Anderson Sec Prelim 2022 P1 - QNS

Setter: Mdm June Liau O ANDERSON SECONDARY SCHOOL Preliminary Examination 2022 Secondary Five Normal Academic CANDIDATE NAME: CLASS: / INDEX NUMBER: PRINCIPLES OF ACCOUNTS Paper 1 Candidates answer on the Question Paper. 7087/01 25 August 2022 1 hour 1100 – 1200h No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your name, class and index number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. Do not use staples, paper clips, highlighters, glue or correction fluid/tape. The use of an approved calculator is allowed. Answer all the questions. Where layouts are to be completed, you may not need all the lines for your answers. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 10 printed pages. 40

2 PRELIM 5NA POA 2022 7087/01 Answer all questions. 1 On 1 October 2020, Alexander Pte Ltd provided the following balances. $ Trade receivables 34 500 Allowance for impairment of trade receivables account 3 450 The following transactions took place during the financial year ended 30 September 2021. 1 On 10 August 2021 , Jacky Trading, a credit customer who owed $ 3 500, was declared bankrupt and a final payment of 20% was received by cheque. The remainder was written off. 2 On 30 September 2021, the trade receivables balance was $ 22 700. Alexander Pte Ltd maintains an allowance for impairment of trade receivables at 10% of the trade receivables balance at the end of every financial year. REQUIRED (a) Explain the following terms: (i) trade receivables [1] (ii) allowance for impairment of trade receivables [1] (b) Name and explain the accounting theory applied when recording allowance for impairment of trade receivables. [2]

3 PRELIM 5NA POA 2022 7087/01 (c) Prepare the journal entries to record the transaction on 10 August 2021. Narrations are not required. [3] Journal Date Particulars Dr $ Cr $ (d) Prepare the journal entries to record the change in allowance for impairment of trade receivables on 30 September 2021. Narrations are not required. [2] Journal Date Particulars Dr $ Cr $ [Total: 9]

4 PRELIM 5NA POA 2022 7087/01 2 Gabriel owns a business providing wellness therapy services. The following information was provided: 1. On 1 June 2021, service fee revenue receivables account balance was $8 800. 2. During the year ended 31 May 2022, service fee revenue received totalled $88 600. 3. On 31 May 2022, $5 600 of service fee revenue was received in advance. REQUIRED (a) Explain the difference between a trading business and a service business. [2] (b) Prepare the journal entry to adjust service fee revenue received in advance on 31 May 2022. A narration is not required. [2] Journal Date Particulars Dr Cr $ $ (c) Calculate the service fee revenue earned for the year ended 31 May 2022. [1] (d) Explain the revenue recognition theory. [1]

5 PRELIM 5NA POA 2022 7087/01 On 1 June 2021, Gabriel’s business started to rent a shop for $5 500 per month. For the year ended 31 May 2022, the business paid $71 500 in cheques for rental expense. REQUIRED (e) Calculate the rental expense incurred for the year ended 31 May 2022. [1] (f) State the name of the account and the amount to be shown in the statement of financial position as at 31 May 2022. State if the item is a ‘Current Asset’ or ‘Current Liability’. [3] [Total: 10]

6 PRELIM 5NA POA 2022 7087/01 3 On 1 April 2021, John Bakery took up a $100 000 loan from Best Bank. The loan is repayable over 5 years and the interest rate on the outstanding amount is 4% per annum. Both the repayment of the loan and payment of interest are to be made every six months on 30 September and 31 March. The first repayment of the loan and interest was made on 30 September 2021. John Bakery’s financial year ends on 31 December each year. REQUIRED (a) Prepare journal entries to record interest for the year ended 31 December 2021, including the closing entries. Narrations are not required. [6] Journal Date Particulars Dr $ Cr $ (b) Prepare an extract of the statement of financial performance for the year ended 31 December 2021 to show the expenses section. [1] John Bakery Extract of Statement of Financial Performance for the year ended 31 December 2021 Les (a) s e 9\\\

7 PRELIM 5NA POA 2022 7087/01 (c) Prepare an extract of the statement of financial position as at 31 December 2021 to show the liabilities section. [3] John Bakery Extract of Statement of Financial Position as at 31 December 2021 Les (d) State the accounting theory behind the adjustment for interest expense payable. [1] [Total: 11]

8 PRELIM 5NA POA 2022 7087/01 4 Shahid sells machine tools. Details from the cash at bank account and the bank statement for the business for the month of January 2022 are as follows. Cash at bank Date Particulars Cheque number Debit Credit Balance 2022 $ $ $ Jan 1 Balance b/d 2 500 Dr 5 Capital 5 000 7 500 Dr 7 Sales revenue 500 8 000 Dr 16 Trade payable - Jasmine 6564 800 7 200 Dr 19 Inventory 6565 1 200 6 000 Dr 23 Cash in hand 100 5 900 Dr 24 Trade payable - Edward 6566 260 5 640 Dr 25 Trade receivable - Indra 400 6 040 Dr 30 Trade receivable - Ken 1 150 7 190 Dr Bank statement Date Payments Receipts Balance 2022 $ $ $ Jan 1 Balance b/d 2 900 Cr 2 Cheque 6563 400 2 500 Cr 4 Standing order - Insurance 600 1 900 Cr 5 Cash 5 000 6 900 Cr 9 Cash 500 7 400 Cr 19 Cheque 6564 800 6 600 Cr 22 Cheque 6565 1 200 5 400 Cr 23 Cash withdrawal 100 5 300 Cr 26 Cheque 400 5 700 Cr 28 Credit transfer – Commission income 230 5 930 Cr 30 Dishonoured cheque 400 5 530 Cr

9 PRELIM 5NA POA 2022 7087/01 REQUIRED (a) Interpret the entries in the cash at bank account. (i) 19 January 2022 [1] (ii) 23 January 2022 [1] (b) Prepare the adjusted cash at bank account for January 2022. [4]

10 PRELIM 5NA POA 2022 7087/01 (c) Prepare a bank reconciliation statement as at 31 January 2022. [4] [Total: 10] END OF PAPER