SGSS 4N Prelim P1

1 Answerallquestions. 1 BrandonisacoffeeretailerwhosellsgoodstoZerahTradingoncredit.ThefollowingtransactionsoccurredduringthemonthofMarch2022. 2022Mar1 BalanceowedbyZerahTradingwas$8300. 9 SoldcoffeebeanstoZerahTradingatalistpriceof$5000andgaveatradediscountof5%.Thecostofthebeanswas$2000. 18 Someofthebeanssoldon9Marchatalistpriceof$1000wereofthewrongspecificationsandreturnedtoBrandon. 28 BrandonreceivedachequefromZerahTradingforamountowingon1Marchafterdeducting2%cashdiscount. 31 ThebankinformedBrandonthatthechequedepositedon28Marchhadbeenrejected. REQUIRED (a) PreparetheledgeraccountofZerahTradinginthebooksofBrandon,forthemonthofMarch2022. ZerahTradingaccount [7] [TurnoverSGSS/POAP1/4N/Prelim/2022

2 (b) Suggestonepossiblereasonwhythechequedepositedon28Marchwasrejected. [1] (c) Completethetablebelowbystatingthesourcedocumentsforthetransactions. Date SourceDocument Mar9Mar18Mar28Mar31 [4] [Total:12] [TurnoverSGSS/POAP1/4N/Prelim/2022

3 2 Ramleeisasoleproprietorwhostartedhisfoodtradingbusinesson1March2021withacapitalof$50000inthebusinessbankaccount.Hisfinancialyearendson28February2022. Thefollowingtransactionstookplaceduringthefinancialyear. 1 On10April2021,Ramleetookhomeaprinter,meantforofficeuse,worth$500fromthebusiness. 2 On22June2021,Ramleepaidthebusinessadvertisingexpensesusingapersonalchequeof$8000. 3 On30September2021,Ramleetookcashof$1300fromtheofficeforhispersonaluse. Thebusinessmadeaprofitof$15000fortheyearended28February2022. REQUIRED (a) Nameandexplainonesuitableaccountingtheorytoexplaintherecordingofcapitalanddrawings. [2] (b) Preparethedrawingsaccountfortheyearended28February2022. [3] [TurnoverSGSS/POAP1/4N/Prelim/2022

4 (c) Preparethecapitalaccountfortheyearended28February2022. [5] [Total:10] [TurnoverSGSS/POAP1/4N/Prelim/2022

5 3 LeeConsultancyis in thebusinessofprovidingconsultingservicesforbusinesses.Thefollowingservicefeerevenuewasextractedfromitsbooks. ConsultancyFeeRevenueDateParticulars Dr($) Cr($) Bal($)2021Jul 1 Consultancyfeereceivable10000 10000DrSep28 Cashatbank 35000 25000Cr2022Feb14 Cashatbank 8000 33000CrJun28 Consultancyfeerevenuereceivedinadvance 12000 21000Cr Jun30 Incomesummary 21000 - REQUIRED(a) Describethetransactiononthefollowingdates. (i) 1July2021 (ii) 14February2022 (iii)30June2022 [3] [TurnoverSGSS/POAP1/4N/Prelim/2022

6 (b) Preparethejournalentriestorecordtheclosingofconsultancyfeerevenueaccounton30June2021.Narrationisnotrequired. [2] (c) Statetheeffectoncurrentassets,currentliabilitiesandprofitfortheyearifservicefeerevenuereceivedinadvancewasnotrecordedon30June2021. Effectofnotrecordingservicefeerevenueinadvance(i) Currentassets(ii) Currentliabilities(iii) Profitfortheyear [3] (d) Explaintheaccrualbasisofaccounting. [1] (e) Statetwofeaturesofsoleproprietorship. (1) [1] (2) [1] [Total:11] [TurnoverSGSS/POAP1/4N/Prelim/2022

7 4 TheCeylonTeaTradingfirmsellsflavouredtea.Thebusinesshasthefollowingbalanceson1May2021. $Motorvehicles 83000Accumulateddepreciationofmotorvehicles 9500 Thebusinessboughtanewvanworth$94500(notincludingCOE)on1May2021bycheque.TheCertificateofEntitlement(COE)amountedto$35000andrepairsexpensesformotorvehiclesforthefinancialyearended30April2022was$5500. REQUIRED(a) Classifyeachexpenditureasa‘capital’or‘revenue’expenditure.Typeofexpenditure (i) Purchasepriceofmotorvehicle (ii) CertificateofEntitlement(COE) (iii) Repairsexpensesfortheusageofmotorvehicle [3] (b) Explainonedifferencebetweencapitalexpenditureandrevenueexpenditure. [2] [TurnoverSGSS/POAP1/4N/Prelim/2022

8 Thebusinessdepreciatesitsmotorvehiclesat10%perannumusingthereducing-balancemethod. REQUIRED(c) Calculatethedepreciationexpensefortheyearended30April2022. [2] [Total:7] EndofPaper [TurnoverSGSS/POAP1/4N/Prelim/2022

9 SGSS4N1POAPrelimPaper1AnswerKey(2022) 1(a) 7marks ZerahTradingDate Particulars Debit+ Credit- Balance2022 $ $ $Mar1 Balanceb/d✔ 8300DrMar9 Salesrevenue(5000x0.95)✔ 4750✔ 13050DrMar18 Salesreturns(1000x0.95)✔ 950✔ 12100DrMar28 Cashatbank(8300x0.98)✔ 8134✔ 3966DrMar28 Discountallowed(8300x0.02)✔ 166✔ 3800DrMar31 Cashatbank✔(dishonouredcheque) 8134✔ 11934Dr Mar31 Discountallowed(withdrawn)✔ 166✔ 12100Dr Apr1 Balanceb/d✔ 12100Dr (b) 1markAnyreasonableanswer:-Chequehasexpiredandisnolongervalid-Chequeispost-dated-InformationonchequeisnotcompleteORnotconsistent-Payer’sbankaccountdoesnothaveenoughfunds/isclosed/frozen.(1m)(c) 4marksDate SourceDocumentMar9 Invoice✔Mar18 Creditnote✔Mar28 Receipt✔Mar31 Bankstatement✔ [TurnoverSGSS/POAP1/4N/Prelim/2022

10 210marks(a) 2marksAccountingentitytheory✔- statesthattheactivitiesofabusinessmustbeseparatedfromtheactionsoftheowner.- Alltransactionsarerecordedfromthepointofviewofthebusiness. 2(b) 3marks DrawingsaccountDate Particulars Debit+ Credit- Balance2021 $ $ $Apr10 Officeequipment✔ 500✔ 500DrSept30 Cashinhand✔ 1300✔ 1800Dr2022Feb28 Capital✔ 1800 - Datecorrect✔ 2(c)5marks CapitalaccountDate Particulars Debit- Credit+ Balance2021 $ $ $Mar1 Cashatbank✔ 50000✔ 50000CrJun22 Advertisingexpense✔ 8000✔ 58000Cr2022Feb28 Drawings✔ 1800✔ 56200CrFeb28 Incomesummary✔ 15000✔ 71200Cr Mar1 Balanceb/d✔ 71200CrDatecorrect✔ [TurnoverSGSS/POAP1/4N/Prelim/2022