BPGHS POA 7087 Paper 2 (Question Paper)

Name of Candidate: _____________________ ( ) Class: ______ Calculator Model: This paper consists of 8 printed pages BUKIT PANJANG GOVERNMENT HIGH SCHOOL PRELIMINARY EXAMINATION 2022 SECONDARY 5 GCE 'O' LEVEL SYLLABUS PRINCIPLES OF ACCOUNTS Paper 2 7087 / 02 Date: 25 August, 2022 Duration: 2h Time: 0750 – 0950 h READ THESE INSTRUCTIONS FIRST Answer all questions. Write your answers on the writing paper provided. Start each question on a fresh sheet of writing paper. The use of an approved calculator is allowed. 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. Setter: Mr Alex Yong [Turn over] 1 The following balances were extracted from the books of Hanz Pte Limited on 31 July 2022. Additional Materials: NONE

2 Debit Credit $ $ Issued share capital, 10 000 ordinary shares 10 000 Retained earnings, 1 August 2021 34 520 Bank loan 12 000 Motor vehicles at cost 198 000 Fixtures and fittings at cost 4 000 Accumulated depreciation: Motor vehicles 11 200 Fixtures and fittings 2 000 Sales revenue 358 000 Sales returns 15 500 Cost of sales 32 920 Inventory 62 350 Trade receivables 20 000 Trade payables 12 400 Wages and salaries 46 920 Advertising 8 889 General expenses 13 500 Commission income 250 Allowance for impairment of trade receivables 2 800 Discount allowed 3 030 Discount received 739 Cash at bank 38 800 443 909 443 909 Additional information 1 The company declared a dividend of $0.21 per share. The dividend will be paid on 1 November 2022. 2 Motor vehicles are depreciated at 25% per annum on net book value. 3 Fixtures and fittings are depreciated at 10% using the straight -line method. 4 The net realizable value of inventory as at 31 July 2022 is $62 000. 5 A credit customer who owed $1 800 was declared bankrupt and the amount has yet to be written off.

3 6 The allowance for impairment of trade receivables is to be maintained at 4% of trade receivables. 7 Advertising expenses, $889, were owing. 8 Wages and salaries was paid for 15 months ending on 31 October 2022. 9 Commission income, $150, had been received in advance. REQUIRED (a) Prepare the statement of financial performance for the year ended 31 July 2022. [10] (b) Prepare the statement of financial position as at 31 July 2022. [10] [Total: 20]

4 2 On 1 July 2019, Lesla Holdings provided the following balance. $ Allowance for impairment of trade receivables 8 850 Lesla Holdings review its list of trade receivables at the end of every financial year and estimates that 9% of its trade receivables is likely to be uncollectible. The trade receivables for the following two years are as shown below: 30 June 2020 30 June 2021 Trade receivables $76 000 $102 000 On 6 May 2020, Ali Mama Services, a credit customer who owed Lesla Holdings $450 was declared bankrupt. Lesla Holdings wrote off the outstanding amount. On 20 December 2020, Lozada Trading, a credit customer who owed Lesla Holdings $10 600, ceased its business operation. Lozada Trading was able to pay $0.35 for every dollar owed to Lesla Holdings. On the same day, Lesla Holdings received a cheque from Lozada Trading and wrote off the remaining amount. REQUIRED (a) Prepare the journal entries for the following transactions. Narrations are not required. (i) 6 May 2020 [2] (ii) 20 December 2020 [3] (b) Prepare the extract of the statement of financial position as at 30 June 2021, showing only the current assets portion. [2] (c) State the valuation method for trade receivables in the statement of financial position. [1] In the following year, the following ledger account was extracted from the books of Lesla Holdings. Trade receivables – MediaCrop Ltd Date Particular Debit Credit Balance 2021 $ $ $ Jul 1 Balance b/d 9 600 Dr Aug 19 Service fee revenue 1 000 10 600 Dr Nov 11 Cash at bank 1 950 8 650 Dr Nov 11 Discount allowed 50 8 600 Dr

5 2022 Feb 10 Allowances for impairment of trade receivables 8 600 - REQUIRED (d) Describe the transaction that took place on the following dates: (i) 1 July 2021 [1] (ii) 19 August 2021 [1] (iii) 11 November 2021 [2] (iv) 10 February 2022 [1] [Total: 13]

6 3 The following information relates to GiveTea Trading as at 30 April 2020, 2021 and 2022. 2020 2021 2022 $ $ $ Non-current assets, net book value 77 800 74 500 73 200 Inventory 18 200 24 680 48 920 Net trade receivables 10 450 18 900 30 150 Cash at bank 15 000 8 900 - Prepaid rent expense - 3 000 - Current portion of long-term borrowings - - 3 300 Trade payables 12 100 26 780 28 960 Bank overdraft - - 2 200 Rent expense payable - - 12 000 Working capital 31 550 28 700 32 610 Current ratio 3.61 2.07 1.70 Quick ratio ? ? ? REQUIRED (a) Calculate the quick ratio for each of the three years ended 30 April 2020, 2021, and 2022. Show your answers to two decimal places. [3] (b) Evaluate the liquidity of GiveTea Trading over the three years ended 30 April 2020, 2021, and 2022. Use the given information and your answers in (a). [6] (c) Recommend two ways that the owner can improve the liquidity of GiveTea Trading. [2] (d) State any one professional ethics that accountants should have. [1] (e) Explain the objectivity theory. [2] [Total: 14]

7 4 Krit decided to set up Sawadee Snacks, a retailer of Thai titbits in Singapore. After preparing the trial balance, the accountant of Sawadee Snacks prepared the financial statements for the year ended 30 September 2021. He discovered the following errors: 1 Credit sales of goods to Bryan worth $2 000 has been omitted from the books. 2 Cheque of $480 paid for insurance expense has been debited to the general expense account. REQUIRED (a) Prepare the journal entries to correct each error above. Narrations are not required. [4] (b) State the effect of the following errors on profit for the year. (i) Error 1 [1] (ii) Error 2 [1]

8 Krit has been in the retail industry for more than 15 years and is familiar with the operations of a retail store. He is intending to set up another retail shop, Aroy Aroy Mak which will be selling handmade Thai desserts such as mango sticky rice. He was advised that he can choose between a sole proprietorship or a limited liability partnership. However, he was unsure what form of business to set up. The following are points that were brought up: ● The estimate capital required to set up Aroy Aroy Mak is approximately $350 000. Krit has some savings that he had accumulated over the years but is unsure if it is enough to cover up the start-up cost of this new business. ● Krit has a wealth of experience in running Sawadee Snacks by himself, but is not well-versed in HR and administrative functions. Luckily, he has few good friends who are well-trained in these areas and are keen to join him if needed. ● Krit was concerned about the management of the new business venture as his wife recently just gave birth to their second child. Krit also mentioned that he would like to spend more time with his newborn child. ● Krit owns a private property and would like to protect it against any losses. ● If the business is succ