JYSS 4E5N POA PRELIM 2022 P2

This document consists of 7 printed pages and 1 blank page. [Turn over p JUNYUAN SECONDARY SCHOOL PRELIMINARY EXAMINATION 2022 SECONDARY FOUR EXPRESS/ FIVE NORMAL ACADEMIC CANDIDATE NAME CLASS INDEX NUMBER PRINCIPLES OF ACCOUNTS 7087/02 Paper 2 25 August 2022 2 hours Additional Materials: Answer booklet READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question.

2 7087/02/4E5N/PRELIM/2022 Answer all questions. 1 Stephen operates an accounting business. The following balances were extracted from the books on 31 August 2022. $ Motor vehicles at cost 75 000 Equipment at cost 250 000 Accumulated depreciation of motor vehicles 14 250 Accumulated depreciation of equipment 125 000 Rent expense 44 000 Wages 99 000 Cash at bank (Overdrawn) 2 200 Trade receivables 48 600 Accounting fee revenue 246 752 Allowance for impairment of trade receivables 250 Utilities paid 5 141 Discount received 690 3% Bank loan 30 000 Interest on loan 500 Capital 103 099 Additional information 1 Utilities paid included $360 which were Stephen’s own house utilities. 2 Wages, $1 900, was prepaid and rent expense, $4 000, was payable. 3 Motor vehicles are to be depreciated at 10% per annum on net book value. Equipment are to be depreciated at 25% per annum on cost. 4 Numez Limited, who owed $1 800, ceased business. A cheque of $800 was received and the remaining amount was written off. The entire transaction was not recorded. 5 The allowance for impairment of trade receivables is to be maintained at 5% of trade receivables. 6 The bank loan was taken up on 1 January 2022 and is to be repaid equally over five years. 7 Interest on loan for the year ended 31 August 2022 had not been fully paid.

3 7087/02/4E5N/PRELIM/2022 [Turn over REQUIRED (a) Prepare the statement of financial performance for the year ended 31 August 2022. [9] (b) Prepare the statement of financial position as at 31 August 2022. [11] [Total: 20]

4 7087/02/4E5N/PRELIM/2022 2 Rich Bank is considering to approve one of the two loans requested by two similar businesses in the technology industry. The following is extracted from the statements of financial position of two businesses as at 31 March 2022. Ace Technology Best Global $ $ Motor vehicles 128 000 65 000 Equipment 27 000 8 000 Inventory 59 500 16 200 Trade receivables 20 780 18 800 Bank overdraft 1 500 - Cash at bank - 700 Prepaid rent expense 900 2 600 Long term borrowings 50 000 40 000 Current portion of long term borrowings 10 000 - Trade payables 25 800 19 000 REQUIRED (a) Calculate the following for both businesses as at 31 March 2022. Show your answers to two decimal places. (i) Current ratio [2] (ii) Quick ratio [2] (b) Evaluate the liquidity of the two businesses. [6] (c) Advise Rich Bank which business you would recommend to provide the loan to. Justify your answer. [2] Yuan Yuan is a potential investor who is interested to invest in one of the businesses. Besides analysing the liquidity of both businesses, Yuan Yuan is also interested in their profitability. REQUIRED (d) Explain what is meant by the profitability of a business. [1] (e) Name one profitability ratio that Yuan Yuan could use. [1] [Total: 14]

5 7087/02/4E5N/PRELIM/2022 [Turn over 3 The following is the cash at bank account of Ali Hub as at 31 August 2022: Cash at Bank Account Date Particulars Cheque No. Debit Credit Balance 2022 $ $ $ August 1 Balance b/d 370 Dr 6 Rent expenses 905 870 500 Cr 8 Capital 2 400 1 900 Dr 1 3 Inventory 906 910 990 Dr 1 9 Dennis Mart 907 380 610 Dr 2 0 Amanda Trading 4 600 5 210 Dr 3 0 Sales revenue 620 5 830 Dr On 2 September 2022, Ali Hub received the following bank statement for the month ended 31 August 2022: Date Particulars Withdrawal $ Deposit $ Balance $ 2022 August 1 Balance b/d 460 Cr 2 Cheque 904 90 370 Cr 7 Cheque 905 870 500 Dr 8 Cash deposit 2 400 1 900 Cr 15 Cheque 906 910 990 Cr 20 Cheque deposit 4 600 5 590 Cr 23 Cheque returned unpaid 4 600 990 Cr 31 Bank charges 20 970 Cr REQUIRED (a) Interpret the entry in the cash at bank account on 30 August 2022. [1] (b) Calculate the updated cash at bank account for the month of August 2022. Indicate whether the balance is debit or credit. [2] (c) Prepare the bank reconciliation statement as at 31 August 2022. [4] (d) Give one reason why Ali Hub prepares the bank reconciliation statement. [1] (e) Aside from preparing a bank reconciliation statement, state one other internal control a business can implement to safeguard its cash. [1] (f) State two reasons why cheque was returned unpaid on 23 August in the bank statement. [2]

6 7087/02/4E5N/PRELIM/2022 [Total: 11]

7 7087/02/4E5N/PRELIM/2022 [Turn over 4 Star Mart provided its fixtures and fittings account for the year ended 30 June 2022. Fixtures and fittings Date Particulars Dr $ Cr $ Bal $ 2021 Jul 1 Balance b/d 15 600 Dr Aug 6 Trade payable 2 000 17 600 Dr Nov 18 Sale of fixtures and fittings 8 000 9 600 Dr 2022 Feb 20 Loan from bank 5 000 14 600 Dr Jul 1 Balance b/d 14 600 Dr REQUIRED (a) Interpret the following entries in the fixtures and fittings account. (i) 6 August 2021 [1] (ii) 20 February 2022 [1] The following information was provided for the fixtures and fittings sold on 18 November 2021. $ Accumulated depreciation of fixtures and fittings 3 750 Sales proceeds banked in 2 600 The business ends its financial year on 30 June. REQUIRED (b) Calculate the gain or loss on the sale of fixtures and fittings on 18 November 2022. [2] (c) Define the term depreciation. [1] (d) State one cause of depreciation. [1] (e) Explain why there is no need to provide depreciation on land. [1] (f) Name the theory that states that the same method of depreciation should be used for every financial period. [1]

8 7087/02/4E5N/PRELIM/2022 Star Mart wants to purchase 12 cabinets for storage purposes. It has shortlisted the following suppliers. Supplier Shoppa Tabao Cost per cabinet $400 $250 Return policy Return can be made within 7 days with no additional charges Return can be made within 21 days but buyer bears the delivery cost of $100 Payment policy Credit term of 7 days Credit term of 30 days Reputation of supplier Has been in business for more than 16 years Has been in business for 3 years with many positive reviews online Warranty 2 years 6 months REQUIRED (g) Recommend which supplier Star Mart should buy the cabinets from. Justify your decision with three reasons.