2022 CTSS 4N Prelim P2 QN

Name: _________________________________RegisterNumber: ______ Class: ______ Clementi TownSecondarySchoolPreliminaryExamination2022Secondary4Normal (Academic) PRINCIPLESOFACCOUNTS 7086/02Paper 2 29July20222hours Candidatesansweronwritingmaterialsprovided. CLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOLCLEMENTITOWNSECONDARYSCHOOL READTHESEINSTRUCTIONSFIRST Writeyour name, register number andclassonall theworkyouhandin.Writeindarkblueor blackpenonbothsidesof thepaper.YoumayuseanHBpencil for anyroughworking.Donot usestaples, paper clips, glueor correctionfluid.Theuseof anapprovedcalculator isallowed.DONOTWRITEONANYBARCODE. Answer all questions. Thebusinessesdescribedinthisquestionpaper arefictitious. Thenumber of marksisgiveninbrackets[ ] at theendof eachquestionor part question. ___________________________________________________________________________________ Thisquestionpaperconsistsof8printedpagesincludingthiscoverpage.

2 Answer all questions. 1 Thefollowingbalanceswereextractedfromthebooksof Joe’sbusinesson30June2022: $Fixtureandfittings, at cost 75000Motor vehicles, at cost 100000Accumulateddepreciation:Fixtureandfittings 1500Motor vehicles 10000Salerevenue 177400Salesreturns 3400Cost of sales 45000Insuranceexpense 24000Inventory 8000Cashat bank 5300 creditBankloan 30000Bankloaninterest 500Drawings 39000Capital 1July2021 130400Tradereceivables 24200Cashinhand 2000Marketingexpense 68000Rent income 34500 Additional information 1 On30June2022:(i) Insuranceexpensepayableamountedto$800.(ii) Rent incomereceivablewas$700. 2 Annual depreciationischargedon:(i) Fixtureandfittingsat 10%usingthestraight-linemethod.(ii)Motor vehiclesat 20%usingthereducingbalancemethod. 3 Following a review of trade receivables on 30 June 2022, 5%was estimated to beuncollectible. 4 Arepayment of $10000onthebankloanwouldbedueinOctober 2022. 5 Joewithdrewgoodsworth$600for hisownuse. Thiswasnot recordedinthebooks.

3 REQUIRED (a) Preparethestatement of financial performancefor theyear ended30June2022. [8] (b) Preparethestatement of financial positionasat 30June2022. [12] [Total: 20]

4 2 HoppaSnack, aretailer of Koreansnackshaditsfinancial year endon31May2022. Thefollowingerrorswerediscoveredon31May2022. (i) Stationerycosting$150wasclassifiedasafixtureandfittings. (ii) $280 cash paid for the owner’s home utilities was recorded under utilitiesexpense. (iii) Commission income earnedof $900wasyet tobereceivedon31May2022andnoadjustment wasmade. (iv) A cheque of $360 received from Tibits Store had been recorded in theaccountsof HabitsStore. REQUIRED (a) Preparejournal entriestocorrect errors(i) to(iv). Narrationisnot required. [8] (b) Copy the following table on to your answer paper. Statetheeffect of error (ii) and(iii)on profit for the year, assets, liabilitiesandequity. Theeffect of thefirst error hasbeenshownasanexample. If thereisnoeffect ontherequireditems, write“noeffect” intherelevant boxes.Error (i) hasbeendonefor youasanexample. Effect onError Profit fortheyear Assets Liabilities Equity (i) Overstatedby$150 Overstatedby$150 Noeffect Overstatedby$150(ii) (iii) [5] [Total: 13]

5 3 Cayden sells goods on credit to his customers. The following were the trade receivablesbalancesfor eachof theyear ended30June. 30June2021 30June2022$ $Tradereceivables 24800 10300Allowancefor impairment of tradereceivables 1240 ? On 15 September 2021, Kavin who owed Cayden $800 was declared bankrupt. Kavinwas only able to pay $250 by cheque. On thesameday, Caydenwroteoff theremainingamount. Cayden set aside 5% of his trade receivables as allowance for impairment of tradereceivables. REQUIRED (a) Explain, using a suitable accounting theory, why it is necessary for a business toaccount for allowancefor impairment of tradereceivables. [2] (b) Preparethejournal entryfor thetransactionon15September 2021. [3] (c) Prepare the journal entry to adjust the balance of allowance for impairment of tradereceivableson30June2022. [2]

6 ThefollowingtransactionsrelatingtoJamie, acredit customer, occurredinthemonthofAugust 2021. Tradereceivable–JamieDate Particulars Dr ($) Cr ($) Bal ($)2021Aug1 Bal b/d 1400Dr4 Salerevenue 11000 12400Dr6 Cashat bank 1300 11100Dr6 Discount allowed 100 11000Dr10 Salesreturn 300 10700Dr Sep1 Bal b/d 10700Dr REQUIRED (d) Explainthefollowingtransactionson: [3] (i) 4August 2021 (ii) 6August 2021 (iii) 10August 2021 (e) Statethesourcedocument usedtorecordtheabovetransactions. [3] Date Sourcedocument4August 6August 10August [Total: 13]

7 4 Robinisasoletrader. Hisbusinessbuyselectronicsoncredit fromJenny, anoverseassupplier. DuringMarch2022, Robin’sbusinesshadthefollowingtransactionswithJenny. 2022Mar 1 OwedJenny$2160.5 Paidachequeof $2116infull settlement of theamount owedon1March.17 PurchasedgoodsfromJennyat alist priceof $2000less8%tradediscount.20 PurchasedgoodsfromJennyat anet priceof $1250.23 Returnedgoodsbought on20Marchworth$184, astheyaredefective. REQUIRED (a) StateonereasonwhyJennyofferedthediscount on17March2022. [1] (b) PrepareJenny’saccount for themonthof March2022inRobin’sledger. [7] (c) Explainthemeaningof acashdiscount. [1]

8 Robin’sbusinessisconsideringchangingfromJenny, anoverseassupplier, toClaudia, alocal supplier. Thefollowinginformationisavailable. Jenny(Overseas) Claudia(Local)Cost of inventory $9.40per unit $11per unit Deliverycharges $30for every50units (Goodsorderedtakesabout 7daystobedeliveredtobusiness) Freenext daydelivery Tradediscount 8%for ordersabove$1000 5%for ordersabove$1000 Cashdiscount 1%if payment ismadewithin30days 2%if payment ismadewithin30days Returnpolicy Returnscanbemadewithin10daysof purchase. Businesswill bear thedeliveryfeefor returns. Returnscanbemadewithin21daysof purchase. Claudiawill pickupthegoodsandoffer exchangeof goodsimmediately. Otherinformation Jennyhasbeeninbusinessfor thepast 20years. Claudiaisanewonlinesupplier. REQUIRED(d) AdviseRobinwhether tochangetothelocal supplier, Claudia, or continuewiththeexistingoverseassupplier, Jenny. Justifyyour decisionwithtworeasons. [5] [Total: 14] ENDOFPAPER