JSS 2022 4E GE 2 P1 with ANS

7087/01/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 1 7087/01 17 Aug 2022 1 hour Candidates answer on the Question Paper. No Additional materials are required 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 HB pencil for any rough working. Do not use staples, paper clips, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions. The number of marks given in the brackets [ ] at the end of each question or part question. The total marks for this paper is 40. This document consists of 8 printed pages [Turn over]

2 7087/01/GE2/22 Answer all questions 1. The trial balance of Alena’s business balanced on 31 January 2022. However, the following errors have now been discovered: 1 Credit note of $300 issued to customer Andrea has omitted from the books. 2 Payment of modification of computer, worth $5 500, to enhance its operating capacity has been debited as cash at bank and credited office equipment. 3 Repayment of bank loan $4 000 has been recorded as $3 000. REQUIRED (a) Prepare the journal entries to correct above errors. Narrations are not required. [6] (b) State the effect of error (1) on the profit for the year. [1] (c) State one purpose of credit note and invoice. credit note invoice [2] (d) Explain the purpose of source document with an accounting theory. [2] [Total: 11]

3 7087/01/GE2/22 2. The following information is obtained from Alvin Gaming Console for the year ended 31 March 2022. Units (Gaming console) Value ($) Sales revenue for the year ended 31 March 2022 32 5 760 Inventory as at 31 March 2021 20 2 000 Operating expenses - 480 Additional information: 1 Summary of invoices for gaming console purchases. Date Quantity $ 2021 1 April 5 500 28 June 4 400 31 Dec 3 300 2022 14 Feb 3 300 2 Business uses FIFO (First-in-first-out) method of inventory valuation. REQUIRED (a) Calculate the cost of sales for the year ended 31 March 2022. [3] (b) Calculate the profit or loss for the year ended 31 March 2022. [3] [Turn over]

4 7087/01/GE2/22 Profit margin for the year ended 31 March 2021 was 30%. (c) Evaluate the profit margin of the business for the 2 years ended 31 March 2021 and 2022. Show your workings clearly and your answer to two decimal places. [3] (d) State how inventory is valued on 31 March 2022. [1] (e) Calculate the rate of inventory turnover for the year ended 31 March 2022. Show your answer to two decimal places. [2] [Total: 12]

5 7087/01/GE2/22 3. Shi Yun started a trading business in Jurong Point. The financial year ends on 30 June 2022. During the year, the following transaction took place. 2021 August 1 Withdrew $200 cash from the business for office use. November 21 Contributed personal van for business use, $10 000 2022 April 1 Took out $1 000 worth of inventory for personal use June 30 Loss for the year was $5 000. REQUIRED (a) Prepare a capital account for the year ended 30 June 2022. [4] (b) State and explain the accounting theory applied by Shi Yun when recording drawings and capital. [2] (c) State the effect of drawings on the profit for the year. [1] [Turn over]

6 7087/01/GE2/22 (d) Record the missing steps in the accounting cycle. [2] [Total: 9] Identify and record .................... .................... Report .................... ....................

7 7087/01/GE2/22 4. Hazirah Event rents out sound and lighting equipment. One of its clients is Mira Music. The following service fee revenue was extracted from the books of Hazirah Event. Its financial year ends 30 April 2022. Service fee revenue account Date Particulars Debit Credit Balance $ $ $ 2021 May 1 Service fee revenue receivable 1 000 1 000 Dr 2022 Jan 1 Cash at bank 30 000 29 000 Cr Apr 1 Trade receivable: Mira Music 10 000 39 000 Cr Additional information: Monthly service fee revenue income earned by Hazirah Event was $3 200. REQUIRED (a) Interpret the entry on 1 May 2021. [2] (b) Explain the adjustments made on 30 April 2022. [2] (c) State and explain the accounting theory behind part (b) [2] [Turn over]

8 7087/01/GE2/22 (d) Explain the effects on profit for the year and current assets if service fee receivable was not adjusted at the beginning of the year. Profit for the year Current assets [2] [Total: 8] [END OF PAPER]

9 7087/01/GE2/22 Answer 1 Credit note of $300 issued to customer Andrea has omitted from the books. 2 Payment of modification of computer, worth $5 500, to enhance its operating capacity has been debited as cash at bank and credited office equipment. 3 Repayment of bank loan $4 000 has been recorded as $3 000. 1. (a) Prepare the journal entries to correct above errors. Narrations are not required. General Journal DR ($) CR ($) Sales returns 300 Trade receivable: Andrea 300 Office equipment 11 000 Cash at bank 11 000 Bank Loan 1 000 Cash at bank 1 000 [6] (b) State the effect of the omission of error (1) on the profit for the year. Overstate [1] (c) State one purpose of credit note and invoice. credit note Returns of damaged goods invoice Credit transaction [2] (d) Explain the purpose of source document with an accounting theory. Source document served as evidence for a business transaction. (1) According to objectivity, accounting records must be supported by verifiable and reliable evidence. (1) [2] [Total: 11]

10 7087/01/GE2/22 2. The following information is obtained from Alvin Gaming Console for the year ended 31 March 2022. Units (Gaming console) Value ($) Sales revenue for the year ended 31 March 2022 32 5 760 Inventory as at 31 March 2021 20 2 000 Operating expenses - 480 Additional information: 1 Summary of invoices for gaming console purchases. Date Quantity $ 2021 1 April 5 500 28 June 4 400 31 Dec 3 300 2022 14 Feb 3 300 2 Business uses FIFO (First-in-first-out) method of inventory valuation. REQUIRED (a) Calculate the cost of sales for the year ended 31 March 2022. $2000 (1) + $500 +$400 + 300 (2) = $3200 [3] (b) Calculate the profit for the year ended 31 March 2022. Net sales revenue – Cost of sales – operating expenses $[5760 (1) - $3200 (1) - $480 (1) = $2080 [3] Profit margin for the year ended 31 March 2021 was 3%. (c) Evaluate the profit margin of the business for the 2 years ended 31 March 2021 and 2022. 2080/ 5760 x 100 = 36.11% (1 – Show working) OF Profit margin has improved from 30% in 31 March 2021 to 36.11% in 31 March 2022. (1) This could be due to the business’s ability to manages its expenses over the 2 years. (1) [3] (d) Sta