Copy of PHSS 2022 POA 4E5N Prelim P2 ANS

PHSS20224EPrelimPaper 2SOLUTIONS Question1(a) MackDonaldStatement of Financial Performancefor theyear ended30November 2021$ $Salesrevenue 43224Less:Salesreturns (433)Netsalesrevenue 42791Less:Costofsales (21280)GrossProfit ✔21511 Add: Other IncomeDiscountreceived ✔510Rentincome(4867+3000) ✔7867 8377Less: ExpensesSalariesexpense(5664–472*) ✔5192Maintenanceexpense ✔10000Depreciation–Property((110000–20000)/100) ✔900Depreciation-Officeequipment((30000–2925)X5%) ✔1425Impairmentlossontradereceivables ✔70Interestexpense(50000X3%X6/12^) ✔750 (18337)Profitfortheyear 11551[9]*5664/12=472^Thebankloanistakenon1June2021,thereforeinterestisowingonlyfor6months(1June2021to30November2021).

(b) MackDonaldStatement of Financial Positionasat 30November 2021$ $ $AssetsNon-CurrentAssets Cost AccumulatedDepreciation NetBookValueProperty(120000-10000) 110000 (10800) ✔99200OfficeEquipment 30000 (2925) ✔27075126275CurrentAssetsTradereceivables(15400–400) 15000Allowanceforimpairmentoftradereceivables(480-400+70) (150) Nettradereceivables ✔14850Cashatbank ✔3422Inventory ✔24228Rentincomereceivable ✔3000Prepaidsalaries ✔472 45928TotalAssets 172247EquityandLiabilitiesOwner'sEquityCapital(101963-2000+11551) ✔111514Non-CurrentLiabilitiesLong-termborrowings ✔50000CurrentLiabilitiesTradepayables ✔9983Interestexpensepayable ✔750 10733TotalEquityandLiabilities 172247[11]

Question2(a) TheCashatbankaccountwillbedebitedby$30000✔,andthesharecapitalaccountwillbecreditedby$30000✔. [2] (b) RetainedEarningsDate Particulars DR$ CR$ Balance$2021Aug1 Balanceb/d ✔33780CR2022Jul31 Dividends(70000sharesX$0.20) ✔14000 19780CRJul31 Incomesummary ✔12120 31900CRAug1 Balanceb/d ✔31900CR[4](c) Accept anyother reasonableanswers PrivateLimitedCompany SoleProprietorshipHarlandshouldkeepKayFCPteLtdasaprivatelimitedcompany. (Stand) ✔ HarlandshouldconvertKayFCPteLtdintoasoleproprietorship. (Stand) ✔ Harlandwouldliketopassthebusinessontohisthreechildren. (Evidence) ✔ Itiseasiertotransferownershipofsharestothreedifferentchildreninaprivatelimitedcompanyascomparedtoasoleproprietorship. (Explanation) ✔ Harlandwouldliketomakebusinessdecisionsquickly. (Evidence) ✔ AsoleproprietorshipwillallowHarlandtohavefullcontroloverbusinessdecisionsashewillbethesoleowner.Hewillnotneedtoanswertoothershareholders.(Explanation) ✔Harlandwouldliketoensurethathispersonalassetsareprotected. (Evidence)✔ Aprivatelimitedcompanyhaslimitedliability,whichpreventscreditorsfromtakingHarland’spersonalassetsshouldthebusinessgobankruptascomparedtoasoleproprietorshipwhichhasunlimitedliability. (Explanation) ✔ Harlandwouldliketoreducereportingrequirements. (Evidence) ✔ Asoleproprietorshiphaslesscomplexreportingrequirementsascomparedtoaprivatelimitedcompany. (Explanation) ✔ Harlandisthinkingofexpandingthenumberofbranchesandwouldliketofindfundingeasily. (Evidence) ✔ ItwillbeeasierforHarlandtofindfundingbyissuingnewsharestoshareholdersunlikeasoleproprietorshipwhereHarlandmayhavetoborrowfromabank.(Harlandhasmorepotentialsourcesoffunding.(Explanatio