Yuan Ching 2024 Prelim P1 and P2

1 N’Level Self-Revision Set 05 – Yuan Ching N’Level Prelim 2024 -PAPER 1- Answer all questions. 1 Aces Trading incurs utilities expense as part of its operations. As at 1 May 2023 As at 30 April 2024 $ $ Utilities expense payable 260 170 The business had paid a total of $2 780 for utilities expense during the year. REQUIRED (a) Calculate the utilities expense for the year ended 30 April 2024. [3] (b) Prepare the journal entry required to record the year-end adjustment to utilities expense on 30 April 2024. A narration is required. Journal [3] (c) State the effect on profit for the year if the utilities expense payable on 30 April 2024 was not adjusted. [2]

2 The following ledger account is extracted from Aces Trading’s books: Trade receivable, David Date Particulars Debit Credit Balance 2024 $ $ $ May 1 Balance b/d 4 830 Dr 15 Cash at bank 4 500 330 Dr 15 Discount allowed 330 0 22 Sales revenue 2 700 2 700 Dr Jun 1 Balance b/d 2 700 Dr REQUIRED (d) Interpret the entries on the following dates: (i) 15 May 2024 [2] (ii) 22 May 2024 [1] On 11 June 2024, David declared bankrupt and Aces Trading decided to write off the amount owing. REQUIRED (e) Prepare the journal entry to write off David’s account on 11 June 2024. A narration is not required. Journal [2] [Total:13]

3 2 Anthony is the new accountant at Sims Trading. He just graduated from university and is hired to replace the previous accountant. The previous accountant was asked to leave because he wrote off the amount owing by a major customer in return for a cash gift from that customer. REQUIRED (a) State and e xplain which principle of professional ethics is violated by the previous accountant’s behaviour. [2] Anthony knows that the financial statements he prepares are important for stakeholders to make informed decisions. REQUIRED (b) Name and explain how another stakeholder, other than the owner, would be interested in the financial statements of the business. [2] (c) State the effect of the following transaction on the accounting equation. Include the account name, direction and amount in your answer. Part (i) is done as an example. Effect of transaction on: Assets Liabilities Equity (i) Sims Trading bought $600 of goods for resale on credit. Inventory + $600 Trade payable + $600 (ii) Sims Trading repaid $10 000 of bank loan with the owner’s personal cheque. [2]

4 Anthony was informed that there were a few errors after he prepared a trial balance for Sims Trading as at 31 May 2024. 1 A cheque of $450 received from credit customer Susan was recorded in credit customer Su Shan’s account. 2 Faulty goods worth $90 returned to credit supplier Beng was debited to Inventory account and credited to Trade payable, Beng. 3 A cheque payment of $1 050 for advertising expense was recorded as $1 500. REQUIRED (d) State the two purposes of preparing a trial balance. 1 2 [2] (e) Explain the limitation of a trial balance to detect errors. [1] (f) State the journal entries to correct errors 1 and 2. Narrations are not required. Journal [4] (g) State the effect of correcting Error 3 on profit for the year. [2] [Total: 15]

5 3 Furry Babies is a new business, selling pet food and accessories as well as providing pets grooming services. When getting ready for business, Furry Babies incurred several capital and revenue expenditures. REQUIRED (a) State two differences between capital and revenue expenditures. 1 2 [4] (b) Tick in the corresponding column if the item is capital expenditure or revenue expenditure. Part (i) has been done as an example. Capital expenditure Revenue expenditure (i) The business paid $20 000 by cheque to rent the shophouse. (ii) The business paid $800 to install ramps at the entrance and in the pets’ shower area. (iii) The business bought $3 500 of grooming equipment on credit. (iv) The business bought $400 of pet shampoo by cheque for use in the business. [3] (c) State the source documents used for the following transactions. Source document (i) The business bought $3 500 of grooming equipment on credit. (ii) The business bought $400 of pet shampoo by cheque for use in the business. [2]

6 Furry Babies installed a camera in the pets’ resting area for owners to see if their pets are ready for collection after the grooming services are completed. The camera cost $90 and the accountant recorded this as an expense. REQUIRED (d) Explain, with the use of an accounting theory, why the accountant recorded the purchase of the camera as an expense. [3] [Total:12] End of paper

7 -PAPER 2- Data for Question 1 Home Elves provides home cleaning and maintenance services for its clients. The following trial balance was extracted from Home Elves’ books for the year ended 30 June 2024. Dr Cr $ $ Service fees revenue 83 140 Cleaning supplies expense 21 415 Salaries and wages 49 500 Trade receivables 8 600 Trade payables 2 580 Allowance for impairment of trade receivables 310 Cash at bank 6 807 Long-term borrowings 12 000 Interest expense 480 Discount received 704 Capital (1 July 2023) 19 234 Drawings 4 306 Cleaning equipment at cost 25 400 Accumulated depreciation of cleaning equipment 2 540 Office equipment at cost 4 000 Additional information: 1 $400 of cleaning supplies expense was paid in advance. 2 $3 470 of service fee revenue was collected in advance. 3 Cleaning equipment is to be depreciated at 10% per annum using the reducing balance method. 4 Office equipment has a scrap value of $300 and is depreciated over 5 years of useful life. 5 The business estimated that 8% of the trade receivables might not be collectible.

8 Answer all questions. 1 Refer to the Insert for data for Question 1. REQUIRED (a) Prepare the statement of financial performance for the year ended 30 June 2024. Home Elves Statement of financial performance for the year ended 30 June 2024 [10]

9 (b) Prepare the statement of financial position as at 30 June 2024. Home Elves Statement of financial position as at 30 June 2024 [10] [Total: 20]

10 2 Cool Comforts is a trader of Dri-fit tees. The business prepared the following cash at bank ledger account for the month of April 2024. Cash at bank Date Particulars Cheque No. Debit Credit Balance 2024 $ $ $ Apr 1 Balance b/d 6 365 Dr 5 Simons 421068 807 5 558 Dr 9 Repairs expense 421069 95 5 463 Dr 14 Mei 540 6 003 Dr 18 Cash in hand 185 6 188 Dr 26 Chee 926 7 114 Dr 28 Ravi 421070 2 050 5 064 Dr May 1 Balance b/d 5 064 Dr The following bank statement was received on 2 May 2024. Bank statement for April 2024 Date Withdrawals Deposits Balance 2024 $ $ $ Apr 1 Balance b/f 6 520 Cr 3 Cheque 421065 155 6 365 Cr 6 Cheque 421068 807 5 558 Cr 8 Credit transfer - Winston 770 6 328 Cr 12 Cheque 421069 95 6 233 Cr 15 Cheque deposit 540 6 773 Cr 17 Cheque returned unpaid 540 6 233 Cr 18 Cash deposit 185 6 418 Cr 24 Direct debit - Utilities 164 6 254 Cr REQUIRED (a) State one internal control other than bank reconciliation that could be in place to safeguard a business’ cash. [1] (b) State one purpose of internal controls. [1] (c) Suggest one reason for a cheque to be returned unpaid. [1]