Outram Sec Prelim 2022 Paper

1 Answer all questions 1 The cash at bank column of Busan’s cash book and her bank statement for the month of July 2022 were as follows. Cash at bank account 2022 DR ($) CR ($) Balance ($) Jul 1 Balance b/d 5 000 DR 5 Gwangju (Cheque No. 334361) 2 810 2 190 DR 11 Sales revenue 3 600 5 790 DR 13 Anyang 2 220 8 010 DR 18 Equipment (Cheque No: 334362) 880 7 130 DR 26 Pohang 1 350 8 480 DR 31 Sejong Trading (Cheque No. 334363) 450 8 030 DR Aug 1 Balance b/d 8 030 DR Bank statement for the month of July 2022 2022 Withdrawal Deposit Balance $$ $ Jul 1 Balance b/d 4 300 CR 4 Cheque 334359 700 5 000 CR 8 Cash deposit 3 600 8 600 CR 9 Cheque 334361 2 810 5 790 CR 14 Cheque deposit 2 220 8 010 CR 16 Refer to drawer (deposited: 14 Jul) 2 220 5 790 CR 19 Cheque 334362 800 4 990 CR 27 Cheque deposit 1 350 6 340 CR 31 Direct payment – Utilities 170 6 170 CR 31 Bank charges 60 6 110 CR Additional information It was discovered that Busan had incorrectly recorded the transaction on 18 July for cheque no. 334362. (32$6$ 2XWUDP www.KiasuExamPaper.com 246 2 REQUIRED (a) Update the cash at bank account for 31 July 2022. Cash at bank account [5] (b) Prepare the bank reconciliation statement as at 31 July 2022. Busan Bank reconciliation statement as at 31 July 2022 [3] (c) Explain why a debit balance in the cash at bank account is presented as a credit balance in the bank statement. [2] [Total: 10] www.KiasuExamPaper.com 247

3 2 Itaewon runs a business selling bicycles. All sales are made on credit. The standard credit terms are payment within 30 days. The following information has also been provided. Net sales revenue for the year ended: $ 31 August 2021 178 000 31 August 2022 198 000 Net trade receivables at: $ 31 August 2020 12 000 31 August 2021 16 000 31 August 2022 22 000 REQUIRED (a) Calculate the trade receivables collection period for the years ended 31 August 2021 and 31 August 2022. Show your answers to two decimal places. 31 August 2021 31 August 2022 Workings Trade receivables collection period (days) [4] (b) Evaluate the management of trade receivables by Itaewon’s business over the two years ended 31 August 2021 and 31 August 2022. [3] (c) Suggest two ways in which Itaewon could improve the trade receivables www.KiasuExamPaper.com 248 4 collection period of the business. 1 2 [2] (d) State two sources of non-accounting information that a business might use when deciding whether to grant credit to a customer. 1 2 [2] (e) Name the accounting theory which is applied when a business makes an allowance for impairment of trade receivables. [1] [Total: 12] www.KiasuExamPaper.com 249

5 3 Oksu Trading sublets out its excess shop space for additional income. The monthly rental income is $3 000. The rent is paid for 6 months, once on 1 March and once on 1 September. The following was extracted from the books of Oksu Trading. Rental income account Date Particulars Debit ($) Credi