2022 QTSS 4E5NA Prelims P2 ANS

2022 QTSS Prelims 5NA P2 - Marking Scheme 1a Statement financial performance for the year ended 31 December 2021 $ $ Consultancy fee revenue 60800 Other income Commission income 1850 [1] 62650 Less: Other expenses Wages and salaries 13000 Rent (14000-550) 13450 [1] General expenses (2250+350) 2600 [1] Interest expense (5% x 20000) 1000 [1] Impairment loss on trade receivables [1420-(500-400)] [2] 1320 Depreciation expense of office equipment 3750 [1] (15%x25000 ) Depreciation expense of motor vehicles 11455 [1] (10%x(145000-30450) 46575 Profit for the year 16075 [8] Top Gun Consultancy

2022 QTSS Prelims 5NA P2 - Marking Scheme 1b $ $ $ $ Assets Non-current assets Cost Accumulated depreciation Net book value Motor vehicles 145000 41905 103095 [1] Office equipment 25000 10750 14250 Total non-current assets 117345 Current assets Trade receivables (71400-400) 71000 [1] Less: Allowance for impairment of trade receivables (2%x71000) 1420 [1] Net trade receivables (not compulsory) 69580 Prepaid rent expenses 550 [1] Cash in hand 580 Total current assets 70710 Total assets 188055 Equity and Liabilities Shareholders' equity Issued share capital, 100 000 ordinary shares 100000 [1] Retained earnings (40000+16075 [OF][1]-7000[1]) 49075 Total equity 149075 Non-current liability Long term borrowings (20000-2000) # 18000 Current liabilities Trade payables 10330 General expense payable 350 [1] Interest payable (1000-625) 375 [1] Bank overdraft 925 [1] Current portion of Long term borrowings # 2000 Dividends payable (0.07X100000) 7000 [1] Total current liabilities 20980 Total equity and liabilities 188055 #both must be present to be awarded 1 mark [12] Top Gun Consultancy Statement of financial position as at 31 December 2021

2022 QTSS Prelims 5NA P2 - Marking Scheme

2022 QTSS Prelims 5NA P2 - Marking Scheme

2ai ii b Date Particulars Debit ($) Credit ($) Bal ($) 2022 Mar-31 Balance b/d 555 Dr[1] Mar-31 Bradley Ltd 1200[1] 1755 Dr Mar-31 Rent (error) 20[1] 1735 Dr Mar-31 Trade receivable - Rooster Ltd (dishonoured cheque) 370 [1] 1365 Dr Mar-31 Bank charges 20[1] 1345 Dr Apr-01 Balance b/d 1345 Dr c Maverick Trading $ Balance as per bank statement 2020 [1] Add: Deposit in transit - Goose Co. 75 [1] Less : Cheque not yet presented – Insurance 750 [1] Adjusted balance as per cash at bank account 1345 [1]OF d Internal controls: - segregation of duties - custody of cash - authorisation [Any 2 of the above] Cash at Bank Bank reconciliation statement as at 31 March 2022 March 10 - Maverick Trading sold goods for $240 and received cheque / deposited the cash into business' bank. [1] March 12 - Owner took out $350 from the business' bank account for personal use. [1]

3a 30-Jun-20 30-Jun-21 30-Jun-22 Total current assets 14500 18900 Total current liabilities 6500 10000 i. Working capital 8000 [1] 8900 [1] CA- CL ii Current ratio 3.52 2.23 [1] 1.89 [1] CA/CL iii Quick ratio 1.56 1.08 [1] 0.87 [1] (CAB+TR)/CL b The working capital has improved from $8000 in 2021 to $8900 in 2022. [1] This is due to an increase current assets such as trade receivables and inventory. [1] The trade payables position has worsened as it has increased from $6500 to $9500. [1] The business' liquidity position has worsened. [1] [Any 5 points] c Stakeholders Decision Lenders Whether the business has the ability to repay the loans when they fall due. Suppliers Whether the business has the ability to pay for goods/services provided on time Any 1 of the above The business' cash position has worsened as it has decreased from $2000 to a negative bank balance of $500 in 2022. [1] The business will have difficulties paying for its repayment of bank loan in 2023 and any other short term debts. [1] The current ratio has worsened over the 3 years from 3.52 in 2020 to 2.23 in 2021 and 1.89 in 2022.[1] The quick ratio has deteriorated over the 3 years from 1.56 in 2020 to 1.08 in 2021 and to 0.87 in 2022. [1]

4a 2022 Debit $ Credit $ Apr-03 Inventory (95%x3000) 2850 [1] Trade payables - Iceman Shoes 2850 [1] Apr-14 Trade payables - Iceman Shoes 2850 [1] Cash at bank (98%x2850) 2793 [1] Discount received (2%x2850) 57 [1] b Trade discount is given to encourage bulk purchases OR customers' loyalty. [1] c Cash discount is given to encourage credit customers to pay earlier than the credit period. [1] d Decision : Buy from Iceman Shoes 1 Local 2 3 Total cost cheaper by $1150 (Iceman=7000+200, Merlin =8000+350) 4 Faster replacements of shoes Decision :Buy from Merlin Development/ Elaboration 1 2 Faster refund 3 4 1 mark for basic point and 1 mark for a reasonable and logical development 1 mark for decision with attempts to justify decision made. Any 3 basic points and 3 relevant development - 6 marks max Journal Provide free samples Development/ Elaboration easier to contact and locate for any enquiry good business understanding of each other Savings can be used for other operational expenses Customers do not need to wait long for exchange. Can provide better customer service Higher cash discounts with longer due date Easier to get cash discounts. More savings for business. Customers will have more choices and may lead to increase in sales and profit. As money is returned faster, business will have the funds to look for alternative supplier quickly. Basic Point long term relationship Basic Point Longer credit period More time for making payment.