2022 PLMGS 4E5NA POA Prelim Paper 1 - Question Booklet

Name: ___________________________ ( ) Class: _______ Centre Number S Index Number PRINCIPLES OF ACCOUNTS 7087/01 Paper 1 26 August 2022 Candidates answer on the Question Paper. 1 hour No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your centre number, name, index number and class in the spaces at the top of this page. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use paper clips, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions. The businesses described in this question paper are entirely fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 11 printed pages and 1 blank pages. Paya Lebar Methodist Girls’ School (Secondary) Preliminary Examination 2022 Secondary 4 Express / 5 Normal (Academic) Calculator Model: (if applicable) For Examiner’s Use 40

2 PLEASE TURN OVER FOR QUESTION 1

3 [Turn over Answer all questions. 1 Glenys Shoes Pte Ltd’s financial year ends on 31 July. Inventory turnover rates for two years for Glenys Shoes Pte Ltd and Didier Solescape Pte Ltd, a similar business, are shown below. Glenys Shoes Pte Ltd Didier Solescape Pte Ltd 2021 2022 2021 2022 21.15 times 27.4 times 40.6 times 41.7 times REQUIRED (a) Discuss the rate of inventory turnover for both businesses for both years. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. …………………………………………………………………………………………………... [4] (b) Suggest one way in which Glenys Shoes Pte Ltd could improve its rate of inventory turnover. ………………………………………………………………………………………………………. ………………………………………………………………………………………………….. [1] [Total: 5]

4 2 Mitra Runway Pte Ltd is a clothing retailer. The following is an extract from the company’s statement of financial position as at 30 June 2021. $ Share capital, 40 000 ordinary shares 60 000 Retained earnings 35 000 REQUIRED (a) State the meaning of: (i) Retained earnings ………………………………………………………………………………………………… …………………………………………………………………………………………..… [1] (ii) Dividends ………………………………………………………………………………………………… …………………………………………………………………………………………….. [1] (b) State three reasons why the shareholders’ equity in a private limited company may be different at the end of the financial year from that at the beginning. 1 ….…………………………………………………………………………………………………. ………………………………………………………………………………………………………. 2 ….…………………………………………………………………………………………………. ………………………………………………………………………………………………………. 3 .……………………………………………………………………………………………………. …………………………………………………………………………………………………… [3]

5 [Turn over On 30 April 20 22, Mitra Runway Pte Ltd issued a further 10 000 shares at $0.30 each. Mitra Runway Pte Ltd made a profit for the year ended 30 June 2022 of $15 000 and declared a dividend of $0.02 per share. REQUIRED (d) Prepare the journal entry to record the issue of shares on 30 April 2022. A narration is required. …………………………………………………………………………………………………........ ………………………………………………………………………………………………………. ………………………………………………………………………………………………………. …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ ………………………………………………………………………………………………….... [3] (e) Prepare the retained earnings account for the year ended 30 June 2022. Bring down the balance on 1 July 2022. …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………........ …………………………………………………………………………………………………… [4] [Total: 12]

6 3 The financial year of Joy Unity’s business ends on 31 May. The business maintains an allowance for impairment of trade receivables at 15% of the trade receivables balance at the end of every financial year. The following information relates to trade receivables for the years ended 31 May 2020, 2021 and 2022. 2020 2021 2022 $ $ $ Trade receivables 607 500 542 500 690 000 There were no uncollectible debts or trade receivables reported bankrupt during the financial year ended 31 May 2020. On 1 June 2020, Lin Jie Watsons , which owed $ 30 000, ceased business. A cheque of $29 625 was received and the remaining amount was written off. On 30 April 2022, Charlotte Guardian confirmed that it was ending its business and could only pay Joy Unity 30 cents for every dollar of its outstanding debt of $ 37 500. On the same day, a cheque was received from Charlotte Guardian. REQUIRED (a) Define the following terms: (i) Trade receivables ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ……..…………………………………………………………………………………....... [2] (ii) Allowance for impairment of trade receivables ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………..………………………………………………………………………………....... [2] (b) Name one accounting theor y applied when recording an impa irment loss on trade receivables. ……………………………………………………………………………………………………..... …………………………………………………………………………………………………… [1]

7 [Turn over (c) Prepare the journal entries to record the transaction on 30 April 2022. Narrations are not required. ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... …………………………………………………………………………………………………… [3] (d) Prepare the journal entries to adjust the balance for allowance for impairment of trade receivables for the years ended 31 May 2021 and 2022. ……………………………………………………………………………………………………..... ……………………………………………………………………………………………………..... ………………………………………………………………