XMS 2022 4E5N PRELIMS P2 QN

XINMIN SECONDARY SCHOOL SEKOLAH MENENGAH XINMIN PRELIMINARY EXAMINATION 2022 CANDIDATE NAME CLASS INDEX NUMBER PRINCIPLES OF ACCOUNTS Paper 2 Secondary 4 Express/ 5 Normal Academic Setter: Ms Jaclyn Neo Vetter: Mdm Norhuda Maksum and Mrs May Ng 7087/02 25 August 2022 2 hours Additional materials: Writing paper (5 sheets) 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. You may use an HB pencil for rough working. Do not use staples, paper clips, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions. The businesses mentioned in this question paper are fictitious. Start each question on a separate page. The number of marks is given in the brackets [ ] at the end of each or part question. At the end of the examination, fasten all your work securely together. For Examiner’s Use Q1 / 20 Q2 / 10 Q3 / 13 Q4 / 17 / 60 Parent’s Signature This document consists of 7 printed pages.

2 1 The following balances were extracted from the books of Eat Smarter, a retailer of whole foods, at the end of the financial year on 31 July 2021. $ Capital, 1 August 2020 80,819 Sales revenue 120,800 Sales returns 22,320 Cash at bank 950 Cr Cost of sales 46,600 Commission income 26,000 Trade payables 28,000 Trade receivables 44,400 Allowance for impairment of trade receivables 340 Discount allowed 809 Interest on bank loan 500 Inventory 32,000 4% bank loan taken on 1 August 2018 15,000 Selling and advertising expense 8,860 Rental expense 13,000 Wages and salaries 30,800 Utilities expense 12,520 Motor vehicles at cost 60,000 Accumulated depreciation of motor vehicles 12,000 Equipment at cost 14,200 Accumulated depreciation of equipment 2,100

3 Additional information 1 Legal fees $550 relating to the purchase of a new equipment had been recorded in the selling and advertising expense account. 2 A sales invoice of $1,200 had been completely omitted in the books. 3 Interest expense on the 4% bank loan had not been fully paid up. 4 5 The owner had withdrawn $30 every month from the business bank account to pay for his telephone bill since 1 January 2021. This has been recorded as utilities expense in the books. During the year, a credit customer owing $1,000 was declared bankrupt. The amount owing was to be written off. 6 The allowance for impairment of trade receivables is to be maintained at 5% of trade receivables. 7 Motor vehicles are to be depreciated at 15% per annum using the reducing -balance method. Equipment is to be depreciated at 20% per annum using the straight-line method. 8 The entire bank loan is repayable on 31 December 2021. REQUIRED (a) Prepare the statement of financial performance for the year ended 31 July 2021. [10] (b) Prepare the statement of financial position as at 31 July 2021. [10] [Total: 20]

4 2 Jingle Wellness buys and sells convenient packs of traditional herbal medicine and soups. The business operates a few machines to pack its inventory. The business provided the following information for the year ended 30 September 2020. Machinery account 2019 Dr ($) Cr ($) Bal ($) Oct 1 Balance b/d 53,280 Dr Nov 29 Sale of non-current assets 14,000 39,280 Dr Dec 1 Trade payable - Packwell (b) 12,000 51,280 Dr 2020 Oct 1 Balance b/d 51,280 Dr Accumulated depreciation of machinery account 2019 Dr ($) Cr ($) Bal ($) Oct 1 Balance b/d 13,450 Cr Nov 29 Sale of non-current assets 5,040 8,410 Cr 2020 Sep 30 Depreciation of machinery 8,574 16,984 Cr Jingle Wellness depreciates machinery using the reducing balance method. A full year’s depreciation is charged in the year of purchase and no depreciation is charged in the year of sale.

5 REQUIRED (a) Define the following terms: (i) non-current assets. [1] (ii) depreciation [1] (b) Interpret the transaction labelled (b) in the machinery account. [1] (c) Calculate the rate of depreciation charged on machinery. [2] The business had received a $13,000 cheque for selling the machine on 29 November 2019. REQUIRED (d) Prepare the journal entry to record the gain or loss on the sale of non -current asset for the year ended 30 September 2020. A narration is required. [3] (e) State two non-accounting information a business should consider when deciding to purchase a non-current asset. [2] [Total: 10] 3 Janice Learning Centre provides enrichment lessons to students. The following information was extracted for the year ended 31 August 2021. 1 On 1 September 2020, service fee revenue owing to the business was $10,200. 2 During the year, the business had received service fee revenue of $89,000 by cash and cheques. Out of the amount collected, $14,000 was received for lessons which will be conducted in September 2021. REQUIRED (a) Define the revenue recognition theory. [1] (b) Calculate the service fee revenue earned for the year ended 31 August 2021. [2] (c) Prepare the journal entry to adjust the service fee revenue account on 31 August 2021. [2] Janice Learning Centre also provided the following information relating to rent expense for the year ended 31 August 2021. Rent expense 2020 Dr ($) Cr ($) Bal ($) Sep 1 Prepaid rent expense (i) 2,150 2,150 Dr Nov 9 Cash at bank 21,500 23,650 Dr

6 2021 Feb 1 Capital (ii) 1,075 24,725 Dr Aug 31 Rent expense payable 1,075 25,800 Dr 31 ? (iii) 25,800 - REQUIRED (d) (e) Interpret the transactions (i) and (ii) in the rent expense account above. [[ 2] Name the account marked (iii) in the rent expense account. [1] Janice recently hired a new accountant to help with the business as she is concerned about Janice Learning Centre’s profitability worsening over the past two years. REQUIRED (f) Name and define one professional ethic her accountant should uphold. [2] (g) State one reason why it is important to be profitable. [1] (h) Suggest two ways in which Janice Learning Centre can improve its profitability. [2] [Total: 13] 4 Jaime Toys uses the First-In-First-Out (FIFO) method to record its inventory of toy model cars. The following information was provided for the financial year ending 30 April 2021. 2020 May 1 Beginning inventory of 25 units at $3,800. Summary of transactions relating to inventory 2020 May 30 Bought 50 units of inventory costing $5,300 on credit. Jun 4 Returned all the goods purchased on May 30 to the supplier. Aug 3 Bought 50 units of inv