4E5N Greendale Prelim POA 2022 P2

Name:_________________________________ ( ) Class:________ This document consists of 7 printed pages. Greendale Secondary School 2022 GREENDALE SECONDARY SCHOOL Preliminary Examination 2022 PRINCIPLES OF ACCOUNTS 7087/02 SECONDARY 4 EXPRESS/5 NORMAL ACADEMIC 24 Aug 2022 Paper 2 2 hours No additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Examination Marks

Greendale Secondary School 2 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 Question 1 Question 2 Question 3 Question 4 Total 20 14 16 10 60

Greendale Secondary School 3 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 Answer all questions. 1 The following balances were extracted from the books of Bingo Pte Ltd on 30 September 2021. $ Share capital, 100 000 ordinary shares 150 000 Retained earnings, 1 October 2020 18 500 Discount allowed 3 450 10% Bank loan 20 000 Sales revenue 241 330 Sales returns 17 310 Cost of sales 164 930 Cash at bank 12 500 Rent income 300 Rent expense 5 340 Insurance expense 2 800 Furniture 150 000 Motor vehicles at cost 72 000 Accumulated depreciation: Furniture 30 000 Motor vehicles 54 400 Loan interest 850 Inventory 56 000 Trade payables 47 850 Trade receivables 78 400 Allowance for impairment of trade receivables 1 200 Additional information 1 Loan interest for the year on 30 September 2021 was not fully paid up. One quarter of the bank loan is due for repayment on 30 September 2023. 2 Insurance is paid for a 16-month period ending on 31 January 2022. 3 Rent income $1 800 was earned but not received. 4 Furniture is depreciated at 10% per annum using the straight- line method. Motor vehicles are depreciated at 20% per annum using the reducing- balance method. 5 The net realisable value of inventory is $59 000. 6 A review of the trade receivables suggests that 3% of the total trade receivables are likely to be uncollectible. 7 50 000 new ordinary shares were issued and fully paid up at $1.50 per share on 28 February 2021. 8 A dividend of $0.05 for each ordinary share was declared on 25 June 2021 and will be paid on 31 December 2021.

Greendale Secondary School 4 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 REQUIRED (a) Prepare the statement of financial performance for the year ended 30 September 2021. [9] (b) Prepare the statement of financial position as at 30 September 2021. [11] [Total: 20]

Greendale Secondary School 5 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 2 YJR Trading is a business which trades in air purifiers. On 1 July 2021, the business had 30 units of inventory valued at $15 000. The business uses the FIFO method to determine the cost of sales. During the month of July 2021, the following purchases took place. 2021 July 5 40 units at $24 000 15 30 units at $16 500 19 10 units at $7 500 On 23 July 2021, the business sold 70 units of inventory for $50 000 to a customer. REQUIRED (a) State the valuation rule for inventory and the accounting theory applicable. [2] (b) Calculate the gross profit for the month of July 2021. [2] On 31 July 2021, the batch of inventory which was bought on 19 July 2021 could only be sold for $5 000 as a competitor had released a better product for a lower price. REQUIRED (c) Prepare the journal entry to record the adjustment on 31 July 2021. Narrations are not required. [1] (d) State the effect on profit for the year and current assets if the inventory was not adjusted. [2]

Greendale Secondary School 6 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 To keep up with the competitors, YJR Trading is considering buying another brand of inventory for resale. The business has shortlisted two brands of air purifiers, Sondy and Ivac. Sondy Ivac Cost price ● $300 per unit ● $500 per unit Nature of product ● Manufacturer warranty of 2 years. ● Filter must be changed every 6 months. ● Can only filter the air. ● Suction power of 20 kPA. (kPA is the unit of measure to measure suction power of air purifier. The higher the kPA, the more powerful the suction.) ● Manufacturer warranty of 3 years. ● Filter must be changed every 2 months. ● Can automatically scan, filter and sterilise the air accordingly. ● Suction power of 14 kPA. Storage cost ● $3.50 per unit As the packaging is bulky, it requires a large amount of space for the business to store in their warehouse. ● $1.40 per unit. As the packaging is quite slim, units can be stacked up together if kept in the warehouse. REQUIRED (e) Which brand of inventory will you recommend YJR Trading to buy based on the factors in the given scenario? Justify your decision with three reasons. [7] [Total: 14]

Greendale Secondary School 7 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 3 Zenker is a sole trader and the following information was extracted from his books on 30 September 2021. $ Inventory 20 000 Trade receivables 6 000 Prepaid insurance 2 000 Rent received in advance 9 000 Bank overdraft 3 000 Bank loan payable 2025 30 000 REQUIRED (a) Should a bank use the current ratio or quick ratio to decide on whether to approve a loan to a business? Explain. [3] (b) Explain why Return on Equity is the best measure to determine whether or not to invest in a company. [2] (c) Calculate the following for the year ended 30 September 2021. Correct to two decimal places. (i) Current ratio (ii) Quick ratio [2] Zenker also supplied the following information for his previous two years ended 30 September 2019 and 2020. Year ended 30 June 2019 2020 Current ratio 3.00 2.50 Quick ratio 1.30 1.10 REQUIRED (d) Comment on the trend of liquidity of the business over the three years ended 30 September 2019, 2020 and 2021. [6] (e) Suggest two ways to improve the liquidity of his business. [2] Zenker is comparing his efficiency in inventory management with his competitors. REQUIRED (f) Name one efficiency ratio which Zenker could use as comparison. [1] [Total: 16] ]

Greendale Secondary School 8 Secondary 4 EXP/5 NA Preliminary Examination 2022 Principles of Accounts Paper 2 4 SJR Trading is a business dealing in soccer equipment. The business has a financial year end of 30 June 2021. The following information relating to royalty income has been provided. Account balance at 1 July 2020 $ Royalty income received in advance 4 000 During the year ended 30 June 2021 $ Royalty income received 19 200 At 30 June 2021 $ Royalty income receivable 1 500 REQUIRED (a) Explain the accrual basis of accounting concept. [2] (b) Calculate the amount (showing all workings) of royalty income earned for the year ended 30 June 2021. [4]