Peirce Sec 7087 POA 4E PRELIM 2022 P2

PEIRCE SECONDARY SCHOOL PRELIMINARY EXAMINATION 2022 SECONDARY FOUR EXPRESS Principles of Accounts 7087/02 23 August 2022 Paper 2 2 hours Additional Materials: Answer booklet INSTRUCTIONS TO CANDIDATES Write your name, class and register number on all the work you hand in. Write in dark blue or black pen. Write your answers and working on the separate answer paper provided. You may use a pencil for rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. The use of an approved calculator is allowed. The businesses described in this question paper are fictitious. Answer all questions. Write your answers in the answer booklet provided. All calculations must be shown adjacent to the answer. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page. Final Copy by Ms Jasmine Yap [Turn over] Candidate Name ________________________________________ Class Register Number FOR EXAMINER’S USE /60 USE PARENT’S SIGNATURE FOR EXAMINER’S USE

2 1 The following balances were extracted from the books of Mad Hatter Pte Ltd on 31 May 2022. Debit Credit $ $ Office equipment 120 000 Accumulated depreciation on office equipment 18 000 Fixtures and fittings 210 000 Accumulated depreciation on fixtures and fittings 42 000 Retained earnings 34 086 Inventory 5 902 Rental 7 200 Repairs and maintenance 600 General expense 350 Trade receivables & payables 9 080 8 190 Allowance for impairment of trade receivables 1 362 Sales returns 3 460 Share capital, 100 000 ordinary shares 100 000 Cash at bank 1 710 Loan from Monkey Finance 40 000 Cost of sales 212 720 Sales revenue 315 210 Salaries 2 430 Discounts 1 456 420 Commission 2 180 568 178 568 178 Additional information at 31 May 2022 1 Rental of $3 000 was received in advance at year end. 2 Prepaid commission amounted to $1 650 at year end. 3 Fixtures and fittings are to be depreciated at 10% per annum on cost. 4 Office equipment are to be depreciated at 15% per annum on net book value. 5 Alice was declared a bankrupt and was only able to pay the business 10 cents for every dollar of its outstanding debt of $1 200 . On the same day, a cheque was received from Alice.

3 6 One quarter of the loan from Monkey Finance is to be repaid on 30 June 2022. 7 Interest of 1% per annum on loan from Monkey Finance has not been paid yet. 8 A dividend of $0.03 has been declared and will be paid on 17 June 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]

4 2 The following information was extracted from the books of Rabbit Hole Accessories. 31 March 2020 $ 31 March 2021 $ 31 March 2022 $ Current assets Inventory 120 000 140 000 155 000 Trade receivables 35 000 66 000 85 000 Prepaid rent 1 300 - - Cash at bank 5 800 3 100 - Current liabilities Trade payables 6 700 8 200 11 500 Bank overdraft - - 4 200 Commission income received in advance 500 1 900 2 300 31 March 2020 $ 31 March 2021 $ 31 March 2022 $ Working capital 154 900 199 000 ? Current ratio 22.51 20.70 ? Quick ratio 5.67 6.84 ? REQUIRED (a) Calculate the following for Rabbit Hole Accessories for the year ended 31 March 2022. Round your answers to two decimal places where necessary. Show all workings clearly. (i) Working capital (ii) Current ratio (iii) Quick ratio [2] [2] [2] (b) With reference to the information provided and the figures you have calculated in (a), comment on the business’s liquidity position over the three years. [6] (c) Recommend and explain four ways the business can use to improve its liquidity. [8] [Total: 20]

5 3 The financial year of The Wizard of Oz ends on 30 April. On 1 May 2020, the business had a capital balance of $65 800. The following transactions took place between 1 May 2020 and 30 April 2022. Date 2020 Description of Transaction Jun 18 The owner of the business, Dumbledore, took inventory worth $58 from the business for his aunt’s birthday party. 2021 Feb 20 Dumbledore took $960 cash from the office to pay for his home utilities. Apr 30 Profit for the year amounted to $15 320. 2022 Jan 24 Dumbledore contributed his laptop worth $1 670 to the business. Apr 30 Loss for the year amounted to $4 310. REQUIRED (a) With the use of an accounting concept, explain the rationale of recording the transaction on 18 June 2020. [2] (b) Prepare the drawings account for the year ended 30 April 2021. [3] (c) Prepare the capital account for the years ended 30 April 2021 and 2022. [4] [Total: 9]

6 4 On 1 March 2022, Wagyu Beef Trading purchased goods at a list price of $2 000 on credit from Moo Moo Trading and received a 10% trade discount on the purchase. REQUIRED (a) Calculate the final amount to be recorded in the books Wagyu Beef for the purchase on 1 March 2022. [2] (b) Suggest one purpose of giving trade discounts. [1] (c) Identify another type of discount which Moo Moo Trading can give to encourage prompt payment from Wagyu Beef for the purchase made on 1 March 2022. [1] Currently, Wagyu Beef Trading only sells one type of wagyu beef known as the Matsusaka beef and hopes to increase its product offerings for its customers by selling other types of wagyu beef as well. However, there is only space for one more type of product. The supplier recommended the business to sell either Kobe beef or Omi beef. The following are points for consideration. Product Kobe beef Omi beef Gross profit per 100g $8 $6 Nature of product • Well marbled meat is lean in addition to being known for its rich sweetness and unique aroma • Suitable to be eaten for Japanese hotpot (shabu shabu) or barbecued • Has more fat than other types of beef • Suitable to be eaten barbecued only Storage • Needs to be stored in extremely low temperatures of at least -10 degrees celsius • Expires 5 days from date of purchase • Can be stored in temperatures of between 1 to 10 degrees Celsius • Expires 8 days from date of purchase Customer preference • Popular overseas and among locals as it is the healthiest choice amongst all types of wagyu beef • Relatively unknown in the local market even though it is popular overseas for its budget friendly price

7 REQUIRED (d) Which type of wagyu beef would you recommend the business to buy, based on the factors given in the scenario? Support your answer with three reasons. [7] [Total: 11] END OF PAPER

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