PHSS 2022 POA 4E5N Prelim P1 Answers

Pei HwaSecondarySchoolPrinciplesof Accounts20224E5NPrelimPaper 1Answer Key Question1(a) InventoryDate Particulars DR($) CR($) Bal($)2022Jul1 Balanceb/d(20x110) 2200Dr✔Jul4 Tradepayable–TBTrading[30x(90%x100)] 2700✔ 4900Dr Jul9 Tradepayable–TBTrading[10x(90%x100)] 900✔ 4000Dr Jul15 Costofsales 2200✔ 1800DrJul21 Impairmentlossoninventory 1800✔✔ -- [6] (b) Inventorymanagement: ▪ Keepingproperrecordstotrackinventory✔▪ Keepingphysicalinventoryinthewarehouse(properstorage) ✔▪ Buyinginsurancetoinsuretheinventory✔ [3](c) Possibleproblems(Accept anyone)▪ Increasedstorage-relatedexpenses(eg.Rent,salary,utilities)hencedecreasingprofitability✔▪ Higherriskoftheinventorybecomingobsoletebeforeitcanbesold,increasingimpairmentlossoninventory,reducingprofitability✔ [1] [Total: 10marks]

Question2 (a) GeneralJournalDate Particulars DR($) CR($)2022(i) Apr30 Cashatbank 2900Tradereceivable–Matthew 2900✔Discountallowed 100Tradereceivable–Matthew 100✔(3000–2900) (ii) Apr30 Tradepayable–SLA 420Tradepayable–LSA 420✔ (iii) Apr30 Capital 360Incomesummary 360✔ (iv) Apr30 Rentexpense 2560Cashatbank(2x1280) 2560✔ [5] (b) Error Effectsoferroron Profit TotalAssets (i) Overstatedby$100✔ Overstatedby$100✔ (ii) Noeffects✔ Noeffects✔ (iii) Understatedby$360✔ Noeffects✔ (iv) Overstatedby$2560✔ Overstatedby$2560✔ [6] (c) Toprovidedocumentaryproofoftransaction✔ORToprovideinformationabouttransaction✔ [1] [Total: 10marks]

Question3 (a) Accumulateddepreciationisthetotalvaluedepreciatedtodate. ✔ [1] (b) Non-currentassetsarevaluedatcostlessaccumulateddepreciationtofindnetbookvalue. ✔ [1] (c) Themedicalequipmentbecomeslessefficientovertheyearsandaprovidesgreaterbenefitsinitsearlieryearsthanlateryears,thereforethereducing-balancemethodischosen. ✔ [1] (d) GeneralJournalDate Particulars DR($) CR($)2022Jan1 Drawings 11650✔Saleofnon-currentassets 11650✔ [2] (e) BGNMedicalStatementofFinancialPerformanceforyearended31May2022(extract)$ $Less:OtherexpenseLossonsaleofnon-currentassets(16000–11650) 4350✔Depreciationofmedicalequipment{20%x[(380000–25000)–(100500–9000) 52700✔ [2] [Total: 7marks] Question4 (a) GeneralJournalDate Particulars DR($) CR($)2021Jun7 Allowanceforimpairmentoftradereceivables 500Tradereceivable–J&NTrading 500✔BeingwritingoffamountowingfromJ&NTrading✔ [2] (b) Reversalofimpairmentlossontradereceivables =($95) ✔Profitincreasedby$95✔

[2] (c) Yearended31July2021 31July2022 Tradereceivablescollectionperiod AvNetTR=[(95%x11700)+(95%x14100)]/2=$12255 TRcollectionperiod=12255/423800x365=10.55days✔ AvNetTR=[(95%x14100)+(95%x12200)]/2=$12492.50 TRcollectionperiod=12492.50/457140x365=9.97days✔ [2] (d) SeahCoffeehasbecomemoreefficientinmanagingtradereceivablesfromtheyearended31July2021to2022. ✔Thetradereceivablescollectionperiodhasimprovedfrom10.55daysfortheyearended31July2021to9.97daysfortheyearended31July2022. ✔Thissuggeststhatthebusinessisabletocollectbacktheirdebtsfaster. [2] (e) Accept any2SendreminderstocreditcustomersaboutpaymentduedateStricterdebtcollectionprocess✔Offercashdiscountto