4E Damai PRELIMS 2022 P1 - Solutions

Secondary 4 Express Preliminary Examinations 2022 – Mark Scheme and Solutions for Paper 1 Answer all questions 1 Osmond runs a textile business with a financial year end of 31 March. He has provided the following information about the business’ motor vehicles. Motor vehicles account Date Particulars Debit Credit Balance 2019 $ $ $ Apr 1 Balance b/d 80 000 Dr 2020 Jan 1 Trade payable – Ozark Motors 45 000 125 000 Dr 2020 Apr 1 Balance b/d 125 000 Dr Accumulated depreciation – motor vehicles account Date Particulars Debit Credit Balance 2019 $ $ $ Apr 1 Balance b/d 16 000 Cr 2020 Mar 31 Depreciation of motor vehicles ? REQUIRED (a) Interpret the entry on 1 January 2020 in the motor vehicles account. On 1 January 2020, the business bought motor vehicles $45,000 on credit from trade payable Ozark Motors. [1] [1] (b) Calculate the depreciation expense for the year ended 31 March 2020 given that the business provides depreciation at a rate of 20% per annum on net book value. Depreciation for old motor vehicles = ($80,000-$16000) x 20% = $12,800 [0.5] Depreciation for new motor vehicles = $45,000 x 20% [0.5] x 3/12 [1] = $2,250 Depreciation expense for 31 March 2020 = $12,800 + $2,250 = $15,050 [1/OF]

2 [3] On 18 March 2020, Osmond purchased cutting equipment from Cutty Trading and incurred the following amounts. $ Payment by Cost of cutting equipment 23 000 On credit Delivery fee to transport cutting equipment 300 Cheque Installation of cutting equipment 200 Cheque Electricity to run cutting equipment 700 Bank transfer Replacement of faulty screws on the cutting equipment 20 Cash REQUIRED (c) Prepare the equipment account for the month of March 2020 to record the purchase on 18 March 2020. This is the business’ first equipment purchase. Equipment account Date Particulars Debit $ Credit $ Balance $ 2020 Mar 18 Trade payable – Cutty Trading 23,000 [1] 23,000 Dr Cash at bank ($300+$200) 500 [1] 23,500 Dr Apr 1 Balance b/d [1] 23,500 Dr $20 is insignificant to decision -making hence, revenue expenditure [3] [Total: 7]

3 2 Nadine sells shoes. She has provided the following information relating to her business for the year ended 31 March 2022. $ Premises 132 300 Trade payables 11 000 Inventory 23 450 Capital 144 610 Sales revenue 46 000 Loan to employee 8 000 Cost of sales 7 300 Cash at bank (overdraft) 5 000 Drawings 360 General expenses 2 200 Trade receivables ? REQUIRED (a) Use the expanded accounting equation to calculate trade receivables. Assets = Liabilities+Capital+(Income-Expenses)-Drawings [1] $163,750+Trade receivables = $16,000+$144,610+36,500-$360 [0.5] Trade receivables = $196,750-$163,750 = $33,000 [1] Assets = Premises+Inventory+Loan to employee+Trade receivables = $132,300+$23,450+$8,000+Trad