ESSS 2022 4E5N Prelim P2

EastSpringSecondarySchoolTowardsExcellenceandSuccess Name:………………………………………………………………………………( )Class:……………….OLevelPreliminaryExamination2022Secondary4Express/ 5Normal(Academic) PrinciplesofAccountsPaper2 7087/02 13September2022 2hoursTuesday 0800–1000 Additionalmaterials:5piecesofaccountingpaper READTHESEINSTRUCTIONSFIRSTWriteyourname,classandregisternumberinthespacesprovidedabove,andonalltheworkyouhandin.Writeindarkblueorblackpen.YoumayuseanHBpencilforroughworking.Donotusestaples,paperclips,highlighters,glueorcorrectionfluid.Theuseofanapprovedcalculatorisallowed.DONOTWRITEONANYBARCODES. Answerallquestions.Thebusinessesdescribedinthisquestionpaperareentirelyfictitious.Thenumberof marksis givenin brackets[ ] attheendofeachquestionorpartquestion.

2 Thisquestionpaperconsistsof7printedpagesincludingthecoverpage.Answerallquestions. Question1ThefollowingtrialbalancewasextractedfromthebooksofGritPteLtd,attheendofthefinancialyearon30June2022. Debit Credit$ $Sharecapital,180,000ordinaryshares 90,000Retainedearnings,1July2021 22,390Costofsales 84,500Utilities 11,870Advertising 6,130Salesrevenue 185,000Salesreturns 25,700Interestexpense 3,000Rentalexpense 8,500Commissionincome 1,150Officeequipment 78,300Fixturesandfittings 42,000Accumulateddepreciation:Officeequipment 23,000Fixturesandfittings 8,360Inventory 31,640Tradereceivables 81,500Allowanceforimpairmentoftradereceivables 6,140Cashatbank 1,380Tradepayables 8,1208%Bankloan 50,000Salaries 22,710Discount 310395,850 395,850

3 Additionalinformationon30June2022.1. Advertisingpaidincluded$1,200for advertisingon radioforthehalf-yearending31August2022.2. Commissionincomeof$420wasforservicestobeprovidedinJuly2022.3. Interestonthe8%Bankloanhasnotbeenfullypaid.$10,000oftheloanisrepayableon1December2022.4. Depreciationistobechargedasfollows:Fixturesandfittingsat15%perannumusingthestraight-linemethodOfficeequipmentat20%perannumusingthereducingbalancemethod5. A tradereceivableowing$1,500hadbeendeclareda bankruptbuthadnotbeenwrittenoff yet.6. The businessreviewedits debtorsand decidedthat 5% of the tradereceivablesbalancemaynotbecollectible.7. Adividendof$0.02persharewasdeclaredon28June2022tobepaidon1August2022. REQUIRED(a) Preparethestatementoffinancialperformancefortheyearended30June2022. [7] (b) Preparethestatementoffinancialpositionasat30June2022. [13] [Total:20]

4 Question2Charlynoperatesatradingbusiness.ShehasprovidedthefollowinginformationfromthebusinessbankstatementandcashatbankaccountforthemonthofApril2022. BankStatementPayments Receipts Balance 2022 $ $ $April1 Balanceb/f 4,520 Cr5 Chequeno:3013 720 3,800 Cr7 Deposit 1,800 5,600 Cr8 Chequeno:3012 670 4,930 Cr9 Rejectedchequefrom7April 1,800 3,130 Cr14 Chequeno:3015 300 2,830 Cr15 Deposit 780 3,610 Cr17 Chequeno:3016 500 3,110 Cr21 Chequeno:3014 1,010 2,100 Cr25 Directdeposit:Commission 310 2,410 Cr30 Bankcharges 25 2,385 Cr CashatbankaccountDate2022 Particulars Chequeno Debit$ Credit$ Balance$April 1 Balanceb/d 3,850 Dr4 Rent 3013 720 3,130 Dr7 YuesniTrading 1,800 4,930 Dr8 Inventory 3014 1,110 3,820 Dr12 YingYing 3015 300 3,520 Dr15 Sales 780 4,300 Dr16 DahFang 3016 500 3,800 Dr24 Utilities 3017 600 3,200 Dr

5 28 JoJoTrading 2,100 5,300 Dr AdditionalinformationThebusinessdiscoveredthatthepaymentforchequenumber3014wasrecordedwronglyinitsbooksofaccounts. REQUIRED(a) PreparetheadjustedcashatbankaccountforApril2022. [5] (b) Preparethebankreconciliationstatementasat30April2022. [3] (c) Stateonepossiblereasonforachequetobedishonoured. [1] (d) Statetheeffectsofeachofthebankreconciliationadjustmentsonprofitforthemonthended30April2022. [2] [Total:11] Question3Gunnyrunsaretailbusiness.Hehasprovidedthefollowinginformationat31March2021and2022 2021 2022$ $Non-currentassetsMotorvehicle,atnetbookvalue 10,000 8,000Officeequipment,atnetbookvalue 2,400 1,30012,400 9,300 CurrentassetsInventory 2,900 4,300Tradereceivables 5,650 7,935Prepaidexpenses 250 120Cashinhand 200 150Cashatbank 270 -9,27012,505 CurrentliabilitiesTradepayables 3,840 5,940Expensespayable 280 320

6 Bankoverdraft - 1,0005%Bankloanrepayablein2023 - 5,0004,12012,260 Non-currentliabilities5%Bankloanrepayablein2023 5,000 -REQUIRED(a) Explainwhyliquidityisimportanttoabusiness. [2] (b) Calculatetotwodecimalplacesthefollowingratiosforthetwoyearsended31March2021and2022.(i) Currentratio [2](ii) Quickratio [2] (c) Evaluatethechangeintheliquidityofthebusinessoverthetwoyearsended31March2021and2022,supportingyouranswerwithappropriateratios. [4] Gunnyisconsideringthefollowingproposalstoimprovetheliquidityofthebusinessfortheyearended31March2023. Proposal1 Sellingthemotorvehicleattheexpectedsellingpriceof$5,000. Proposal2 Gettinga6-month3%Bankloan. REQUIRED(d) AdviseGunnywhethereachoftheseproposalswouldimprovetheliquidityofhisbusinessandhoweachproposalmayaffecttheprofitabilityofhisbusiness. [4] [Total:14] Question4Jaycelrunsabusinesssellingkitchenproductsandbuysfromcreditsupplier, Zelah.ZelahallowsJaycela tradediscountof10%onthelistpriceofordersover$5,000andalsooffera2%cashdiscountifpaymentismadewithin10days.ThefollowingtransactionstookplacebetweenJaycelandZelahduringthemonthofJuly2022.2022Jul 1 BalanceduetoZelah$1,500.

7 3 JaycelpurchasedgoodsfromZelah,listprice$2,600.15 JaycelpaidamountowingtoZelahtodateusingherpersonalcheque.20 JaycelpurchasedgoodsfromZelah,listprice$6,200.22 Jaycelreturnedgoodsto Zelah,list price$700.Thesegoodswerepurchasedon20July2022.28 JaycelpaidthebalanceonZelah’saccountbybanktransfer.REQUIRED(a) PreparetheaccountforZelahinthebooksofJaycelforthemonthofJuly2022. [6] (b) Namethesourcedocumentsforthetransactionsonthefollowingdates. [2](i) 20July2022(ii) 22July2022 SomeofJaycel’s customershavebeenenquiringaboutmulti-purposecookingpotsandJaycelhassourcedfor twopossiblesuppliersfor thistypeof pots:RizharTradingandBtriceInternational.Informationaboutthesetwosuppliersareasfollows. RizharTrading BtriceInternationalCountryofoperation IncorporatedandoperatesinSingapore IncorporatedandoperatesinChina Unitcostofpot $60 $48 Deliverycost Nodeliverycostischarged Shippingandinsurancecostis$400fora batchof100potsorless. Minimumquantityperorder 50pots Nominimumquantity Returnpolicy Potscan be returnedwithinthreemonthsfrompurchase. Potscannotbereturned. Paymentterms Credittermof 21 daysandcash discountof 2% forpaymentsmadewithin7days. Credittermsof30daysandnocashdiscountisgiven. Reputationofsupplier RizharTradingisawell-knownsupplierof kitchenproductsand has beenoperatingforovertwodecades. BtriceInternationalhasbeeninoperationsforthreeyearsandhasgoodonlinereviewsforitsproducts and customerservices.

8 REQUIRED(c) AdviseJaycelwhichsuppliersheshouldbuythepotsfrom.Supportyouradvicewiththreereasons. [7] [Total:15] EndofPaper