St Gabriels Sec 4E P2 with ANS

1 [Turn over SGSS/POAP2/4E5N/Prelim/2022 St. Gabriel’s Secondary School 2022 ‘O’ Preliminary Examination Subject : Principles of Accounts Paper : 7087/02 Level/Stream : Sec 4 Express / 5 Normal Academic Duration : 2 hours Date : 24 August 2022 Setters : Mr Tuang Fook Yong / Mdm Ruby Cheah No Additional Materials are required. _______________________________________________________________________ This question paper consists of 7 printed pages including this cover page. Name: …………………………………………( ) Class: Sec ……………….. READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. 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.

2 [Turn over SGSS/POAP2/4E5N/Prelim/2022 Answer all questions. 1 The following balances were extracted from the books of JY Pte Ltd, on 30 June 2022. $ Issued share capital, (400 000 ordinary shares on 1 July 2021) 778 000 Retained earnings 62 300 Property 900 000 Cash at bank 23 000 Cr Office equipment at cost 90 000 Motor vehicles at cost 180 000 Accumulated depreciation on 1 July 2021 - Office equipment 20 000 - Motor vehicles 24 000 Wages & salaries 70 800 Allowance for impairment loss of trade receivables 3 900 Sales revenue 322 900 Cost of sales 120 200 Rent received 88 000 Motor expenses 7 400 Sales returns 4 300 Insurance 28 000 Discount received 1 400 Inventory 28 600 Trade receivables 29 500 Trade payables 18 800 Interest on mortgage loan 3 500 4% Mortgage loan (repayable in 2032) 120 000

3 [Turn over SGSS/POAP2/4E5N/Prelim/2022 Additional information 1 Included in the insurance of $28 000 was a payment of $12 000 for a one year fire insurance policy commencing on 1 October 2021. 2 JY Pte Ltd sublets part of its property to a tenant for $8 000 a month since 2018. 3 A credit customer who owed $3 500, paid 40 cents for every dollar of debts owed on 30 April 2022. No record was made in the books. The remaining amount was to be written off as irrecoverable on 30 June 2022. 4 It is the business policy to maintain its allowance for impairment of trade receivable at 5% of trade receivables. 5 Inventory as at 30 June 2022 has a net realisable value of $26 500. 6 Cash of $5 000 withdrawn from the business bank account for office use was omitted from the books. 7 No record was made for dividend declared on 30 June 2022 at 5 cents per share. The dividends are to be paid on 31 July 2022. 8 Mortgage loan of $12 000 to be paid on 31 August 2022 and interest on mortgage loan was not fully paid in the year. 9 Depreciation is to be provided on non-current assets based on the information below: Non-current asset Depreciation

4 [Turn over SGSS/POAP2/4E5N/Prelim/2022 - Office equipment 20% per annum on cost, using the straight line method. - Motor vehicles 10% per annum on book value, using the reducing balance method. - Property Leasehold life of 60 years. REQUIRED (a) Prepare JY Pte Ltd’s statement of financial performance for the year ended 30 June 2022. [10] (b) Prepare JY Pte Ltd’s statement of financial position as at 30 June 2022. [10] [Total: 20] 2 Kaifung runs a retail business with a financial year end of 31 July. The following ledger accounts have been prepared as at 31 July 2021. Motor vehicles account Date Particulars Debit $ Credit $ Balance $ 2020 Aug 1 Balance 80 000 Dr Dec 1 G9 Motors 170 000 250 000 Dr 2021 Aug 1 Balance 250 000 Dr Accumulated Depreciation of Motor vehicles account Date Particulars Debit $ Credit $ Balance $ 2020

5 [Turn over SGSS/POAP2/4E5N/Prelim/2022 Aug 1 Balance 8 000 Cr July 31 Depreciation of motor vehicles 24 200 32 200 Cr 2021 Aug 1 Balance 32 200 Cr REQUIRED (a) Interpret each of the entries below. (i) 1 December 2020 in Motor vehicles account. [1] (ii) 31 July 2020 in Accumulated depreciation of Motor vehicles account. [1] On 30 May 2022, an old vehicle bought on 1 September 2019 for $80 000 was sold. A cheque of $69 800 was received on the same day. It is the business policy to provide depreciation at 10% per annum on net book value. A full year’s depreciation is charged in the year of purchase but no depreciation is charged in the year of sales. REQUIRED (b) Calculate the gain or loss on sale of the old vehicle on 30 May 2022. Show working clearly. [4] (c) Prepare journal entries to record the sale of the old vehicle on 30 May 2022. Narrative is not required. [4]

6 [Turn over SGSS/POAP2/4E5N/Prelim/2022 [Total: 10] 3 The following information relates to Sanchit’s business at 31 August 2021 and 2022. 2021 2022 $ $ Inventory 25 650 40 350 Expenses payable - 6 500 Cash at bank 5 000 - Bank overdraft - 1 000 Trade receivables 25 000 30 000 Trade payable 22 300 27 000 Motor vehicle 90 000 90 000 Bank loan - 100 000 Income receivables - 2 000 Current portion of loan 20 000 Current ratio 2.50 : 1 ?

7 [Turn over SGSS/POAP2/4E5N/Prelim/2022 Quick ratio 1.35 : 1 ? REQUIRED (a) Calculate the following for the year ended 31 August 2022. (i) Current ratio [2] (ii) Quick ratio [2] Sanchit’s business policies were as follows: - He sells goods on a credit basis, offering cash refunds for sales return. - He pays suppliers promptly within 7 days of receiving an invoice to enjoy cash discount. - He usually orders one year in advance to meet possible demand and avoid price hikes. - He orders in bulk to enjoy trade discount. REQUIRED (b) Comment on the change in liquidity from the year ended 31 August 2021 to the year ended 31 August 2022, using information given as well as answers from part (a). [6] (c) Recommend two actions Sanchit could take to improve the liquidity of the business. Give reasons to support your answers. [4] [Total: 14] 4 Lao Ban, age 40, has been an accountant for 10 years and was recently retrenched from food delivery business ShoppinEat. Lao Ban has been very interested in food and beverage business. His savings as well as the compensation that he has gotten from his retrenchment are more than