenditure. REQUIRED (h) State the accounting theory applied when deciding if expenditure on a non-current asset is capital expenditure or revenue expenditure. [1] [Total: 16]

5 4E5NA/7087/02/PRELIM/2023 [Turn over 3 Le Jin is considering investing in one of the two businesses retailing in clocks and watches. The following information on two businesses, Precious Times and Great Times, for the year ended 31 July 2023 was provided. Precious Times Great Times $ $ Sales revenue 50 000 45 000 Sales returns 10 000 15 000 Cost of sales 20 000 18 000 Operating expenses 10 000 8 000 Mark up on cost 100% ? Gross profit margin 50% ? Profit margin 25% ? REQUIRED (a) Calculate the following as at 31 July 2023 for Great Times’ business. Show your answers to two decimal places. (i) Mark-up on cost [2] (ii) Gross profit margin [1] (iii) Profit margin [2] (b) Comment on the profit ability of the two busines ses for the year en ded 31 July 2023. Use the given information and your answer to (a). [5] [Total: 10] [Turn over

6 4E5NA/7087/02/PRELIM/2023 [Turn over 4 The following allowance for imp airment of trade receivables account is extracted from the books of Royson Fashion for the year ended 30 June 2022. Allowance for impairment of trade receivables account Date Particulars Debit $ Credit $ Balance $ 2021 Jul 1 Balance b/d 6 230 Cr Nov 7 Trade receivable - Nabillah 5 460 770 Cr 2022 Jun 30 Impairment loss on trade receivables 8 190 8 960 Cr Additional information Trade receivables balance as at 30 June 2023 was $1 45 200. The business decided to maintain it s allowance for impairment of trad e receivables at 5% of its trade receivables. REQUIRED (a) Interpret the entries on 7 November 2021 and 30 June 2022. [2] (b) Prepare the journal entr y to adj ust the balance of allowance for i mpairment of trade receivables for the year ended 30 June 2023. A narration is not required. [2] Bank reconciliation statement as at 31 July 2020 (c) Explain, using a s uitable accounting theory, why it is necessary for a busi ness to account for allowance for impairment of trade receivables. [3]

7 4E5NA/7087/02/PRELIM/2023 [Turn over Royson Fashion received applications from two of its credit customers, Grace Ltd and Sunny Trading, to extend the credit period allowed to them, from 30 days to 60 days. Royson Fashion can only increase the credit period of one customer. The following information is available. Grace Ltd Sunny Trading Annual sales revenue mad