2022 GMSS POA 4E5N PRELIM PAPER 2

GeylangMethodistSchool(Secondary)PreliminaryExamination2022 CandidateName Class IndexNumber PRINCIPLESOFACCOUNTSPaper2 Additionalmaterials:Writingpapers(4sheets) 7087/02Sec4Express/Sec5Normal(Academic) 2hours READTHESEINSTRUCTIONSFIRSTWriteyourindexnumberandnameinthespacesatthetopofthispage.Writeindarkblueorblackpen.Donotusestaples,paperclips,glueorcorrectionfluid/tape.Theuseofanapprovedcalculatorisallowed. Answerallquestions. Thebusinessesdescribedinthisquestionpaperareentirelyfictitious. Thenumberofmarksisgiveninbrackets[ ] attheendofeachquestionorpartquestion. Thetotalmarksforthispaperis60marks. Thisdocument consistsof 7printedpagesand1blankpage.

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) 1 Thefollowingisalist of balancesfromthebooksof BeezeePteLimitedon30September 2021. $Sharecapital, 100000ordinaryshares 100000Retainedearnings, 1October 2020 15180Equipment, at cost 122000Motor vehicles, at cost 100000Accumulateddepreciation:Equipment 12000Motor vehicles 20000Tradepayables 6340Tradereceivables 29500Allowancefor impairment of tradereceivables 1300Cashat bank 18005%Bankloan 60000Salesrevenue 161250Salesreturns 900Cost of sales 91200Inventory 13500Commissionincome 20200Insuranceexpenses 28000Wagesandsalaries 9370 Additional information 1 Insuranceexpenses, $300, wereprepaid.2 Commission, $900, hadbeenreceivedinadvance.3 Equipment is depreciated at 10%using the straight-linemethod. Theestimatedscrapvalueis$2000.Motor vehiclesaretobedepreciatedat 20%per annumusingthereducing-balancemethod.4 The allowance for impairment of trade receivables is to be maintained at 4% of tradereceivables.5 Thenet realizablevalueof inventoryasat 30September 2021is$12500.6 Interest onthebankloanfor theyear ended30September 2021hadnot yet beenpaid.7 Thecompanydeclaredadividendof $0.02per share. It will bepaidon5October 2021. REQUIRED (a) Preparethestatement of financial performancefor theyear ended30September 2021. [9](b) Prepare the statement of financial position as at 30 September 2021.[11] [Total: 20] 2

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) 2 The following information has been provided for Fashion Retail for the year ended 30 August2021. Net salesrevenue $268500Operatingexpenses $42100 Grossprofit margin 24.00%Returnonequity 40.68% REQUIRED(a) Calculatetotwodecimal places, wherenecessary, for theyear ended30August 2021:i. Gross profit[1]ii. Mark-up on cost[2]iii. Profit margin[1] The following profitability ratios were extracted from the books of Uptown Retail, a closecompetitor of FashionRetail.Grossprofit margin 18.00%Mark-uponcost 22.36%Profit margin 10.39%Returnonequity 53.44% REQUIRED(b) Evaluatetheprofitabilityof FashionRetail andUptownRetail for theyear ended30August2021. Usethegiveninformationandyour answer to(a). [6] Hazmi isconsideringtoinvest ineither FashionRetail or UptownRetail. REQUIRED(c) Recommend which business Hazmi should invest in. Use the given information to supportyour recommendation.[2] (d) Explaintheimportancetoabusinessof itsprofitability. [2][Total: 14] 3

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) 4

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) 3 On 1 October 2018, Daisy Trading bought two identical trucks costing $150 000 each usingcheque.On 30 June2020, thebusinesssoldoneof thetrucksandreceivedachequefor $82000. Onthesameday, thebusinessbought anewvanfor $95000oncredit. The business depreciates its motor vehicles at a rate of 20% per annum using thereducing-balance method. Afull year of depreciationischargedintheyear of purchase, whilenodepreciationischargedintheyear of sale. DaisyTrading’sfinancial year endson31December. REQUIRED(a) Calculatethefollowing:(i) Gain or loss on the sale of non-current asset[2](ii) Depreciation for the year ended 31 December 2020.[2]Showyour workingsclearly. (b) Preparethejournal entrytotransfer thegainor lossonthesaleof non-current asset on31December 2020. Narrationisnot required. [2] (c) State the source document used to record the purchase of a new van on 30 June 2020.[1] (d) Explain one reason why Daisy Trading chooses the reducing-balance method to depreciateits motor vehicles.[1] 5

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) On 1 January 2021, Daisy Trading bought a motorcycle from Japan and paid the followingamountsbycheque: $Purchasepriceof motorcycle 20320Certificateof entitlement (COE)* 9500Registrationfeeof motorcycle 1500Deliverycost of motorcycle 100Petrol cost of motorcycle 200Maintenancecost of motorcycle 500 *Certificateof entitlement referstotheright topurchaseandownavehicle. REQUIRED(e) Distinguish between capital expenditure and revenue expenditure.[2] (f) Calculate the cost of the new motor vehicle.[2] Daisy Trading purchased additional fixture and fittings during the year and classified thepurchaseasrevenueexpenditure. REQUIRED(g) State the effect of the above classification on profit for the year and non-current assets.[2] [Total: 14] 6

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) 4 Tricia is the owner of T Electronics, a business which buys and sells electronic products bychequesonly. ThebusinessrecordsinventoryusingtheFirst-In-First-Out (FIFO) method. On 1 August 2021, T Electronicshad300unitsof electronicproductsvaluedat $128000. Duringthemonthof August, thefollowingtransactionstookplace.PurchasesAug5 200unitsat $86000Aug18 300unitsat $112500Aug26 100unitsat $47800 TElectronicssold500unitsof electronicproductsfor $530000on28August 2021. REQUIRED(a) Calculate the cost of sales for the month of August 2021.[1] (b) Calculate the value of the ending inventory on 30 August 2021.[1] On30August 2021, Triciarealizedthat someelectronicproductshaddefectsandthenetrealizablevalueof theinventorywas$150000. REQUIRED(c) Statethevalueof theendinginventory. [1] (d) Statetheeffect andamount onprofit for theyear andcurrent assetsif theinventorywasnotadjusted. [2] 7

GMS(S)/POA/P2/PRELIM2022/4E/5N(A) Due to the changing preferences of her customers, Tricia is considering to purchase 10 units oftabletstosell toher customers. Shegatheredthefollowinginformation.Model AB Model YZCost price $500per unit $300per unitDeliveryfees $30per 10units $50per 10unitsBatterylife Battery lasts up to 9 hours surfingthewebor watchingvideos. Battery lasts up to 5 hours surfingthewebor watchingvideos.Weight of tablet 641g 350gColoursavailable Black, grey, pink, green, blue BlackandgreyDisplay 13-inchhighdefinition(HD) screen 8.5-inch high definition (HD)screen. Able to adjust screenbrightnesstosuit roomlighting.Other functions Super-fast downloads andhigh-quality streaming. Tabletcomes with both WiFi and cellularfunctions. Tablet comes only with WiFifunctions. Customers’ review “Worksasgoodasmylaptop.I bring it around for my workmeetings and it could last me awholedayat work.” “Great value for money. I like thatit’s smaller in size and convenientfor metobringaround.” Triciaalsodiscoveredthefollowingcustomer preferencesinher research:● Customershavedifferent colour preferences.● Customersprefer atablet whichservesbothworkandleisurepurposes.● Customers with young kids prefer tablets with adjustable brightness levels as it helps toprotect their kids’ eyes. REQUIRED(e) AdviseTriciawhichtablet sheshouldchoosetosell. Justifyyour decisionwiththreereasons.[7][Total: 12] ENDOFPAPER 8

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