Deyi P1 4E5NA Prelim 2022 (sharing)

1 1 Ji Jun is a trader who buys and sells factory uniforms on credit. REQUIRED (a) Complete the following table to show the source documents and ledger accounts in which each of the transaction would be recorded. Transaction Source Document Account to be debited Account to be credited (i) Payment of staff salaries through bank’s standing order. (ii) Import duty imposed on uniforms bought from China. (iii) Shirley, a credit customer returned damaged goods. [6] (b) Analyse the effect of transaction (i) from Part 1(a) on the following accounting elements of the business. (i) owner’s equity ……………………………………..……………………………………………………..……….….…....[1] (ii) total assets ………………………………………….………………………………………………………….…...…..[1]

2 The following balances were extracted from the books of Ji Jun’s business on 30 April 2022. $ Motor vehicles 18 930 Inventory 3 000 Trade receivables 8 910 Trade payables 2 800 Cash at bank ? Salary expense payable 800 Capital 28 640 REQUIRED (c) Calculate the value of cash at bank at 30 April 2022. All workings must be shown clearly. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………….………………………………………………………….…...…..[2] (d) Explain the effect on profit if the salary expense payable was wrongly recorded as prepaid salary expense for the year ended 30 April 2022. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………….………………………………………………………….…...…..[1] [Total : 11] [Turn over

3 2 Kumin Trading has the following information about its inventory of office chairs. On 1 June 2022, the inventory valuation was $22 490 for 80 office chairs. During the financial year, the business made the following purchases of office chairs on credit: Purchases on credit Quantity $ 2022 Jun 4 40 13 120 12 80 24 920 18 50 15 540 25 80 22 460 Additional information: 1 The business uses the FIFO system for inventory management. 2 The business sold some office chairs on the following dates: June 6 Sold 80 units for $20 000 cash. June 20 Sold 120 units for $90 000 cash REQUIRED (a) Calculate the total cost of sales for the month of June 2022. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………….………………………………………………………….…...…..[2] (b) Calculate the value of inventory at 30 June 2022. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….…...….. ………………………………………….………………………………………………………….…...…..[2]

4 After the valuation of inventory on 30 June 2022, it was discovered that the batch of office chairs purchased on 2 5 June 2022 had become outdated. The net realisable value of these office chairs was agreed to be $18 000 after spending $2 000 on maintenance service. REQUIRED (c) Calculate the revised value of inventory at 30 June 2022. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………….………………………………………………………….…...…..[2] (d) Prepare the journal entry to record the required adjustment to inventory at 30 June 2022. A narration is not required. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………….………………………………………………………….…...…..[2] (e) Explain what is meant by perpetual inventory system. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………………………………………………………………….………….….. ……………………………………..……………………………………………………..……….….……….. ………………………………………….………………………………………………………….…...…..[2] [Total : 10] [Turn over

5 3 Geneco provides legal services and its accounting year ends on 31 December. Geneco took up a bank loan with UCBC Bank at an interest rate of 3% per annum on 1 October 2019. Repayment of principal and interest expense will take place every year starting 30 September 2020. The following was extracted from Geneco’s books. Bank Loan – UCBC Bank Date Particulars Dr $ Cr $ Balance $ 2019 Oct 1 Cash at bank 90 000 90 000 Cr 2020 Jan 1 Balance b/d 90 000 Cr Sep 30 Cash at bank 18 000 72 000 Cr 2021 Jan 1 Balance b/d 72 000 Cr Sep 30 Cash at bank 18 000 54 000 Cr 2022 Jan 1 Balance b/d 54 000 Cr REQUIRED (a) Calculate the interest expense for the year ended 31 December 2021. ………………………………………………………………………………………………………….... ……………………………………..……………………………………………………..……….…...… …..……………………………..……………………………………………………..……….….….….. ………………………………………….………………………………………………………..….…[2] (b) State one difference between non-current liabilities and current liabilities. ………………………………………………………………………………………………………….... …………………………………………………………………………………………………….….….. ……………………………………..……………………………………………………..…...….……… ……………………………………..……………………………………………………..…..….………. ………………………………………….…………………………………………………..….……….[1]

6 (c) Prepare an extract of the statement of financial position as at 31 December 2021, showing only the liabilities section. …………………………………………………………………………………………….………….….. …………………………………..…………………………………………………..……….….……….. …………………………………………………………………………………………….………….….. …………………………………………………………………………………………….………….….. …………………………………..…………………………………………………..……….….……….. …………………………………………………………………………………………….………….….. …………………………………………………………………………………………….………….….. ……………………………………..………………………………………………..……….….……….. ………………………………………….…………………………………………………….………..[3] (d) Analyse the effect of the loan from UCBC bank on the following items for the year ended 2019: (i) working capital ………………………………….…………………………………..…….…………………….……..[1] (ii) total liabilities ……………………………….……………………………………………………………….…...…..[1] (e) Geneco made a loss of $5 000 for the year ended 31 December 2021. State the double entry for transferring the loss to the capital account. …………………………………………………………………………………………………….….….. ……………………………………………………………………………………………….……….….. ……………………………………..………………………………………….………..…..….….…….. ………………………………………….………………………………………………….…………..[2] [Total : 10] [Turn over

7 4 Jimmy provided the following information for the financial years ended 31 July 2020, 2021 and 2022. 2020 2021 2022 Sales revenue 430 000 516 000 612 000 Sales returns 30 000 16 000 12 000 Gross profit 60 000 75 000 82 000 Profit for the year 20 000 24 000 25 500 Average equity 390 000 520 000 660 000 Gross profit margin 15% 15% ? Profit margin 5% 4.8% ? Return on equity 5.13% 4.62% ? REQUIRED (a) Calculate the following for the year ended 31 July 2022. Show your answer to two decimal places. 31 July 2022 (i) Gross profit margin (ii) Profit margin (iii) Return on equity [3]