Zhonghua POA 2024 Sec 5 Prelim Paper 2 answer

1 ZHONGHUA SECONDARY SCHOOL PRELIMINARY EXAMINATION 2024 SECONDARY 5 NORMAL ACADEMIC Candidate’s Name Class Register Number Suggested Marking Scheme PRINCIPLES OF ACCOUNTS 7087/02 9 September 2024 2 hours READ THESE INSTRUCTIONS FIRST Write your name, class and register number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any rough working. Do not use paper clips, glue or correction fluid. Answer all questions. You may use a calculator. The businesses mentioned in this question paper are entirely fictitious. Where the columnar format is used, the running balance column should be updated for the first and last entries. Where applicable, the balance should be brought down to the next financial year. 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. Setter: M Mr John Kok Vetter: Ms Teo Jing Zhi & Ms Destiny See This question paper consists of 6 printed pages (including this cover page) Question Score 1 / 20 2 / 14 3 / 15 4 / 11 Total / 60

2 1 (a) Desire Diamonds Statement of financial performance for the year ended 30 June 2024 $ $ Sales revenue (170270 + 0.95x1000) 171 220 [1] Less: sales return 9 000 Net sales revenue 162 220 Less: Cost of sales 60 700 Gross profit 101 520 Add: Other income Rent income (12/18 x 18000) 12 000 [1] Discount received 1 440 13 440 114 960 Less: Other expenses Advertising 22 700 Salaries and wages (12 x 5 000) 60 000 [1] Loan interest (8% x 50000 x 6/12) 2 000 [1] General expenses 10 380 Discount allowed 4 800 Depreciation of fixtures and fittings (10% x 72000) 7 200 [1] Depreciation of plant and equipment (5% x [288000-50900]) 11 855 [1] Impairment loss on inventory 2 564 [1] (0.3 x 10300 x 0.6 +([0.7 x 10300]-6500)) [1] Reversal of impairment loss on trade receivables (505) [1] (5% x ([31950 + 0.95 X 1000 - 3000])-5000+3000) [1] ________ 120 994 Loss for the year (6 034) (b) Desire Diamonds Statement of financial position as at 30 June 2024 Assets Non-Current assets Cost Accum depn NBV Fixtures and fittings (12000+7200) 72 000 19 200 [1] 52 800 Plant and equipment (50900+11855) 288 000 62 755 [1] 225 245 360 000 81 955 278 045 Current assets Trade receivables (31950+0.95x1000-3000) 29 900 [1] Less: Allowance for impairment on tr 1 495 [1] (5% x [31950+0.95x1000-3000]) 28 405 Cash at bank (15700+0.4 x 0.3 x 10300 16 936 [1] Inventory 6 500 51 841 Total assets 329 886 Equity and liabilities Owner’s equity Capital (249520 – 6034) 243 486 Non-current liabilities Long term borrowings (50000 x 4/5) 40 000 [1] Current liabilities Trade payables 20 650 Rent income received in advance (6/18 x 18000) 6 000 [1] Salaries and wages payable (12 x 5000 – 51050) 8 950 [1] Interest payable (2000-1200) 800 [1] Current portion of long term borrowing (1/5 x 50000) [1] 10 000 46 400 329 886 [Total: 20]

3 2 (a) State one purpose of internal control. Any one of the following: [1] 1. Safeguard assets of the business 2. Ensure business transactions are recorded accurately 3. Comply with laws and regulations (b) State two methods of internal control over cash other than bank reconciliation. 1. Segregation of duties. [1] 2. Custody of cash. [1] 3. Authorisation. [1] [Any 2 points] (c) Update the cash at bank account on 31 July 2024. Cash at bank Date Particulars Dr Cr Bal 2024 $ $ $ Jul 31 Balance b/d 5 728 Dr Jack Supplies 345 [1] Utilities 2 200 [1] Sinking Shop 4 120 [1] Interest income 12 [1] Bank charges 20 [1] 945 Cr Aug 1 Balance b/d 945 Cr [1] [6] (d) Prepare the bank reconciliation statement as at 31 July 2024. Trusty Trading Bank Reconciliation Statement as at 31 July 2024 $ Dr balance as per bank statement (1 027) [1] Add: Deposits in transit Cheque No: 5304 (error) 55 [1] Luke 2 915 [1] Less: Cheques not yet presented Claire 2 888 [1] Cr balance as per updated cash at bank account (945) [1] [5] [Total: 14]

4 3 (a) According to the materiality theory [1], relevant information should be reported in the financial statements if it is likely to make a difference to the decision-making process and since the amount spent on measuring cup is insignificant, it can be reported as an expense instead of a non-current asset. [1] (b) Depreciation for the year ended 31 December 2023 = 20% x (90000-18000-14400) + 20% x (90000+7200+2800) [1] = 11520 + 20000 = $21520 [1] (c) General Journal Date Particulars Dr Cr 2023 $ $ Aug 9 Sale of non-current asset 90 000 Motor Vehicle 90 000 Accumulated depreciation of motor vehicle 32 400 Sale of non-current asset 32 400 Cash at bank 60 000 Sale of non-current asset 60 000 Sale of non-current asset 2 400 Income Summary 2 400 1 mark per double entry [4] (d) Decision [1]: Alodia should extend credit to Linus Party Evidence [1]: Linus Party has a repayment history averaging 33 days which is within the 45 days requested. Explanation[1]: This will allow Alodia to reduce the time and cost needed to process late payments and would free her up to focus on other aspect of the business. Evidence [1]: Linus Party credit sales revenue is $26 900 more than Marcus Meal or average trade receivables balance is $13 000 more. Explanation[1]: This means it is more important to keep Linus Party as a customer by extending credit since losing them would means a big reduction in revenue and therefore lower potential profit Evidence [1]: Linus Party has garnered attention for offering unique and innovative services. Explanation[1]: This means that Linus Party has the ability to attract more unique customers through their innovation and thus has a potential to have a larger demand of goods and therefore by offering credit extension and keeping Linus Party as a customer, Alodia has the potential of early higher profit.

5 OR Decision [1]: Alodia should extend credit to Marcus Meal Evidence [1]: Marcus Meal is centrally located with a regular customer base who like Alodia’s cakes. Explanation[1]: This means that Marcus Meal has a steady flow of business and is unlikely to close. As a result, Alodia would be unlikely to experience expense due to Marcus Meal inability to pay up. Evidence [1]: Marcus Meal has a repayment history averaging 42 days which is within the 45 days requested. Explanation[1]: This will allow Alodia to reduce the time and cost needed to process late payments and would free her up to focus on other aspect of the business. Evidence [1]: Marcus Meal has been operating for 10 years and had been featured in both local and overseas media. Explanation[1]: This means that Marcus Meal has an attractive business with strong customer loyalty and is therefore unlikely to close. Therefore, Alodia would be unlikely to experience expense due to Marcus Meal inability to pay up. Evidence [1]: Marcus Meal business has been growing after Covid. Explanation[1]: This means that Marcus Meal may b