JSS 2022 4E GE2 P2 V2 with ANS

7087/02/GE2/22 O JURONG SECONDARY SCHOOL 2022 GRADUATION EXAMINATION 2 SECONDARY 4 EXPRESS SECONDARY 5 NORMAL ACADEMIC CANDIDATE NAME CLASS INDEX NUMBER PRINCIPLES OF ACCOUNTS Paper 2 7087/02 18 Aug 2022 2 hours Additional Material: Writing papers (6 sheets) READ THESE INSTRUCTIONS FIRST Write your class, index number and name on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HD pencil for rough working. Do not use staple, paper clips, highlighters, glue or correction fluid. The use of an approved calculator is allowed. The number of marks is given in brackets [ ] at the end of each question or part question. The total marks for this paper is 60. ________________________________________________________________________________ This document consists of 6 printed pages including this page. [Turn over]

2 7087/02/GE2/22 1 The following trial balance was extracted from JingTing Pte Ltd on 31 May 2022. $ Share capital, 100 000 ordinary shares 150 000 Retained earnings 1 June 2021 82 200 Property 200 000 Accumulated depreciation - property 40 000 Motor Vehicles 80 000 Accumulated depreciation - motor vehicles 16 000 Inventory 49 600 Trade receivables 15 500 Cash at bank 10 000 Allowance for impairment of trade receivables 1 400 10% Bank Loan 80 000 Interest on bank loan 1 000 Cost of sales 72 700 Sales revenue 85 000 Commission income 3 800 Rental expenses Discount received 30 000 400 Additional information: 1 On 31 May 2022: (i) Rental expenses covers the period 1 June 2021 to 31 August 2022. (ii) Commission income, $200, had been received in advance. 2 The net sale realisable value of inventory as at 31 May 2022 was $49 000. 3 A credit customer was declared bankrupt. $500 of debt was be written off. 4 A review shows that 5% of the trade receivables are likely to be uncollectible. 5 One- fifth of the loan was due for repayment on 30 June 2022. Interest on loan was not fully paid. 6 Depreciation policy is as follows: (i) Property: 5% per annum on cost. (ii) Motor vehicles: 20% per annum on net book value. 7 Dividends at $0.05 per share was declared on all shares on 31 May 2022 and will be paid out on 31 July 2022. REQUIRED (a) Prepare the Statement of financial performance for the year ended 31 May 2022. [10] (b) Prepare the Statement of financial position as at 31 May 2022. [10] [Total: 20] [Turn over]

3 7087/02/GE2/22 2 Jolene Trading’s financial year ends on 30 April. The following information is supplied. 30 April 2021 30 April 2022 $ $ Equipment - 100 000 Inventory 20 000 50 000 Trade receivables 10 000 8 000 Cash at bank 3 000 - Bank overdraft - 5 000 Trade payables 8 000 9 000 Current portion of long-term borrowing 10 000 10 000 10 years bank loan 100 000 100 000 Prepaid utilities expenses - 800 Drawings 800 2 000 Mark- up on cost - 20% Cost of sales - 400 000 Trade receivables collection period 4.30 days ? REQUIRED (a) Explain the importance of being liquid. [1] (b) Calculate the following for the year ended 30 April 2022. (i) Current ratio (ii) Quick ratio (iii) Net sales revenue (iv) Trade receivables collection period [4] (c) Comment on the changes in liquidity for the two years ended 30 April 2021 and 2022. [4] (d) Suggest two ways in which Jolene Trading can improve on its liquidity. [2] (e) Evaluate on the efficiency of trade receivables management over the two years. [2] (f) Suggest one way which can Jolene Trading to improve the management of trade receivables. [1] [Total: 14] [Turn over]

4 7087/02/GE2/22 3 The following extract is taken from the books of Markus Enterprise on 1 August 2020. Equipment $150 000 Accumulated depreciation $28 500 On 1 January 2021, the business sold one of the equipment, costing $50 000, to KJ Trading on credit for $20 000. The equipment was purchased on 1 April 2019. The business purchased a replacement equipment $30 000 on credit from Zander Engineering on 2 January 2021. It is the firm’s policy to depreciate all the equipment at the rate of 10% using the reducing balance method. A full year depreciation is provided for equipment in the year of purchase and in the year of sale. REQUIRED (a) Prepare the journal entries to record the sales proceeds of the equipment on 1 January 2021. Narrations are not required. [2] (b) Prepare the journal entries to record the purchase of the replacement equipment on 2 January 2021. Narrations are not required. [2] (c) Calculate the depreciation expense for the year ended 3 0 September 2021. Show your workings. [2] (d) (e) Calculate the gain or loss on the sale of the equipment on 1 January 2021. Using an appropriate accounting theory, explain why the business depreciate its non- current assets. [2] [2] [Total: 10] [Turn over]

5 7087/02/GE2/22 4 Kumar Publishing had the following balances for trade receivables over the three years. 31 July 2020 31 July 2021 31 July 2022 $ $ $ Trade receivables 34 500 30 800 40 000 On 15 September 2021, BFG Knowledge confirmed that it was ending its business and could only pay Kumar Publishing 80 cents for every dollar of its outstanding debt of $5 000. On the same day, a cheque was received from BFG Knowledge. The business reviews its list of trade receivables at the end of every financial year ended 31 July and estimates that 5% of its credit customers are likely to be uncollectible. REQUIRED (a) Prepare the journal entries to record the transactions on 15 September 2021. Narrations are not required. [3] (b) Prepare the journal entries to adjust the balance of allowance for impairment of trade receivable for the year ended 31 July 2022 . Narrations are not required. [2] (c) Prepare a statement of financial position extract as at 31 July 2022 , showing the trade receivables. [2] (d) State and explain how Kumar Publishing uses one internal control to manage its cash in the business. [2] [Turn over]

6 7087/02/GE2/22 The following two credit customers have approached Kumar Publishing to extend repayment period from 30 days to 45 days. As the economic forecast in 2022 is not favourable, Kumar Publishing intends to extend longer repayment to only one business. Kumar Publishing current repayment terms is 30 days. Matilda’s Literacy Charlie and Book Factory Nature of business Physical retail store in Orchard Road with a café Local publisher is known for its strong emphasis on local authors. Hosted several public talks by renowned local authors Singapore- based online store that boasts 10 million book titles and a wide range of stationery and educational toys Average trade receivables balance Repayment history over the past year $20 000 Collection days: 40 days Repaid late 4 times $37 000 Collection days: 35 days Repaid late twice Reputation of business Popular among supporters of local book scene Has been in operation for 10 years Popular Instagram-worthy café among youngsters Online reviews of the company’s collection of books to delivery and customers have been good Established in 2021 on multiple local ecommerce platforms Aggressive marketing and promotion by business Industry outlook Gr