2022 DSS Prelims 4E P2

This document consists of 5 printed pages. Name: Index No. Class: DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL DUNEARN SECONDARY SCHOOL Dunearn Secondary School Preliminary Examination 2022 Principles of Accounts Secondary 4 Express Paper 2 7087/2 13 Sep 2022 815 hr to 1015 hr 2 hours INSTRUCTIONS TO CANDIDATES Do not open this booklet until you are told to do so. Write your name, register number and class on the question paper. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. You may use a calculator. Please show all workings clearly. All calculations must be shown adjacent to the answer. The total number of marks is given in brackets [ ] at the end of each question. Answer all questions. For Examiner’s use 1 (20) 2 (12) 3 (12) 4 (16) TOTAL (60) Setter: Ms Cindy Goh

2 Answer all questions. 1 The following balances were extracted from the books of Dunearn Gems Pte Ltd on 30 June 2021. $ Sales revenue 388 000 Cost of sales 138 500 Sales returns 16 700 Wages and salaries 85 200 Rent 140 000 General expenses 9 200 Advertising expenses 40 700 Equipment at cost 280 000 Motor vehicles at cost 347 000 Accumulated depreciation Equipment 123 000 Motor vehicles 11 800 Trade receivables 36 300 Trade payables 224 900 Allowance for impairment of trade receivables 800 Cash at bank 28 600 Cr Inventory 25 900 Share capital, 200 000 ordinary shares 200 000 Dividends 4 000 Retained earnings 1 July 2020 26 400 5% Bank loan 120 000 Additional information: 1 General expenses of $200 was prepaid. 2 The rent expense covers the period 1 July 2020 to 31 August 2021. 3 New equipment, cost $3 000, had been posted in error to advertising expenses. 4 Equipment is to be depreciated at 10% per annum using the straight-line method. 5 Motor vehicles are to be depreciated at 20% per annum using the reducing-balance method. 6 Mars went bankrupt and his debt of $300 was to be written off. All others debts were deemed to be collectible as at the year end. 7 The interest on bank loan was outstanding. REQUIRED (a) Prepare the statement of financial performance for the year ended 30 June 2021. [8] (b) Prepare the statement of financial position at 30 June 2021. [12] [Total: 20]

3 2 Javier is thinking of extending credit terms of 30 days to 35 days to his customers to increase his business. Below are some of the details of his customers: Tenny International Raja Singapore Average Trade Receivable Balance $ 50 000 $ 10 000 Repayment history Collection days: 40 4 times late payment Collection days: 30 2 times late payment Reputation of business Big corporation with global presence A local enterprise with strong presence in Singapore Other factors Has strong research and development team Has great customer loyalty programme REQUIRED (a) If you were Javier, which customer would you extend credit to? Explain your reasons. [7] (b) Explain the similarities and differences between drawings and dividends. [3] (c) Explain accounting theory used when there is a provision for allowance for impairment of trade receivable. [2] [Total: 12]

4 3 The following information was extracted from 4 Emerald on 31 March 2022. $ Cost of Sales 28 000 Profit for the period Mark-up on cost 5 200 25% Some of its financial ratios for the years ended 2020 and 2021 are as follows: Year ended 31 March 2020 2021 Gross profit margin 30% 20% Profit margin 10% 28% Additional Information (i) 4 Emerald maintained its mark-up from 2021 and 2022. (ii) Equity section changes are as follows: 31 March 2020 31 March 2021 31 March 2022 $ $ $ Equity 10 000 15 000 30 000 REQUIRED (a) Calculate the following ratios for 4 Emerald for the year ended 31 March 2022. (round off to 2 decimal points if required) (i) Net Sales Revenue (ii) Profit Margin (iii) Return on equity [5] (b) Compare and comment on the profitability of 4 Emerald from 2020 to 2022. [7] [Total:12]

5 End of Paper 4 Zhen Dong is a wholesaler who buys and sells inventory on credit. On 1 March 2022, there was opening inventory of 10 000 boxes costing $28 000. During the year, the following transactions took place: 2022 Mar 2 Bought 10 000 boxes from Max with list price of $30 000. A trade discount of 10% was given. Mar 3 Sold 10 000 boxes to Faye with list price of $50 000. A trade discount of 15% was given to her. Mar 17 Bought 10 000 boxes from Colin for $22 000. Mar 20 Sold 10 000 boxes to Zul for $60 000. Mar 27 Faye returned half of her purchase on May 3. Mar 30 Returned goods purchased from Colin on Mar 17. REQUIRED (a) Prepare the inventory account for the month ended 31 March 2022. [8] (b) Prepare the trading portion of the statement of financial performance for the month ended 31 March 2022. [5] (c) As at 31 March 2022, after temporary power trip, Zhen Dong realized that 20% of his inventory has gone bad. Explain how would the profit for the period and asset valuation would be affected if Zhen Dong chose not to be any adjustment as at 31 March 2022. [2] (d) State the concept that Zhen Dong is violating when no adjustment is made on the inventory on 31 March 2022. [1] [Total: 16]