2022 QTSS 4E5NA Prelims P2 QNS

[Turn over Name: …………….………………………………….. ( ) Class: 5A Queenstown Secondary School Preliminary Examination 2022 Secondary Five Normal (Academic) Principles of Accounts Paper 2 7087/02 29 August 2022 Time: 0800 – 1000 Monday Duration: 2 hours Setter: Mdm Farhati Ahmad Additional Materials: Writing paper (5 sheets) READ THESE INSTRUCTIONS FIRST Write your name, class and index number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for rough working. Do not use staples, paper clips, glue or correction fluid. The use of approved calculator is allowed. Answer all questions. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 4 questions and 7 printed pages. For Examiner’s Use Q1 /20 Q2 /13 Q3 /13 Q4 /14 TOTAL /60

2 Answer all questions. 1 The following balances were extracted from the books of Top Gun Consultancy on 31 December 2021. $ Consultancy fee revenue 60 800 Wages and salaries 13 000 Rent 14 000 General expenses 2 250 Commission income 1 850 Motor vehicles 145 000 Accumulated depreciation of motor vehicles 30 450 Office equipment 25 000 Accumulated depreciation of office equipment 7 000 Trade receivables 71 400 Trade payables 10 330 5% bank loan repayable by June 2025 20 000 Interest paid on 5% bank loan 625 Allowance for impairment on trade receivables 500 Cash at bank 925 credit Cash in hand 580 Issued share capital, 100 000 ordinary shares 100 000 Retained earnings 1 January 2021 40 000 Additional information 1 Rent of $550 was paid in advance and general expense of $350 was owing. 2 10% of the loan is repayable in June 2022 and interest on the bank loan for the year has not been fully paid. 3 A customer who owed $400 has declared bankrupt. The business decided to write off the amount. 4 The allowance for impairment of trade receivables is to be maintained at 2% of trade receivables. 5 Office equipment is to be depreciated at 15% per annum using the straight- line method. 6 Motor vehicles are depreciated at 10% per annum using reducing -balance method. 7 A dividend of $0.07 per share had been declared and will be paid on 15 January 2022.

3 [Turn over REQUIRED (a) Prepare the statement of financial performance for the year ended 31 December 2021. [8] (b) Prepare the statement of financial position as at 31 December 2021. [12] [Total:20]

4 2 The cash at bank account and bank statement for Maverick Trading for the month of March 2022 were as follows. Cash at Bank Date Particulars Debit $ Credit $ Balance $ 2022 Mar 1 Balance b/d 2 300 Dr 10 Sales revenue (i) 240 2 540 Dr 12 Drawings (ii) 350 2 190 Dr 15 Rooster Ltd 370 2 560 Dr 20 Iceman Ltd (Cheque 1200) 800 1 760 Dr 25 Goose Co. 75 1 835 Dr 29 Rent (Cheque 1201) 530 1 305 Dr 30 Insurance (Cheque 1202) 750 555 Dr Apr 1 Balance b/d 555 Dr Bank Statement Date Particulars Payments $ Receipts $ Balance $ 2022 Mar 1 Balance b/d 2 600 Cr 2 Cheque 1198 300 2 300 Cr 11 Cash 240 2 540 Cr 12 Cash 350 2 190 Cr 16 Cheque 370 2 560 Cr 21 Cheque 1200 800 1 760 Cr 23 Credit transfer – Bradley Ltd 1 200 2 960 Cr 30 Cheque 1201 550 2 410 Cr 30 Rejected cheque 370 2 040 Cr 31 Bank charges 20 2 020 Cr Additional information The business made an error in the recording of cheque 1201. REQUIRED (a) Interpret the entries in the cash at bank account on the following dates: (i) March 10 [1] (ii) March 12 [1] (b) Update the cash at bank account on 31 March 2022. [5] (c) Prepare the bank reconciliation statement as at 31 March 2022. [4] (d) Besides bank reconciliation, state two internal controls that business use to safeguard cash. [2] [Total:13]

5 [Turn over 3 The following balances were extracted from Hangman Trading for two financial years ended on 30 June 2021 and 30 June 2022. 30 June 2021 $ 30 June 2022 $ Office equipment 15 000 30 000 Trade receivables 5 000 8 700 Trade payables 6 500 9 500 Inventory 7 500 10 200 Cash at bank 2 000 - Bank overdraft - 500 Bank loan - 20 000 REQUIRED (a) Calculate the following for the two years ended 30 June 2021 and 30 June 2022. Show your answers to two decimal places. (i) working capital [2] (ii) current ratio [2] (iii) quick ratio [2] The current ratio and quick ratio for the year ended 30 June 2020 are as follows. Current ratio 3.52 Quick ratio 1.56 REQUIRED (b) Using the information given and your calculations, comment on the liquidity position of Hangman Trading. [5] (c) Name one stakeholder and explain why the stakeholder would be interested in Hangman Trading’s liquidity position. [2] [Total:13]

6 4 Viper sells sport shoes. He buys goods from Iceman Shoes on credit. Viper is given a trade discount of 5% on all purchases and a cash discount of 2% if payment is made within 15 days. The following transactions took place during April 2022. April 3 Viper purchased shoes, list price $3 000. 14 Viper settled this account by bank transfer. REQUIRED (a) Prepare journal entries to record these transactions in the books of Viper’s business. Narrations are not required. [5] (b) State one reason why a business might offer trade discounts to its customer. [1] (c) State one reason why a business might offer cash discounts to its customer. [1]

7 Viper is considering changing his local supplier, Iceman Shoes to an overseas supplier, Merlin Supplies. Viper’s business purchases approximately 1 000 pairs of shoes per annum from Iceman Shoes, a supplier to Viper’s business for the past ten years. The following information is available. Iceman Shoes Merlin Supplies List price $7 $8 Credit terms 30 days 2% discount for payment within 15 days 45 days 15% discount for payment within 20 days Delivery fees $20 for every 100 pairs $35 for every 100 pairs Refund policy Refunds made within 1 week of return Refunds made within 3 days of return Replacement policy Replacement shoes delivered within 5 days Replacement shoes shipped within 10 days Additional incentive None Samples of new designs of shoes provided monthly REQUIRED (d) Recommend whether Viper should buy from Iceman Shoes or Merlin Supplies. Justify your decision with three reasons. [7] [Total:14] END OF PAPER