EVG 2024 POA Prelim 4G3 5G2 P2 Ans

2024 4G3_5G2 Prelim Paper 2 Ans Question 1 (a) Alan Statement of financial performance for the year ended 31 March 2024 $ $ Sales revenue 111 300 Less: Sales returns (11 300) Net sales revenue 100 000√ Less: Cost of sales (102 000) Gross loss (2 000) √ Other income Commission income (3 000 + 500) 3 500√ Less: Other expenses Rent expense (16 800 – 16 800/14 x 2) 14 400√ Wages and salaries 33 000 Discount allowed 210√ Interest expense (3% x 20 000) Depreciation on fixtures and fittings (10% x 90 000) Depreciation on motor vehicles (20% x [40 000 – 8 000]) 600√ 9 000√ 6 400√ Impairment loss on trade receivables [2 200 – (800 – 400)] 1 800√ (65 410) Loss for the year (63 910)√OF √ Format [11]

2 (b) Alan Statement of financial position as at 31 March 2024 Cost $ Accumulated Depreciation $ Net Book Value $ Assets Non-current assets Fixtures and fittings 90 000 27 000 63 000 Motor vehicles 40 000 14 400 25 600 88 600√OF Current assets Inventory Commission income receivable 24 700 500√ Prepaid rent expense (16 800/14 x 2) 2 400√ Cash at bank 8 300 Trade receivables (44 400 – 400) 44 000 Less: Allowance for impairment of trade receivables (2 200) 41 800√OF 77 700 Total assets 166 300 Equity and liabilities Owner’s equity Capital [99 900 – 900 – 63 910] √OF 35 090 Non-current liabilities Long-term borrowings √ (20 000 x 3/4) 15 000 Current liabilities Trade payables Interest expense payable (600 – 400) 111 010 200√ Current portion of long-term borrowings 5 000√ (20 000 x 1/4) 116 210 Total equity and liabilities 166 300 √ Format [9]

3 Question 2 (a) For the financial year ended 30 June 2023: Current ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = (25 900+26 400+23 600)√ 33 400 = 2.27 √ [2] Quick ratio = (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑃𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = (25 900+26 400)√ 33 400 = 1.57 √ [2] (b) For the financial year ended 30 June 2024: Current ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = (33 300+50 000+6 000)√ (17 800+34 100) = 1.72 √ [2] Quick ratio = (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑃𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = 33 300√ (17 800+34 100) = 0.64 √ [2] (c) Lilydale’s current ratio is on a worsening trend over the th ree years. It worsened from 3.74 in 2022 to 2.27 in 2023 to 1.72 in 2024. √ Lilydale’s ability to pay debts within the short term using current assets has become weaker. √ The current ratio is a bove the acceptable norm of 2 in the first two years. It has fallen below the recommended norm in the third year but is still above 1. √ The business is able to pay current liabilities and meet operational needs in the first two years with its current