Greenridge 2024 4N P2 Answers 1

2024 4N PRELIMS P2 Answers 1(a) Jazzy Statement of financial performance for the year ended 31 August 2023 $ $ Service fee revenue (-2000) 101 000 1 Other income Discount received 800 1 101 800 1 Less: other expenses Discount allowed 1 900 1 Rent expense (-1000) 16 000 1 Wages and salaries 14 500 Reversal of impairment loss on trade receivables (108) 1 (7%X5600)-500 Depreciation of office equipment 2 000 1 10%X20000 Depreciation of motor vehicles 12 750 47 042 1 15%X(100000-15000) Profit for the year 54 758

1(b) Jazzy Statement of financial position at at 31 August 2023 Assets Cost Accumulated depreciation Net book value Non-current assets $ $ $ Office equipment 20 000 6 000 14 000 1 Motor vehicles 100 000 27 750 72 250 1 86 250 Current assets Trade receivables 5 600 Less: allowance for impairment of trade receivables 392[1] 5 208 1 Prepaid rent expense 1 000 1 Cash at bank 5 800 Cash in hand 1 300 13 308 Total assets 99 558 1 OF Equity and Liabilities Owner's equity Capital (25 7000 + 54 758 [1 OF] - 2 900 [1]) 77 558 Non-current liabilities Long-term borrowings (-5000) 15 000 1 Current liabilities Current portion of long-term borrowings 5 000 1 Service fee revenue received in advance 2 000 7 000 1 Total equity and liabilities 99 558 1 OF

2(a)(i) Refers to the expenses incurred but not paid yet. [1] 2(a)(i) Amount received for income that has not been earned yet. [1] 2(b) 4200 [1] +500 [1] - 300 [1] = $4 400[1] 2(c) Overstated [1] by $300 [1] 2(d)(i) Date 2023 Particulars Debit $ Credit $ Jul 1 Salaries expense payable [1] 1 400 Salaries expense [1] 1 400 2(d)(ii) Date 2024 Particulars Debit $ Credit $ Jun 30 Salaries expense [1] 1 800 Salaries expense payable [1] 1 800 2(e) Extract of statement of financial position as at 30 June 2024 Current liabilities $ Salaries expense payable [1] 1 800 Commission income received in advance [1] 300

3(a) Identify errors in cash at bank account Identify errors on bank statement Help discover fraud Ensure up to date information about cash at bank balance [any 2] 3(b) Segregation of duties, Custody of cash. Authorisation [any 2] 3(c) Cash at bank Date Particulars Debit $ Credit $ Balance $ 2024 Mar-31 Balance b/d [1] 5 824 Dr 1 31 Insurance expense[1] 2 500 3 324 Dr 1 31 Rose [1] 9 00 4 224 Dr 1 31 Orchid Garden [1] 2 300 1 924 Dr 1 Apr-01 Balance b/d [1] 1 924 Dr 1 3(d) Bank reconciliation statement as at 31 March 2024 $ $ Balance as per bank statement (776) 1 Add: deposits in transit Sales revenue 1 800 1 National Park 1 700 3 500 1 Less: cheques not yet presented Inventory 800 1 Updated balance as per cash at bank 1 924 1 3(e) Decrease [1] by $2 500 [1]

4(a) Decision Jia should agree to make on credit to Ben [1] Reason 1 The business has been operating for the 8 years.[1] Explanation 1 It is an established business and would most like continue to generate sales. Ben is more likely to have sufficient funds to pay Jia on time. [1] Reason 2 Ben is able to provide references. [1] Explanation 2 This shows that Ben is a reliable customer and is unlikely to default in payment. [1] Decision Jia should not agree to make sales on credit to Ben [1] Reason 1 Ben’s business has been generating lower sales in the past year. [1] Explanation 1 If this trend continues, Ben may have difficulties paying the amount owed to Jia on time. [1] Reason 2 Ben pays his suppliers 7 days later compared to Jia’s other customers. [1] Explanation 2 As Jia is receiving payment later than usual, it may have a negative impact on Jia’s cash flow and affect its ability to pay its urgent expenses. [1]

4(b)(i) Date 2024 Particulars Debit $ Credit $ Jul 6 Trade receivables – Jerry [1] 400 Cash at bank [1] 380 Discount allowed [1] 20 4(b)(ii) Date 2024 Particulars Debit $ Credit $ Jul 31 Allowance for impairment of trade receivables [1] 400 Trade receivables – Jerry [1] 400