BPGHS POA 7087 Paper 1 (Question Paper)

Name of Candidate: _____________________ ( ) Class: ______ Calculator Model: This paper consists of 10 printed pages BUKIT PANJANG GOVERNMENT HIGH SCHOOL PRELIMINARY EXAMINATION 2022 SECONDARY 5 GCE 'O' LEVEL SYLLABUS PRINCIPLES OF ACCOUNTS Paper 1 7087 / 01 Date: 29 August, 2022 Duration: 1h Time: 0750 – 0850 h READ THESE INSTRUCTIONS FIRST Write your name, class and index number 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 staples, paper clips, glue or correction fluid. The use of an approved calculator is approved. 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. Setter: Mr Alex Yong [Turn over] Additional Materials: NONE

2 1 The accountant of Krusty Ltd provided the following cash at bank account of the business for the month of July 2022. Cash at bank account Date Particular Cheque Number Debit Credit Balance 2022 $ $ $ Jul 1 Balance b/d 3 100 Dr 5 Rui Rui Supplies 22026 857 2 243 Dr 8 Sales revenue 250 2 493 Dr 10 Dong Ding Warehouse 22027 500 1 993 Dr 19 Coriander Producers 22028 1 000 993 Dr 21 Sang Song Retail 375 1 368 Dr 24 Patrick Transport 22029 825 543 Dr 27 Sales revenue 300 843 Dr 30 Ah Meng Equipment 900 1 743 Dr 31 Xiao Ming Trading 22030 3 150 1 407 Cr Aug 1 Balance b/d 1 407 Cr The following bank statement for July 2022 received is as follows: Bank statement Date Particular Withdrawal Deposit Balance 2022 $ $ $ Jul 1 Balance b/d 3 200 Cr 1 Direct deposit – Kai 1 075 4 275 Cr 4 Cheque no. 22025 100 4 175 Cr 8 Cheque deposit 250 4 425 Cr 10 Cheque no. 22026 875 3 550 Cr 17 Cheque no. 22027 500 3 050 Cr 19 Standing order – Rent 2 365 685 Cr 25 Cheque no. 22028 1 000 315 Dr 27 Cheque deposit 375 60 Cr 28 Cheque deposit 300 360 Cr 31 Bank charges 20 340 Cr Additional information: The manager of Krusty Ltd, Gabriel, discovered that the accountant made an error in recording the transaction on 5 July 2022. REQUIRED (a) Explain the purpose of bank reconciliation.

3 ………………………………………………………………………………………… …………………………………………………………………………………….. [1] (b) Prepare the adjusted cash at bank account for July 2022. Cash at bank account ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………….. [5]

4 (c) Prepare the bank reconciliation statement as at 31 July 2022. Bank reconciliation statement as at 31 July 2022 ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………….. [5] (d) Gabriel have a habit of depositing the sales proceeds at the end of every month. One day, the shop was robbed and the cash register was emptied by the burglar. After a thorough investigation, the police found out that the cash register was not locked at all as there was no attempt by the burglar to force open it. REQUIRED (i) Explain two ways Gabriel can enhance the custody of cash in the business in the future. …………………………………………………………………………………... …………………………………………………………………………………... …………………………………………………………………………………... …………………………………………………………………………………... ………………………………………………………………………………. [2]

5 The accountant of Krusty Ltd recently found out that Gabriel also has poor internal control measures in place. It was discovered that Gabriel has been handling all the cash and doing the recording duties by himself. Moreover, Gabriel is also the only one reviewing and approving all the purchases that were made with their supplier. There was also no proper documentation in place upon the receipt of the purchase of the inventory. REQUIRED (ii) Develop two ways Gabriel can do to enhance the internal control of his business. 1. ……………………………………………………………………………….. …………………………………………………………………………………... …………………………………………………………………………………... …………………………………………………………………………………... 2. ……………………………………………………………………………….. …………………………………………………………………………………... …………………………………………………………………………………... …………………………………………………………………………………... [2] [Total: 15]

6 2 Xia Hai Ltd’s financial year end is on 31 March. The following balances were extracted from the books of Xia Hai Ltd. 1 April 2021 31 March 2022 $ $ Prepaid rent expense 1 980 Rent expense payable 1 210 Commission income receivable 2 280 1 870 Additional information: On 1 September 2021, the owner of Xia Hai Ltd paid $8 900 rent by cheque and deposited $6 800 commission income into the business bank account. REQUIRED (a) Using an accounting theory, explain why it is necessary for Xia Hai Ltd to make adjustments for prepaid rent expense. Name: ..……………………………………………………………………………… Explanation: ………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………..… [2] (b) Calculate the rent expense for the year ended 31 March 2022. ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………….. [3] (c) Calculate the commission income for the year ended 31 March 2022. ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………….. [3] [Total: 8]

7 3 Hot Heels Boutique buys and sells fashionable heels for the ladies. Hot Heels Boutique’s financial year ends on 31 December. On 1 December 2021, the business had inventory valued at $45 000. On 23 December 2021, a fire broke out in the business’ warehouse. After the fire was put out, it was found out that $19 000 of the business inventory was destroyed. On 27 December 2021, an insurance claim of $11 000 was agreed and the amount was to be paid in December 2021. REQUIRED (a) Name the accounting theory which is applied when a business accounts for the loss of inventory. …………………………………………………………………………………..… [1] (b) Prepare the journal entries to account for the insurance claim that took place on 27 December 2021. Narration is not required. Journal ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………………………………………..… [2] (c) Calculate the impairment loss on inventory that will be reflected in the statement of financial performance for the year ended 31 December 2021. ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………………………