Temasek Sec 2024 Prelims 5N POA P1 and P2 Ans

TEMASEK SECONDARY SCHOOL Preliminary Examination 2024 Secondary Five Normal Academic Principles of Accounts Paper 1 (7087/1) Marking Scheme Question 1(a) 3 960/90% = $4 400 √ [1] Question 1(b) 150 / (2 850 + 150) x 100 = 5% √ [1] Question 1(c)(i) The cheque of $2 850 received from Zaiton on 14 July was dishonoured √ Business withdrew the discount of $150 given to her √ [2] Question 1(c)(ii) Business wrote off the debt of $6 960 owing from Zaiton √ [1] Question 1(d) Prudence theory √ Business do not overstate its trade receivable balance when a debt becomes uncollectible √ [2] Question 1(e) no effect √ [1] [Total: 8]

Question 2(a) benefits of motor vehicles decreases as they get older √ [1] Question 2(b) Dep (30/6/2021) = 20% x (23 000 - 0) = 4 600 20% x (23 000 - 4 600) = 3 680 Debit $ Credit $ Cash at bank 10 000 √ Accumulated depreciation - motor vehicles (4 600 + 3 680) 8 280 √ Loss on sale of motor vehicles 4 720 √ Motor vehicles 23 000 √ [4] Question 2(c) Dep (30/6/2021) = 20% x [(100 000 - 23 000 + 15 000) √ - (38 000 - 8 280) √ ] = $12 456 0 [2] Question 2(d) Non-current assets Cost Motor vehicles 92 000 √ [3] (100 000 - 23 000 + 15 000)) [Total: 10] 42 176 √ 49 824 √ (38 000 - 8 280 + 12 456) Dep (30/6/2022) = Extract of statement of financial position as at 30 June 2024 Accumulated Depreciation Net Book Value

Question 3(ai) 500 + 580 = $1 080 √ [1] Question 3(aii) (900 + 880) √ - 1 080 √ OF = $700 [2] Question 3(b) average inventory = (500 + 1 320)/2 = 910 √ cost of sales = 1 080 √ days sales in inventory = 910/1 080 x 365 = 307.55 days [2] Question 3(c) The days sales in inventory for Chong’s business has worsened from 290.32 days in 2022 to 298.87 days in 2023 to 307.55 days in 2024. √ This means that the business is managing inventory less efficiently over the three years. √ The worsening days-sales-in-inventory indicates that the business is taking longer to sell its goods. √ This may be due to the business buying too many goods and unable to sell them. √ The business may be paying more for its goods as unit price has increased from $50(Jul 1) to $58(Sep 8) to $66 (Feb 1) √ [5] Question 3(d) decrease inventory √ or increase sales √ provide trade discounts to encourage bulk purchases which leads to higher sales and improved inventory turnover √ buy in bulk to get trade discount to lower the cost of inventory purchased √ [3] [Total: 13]

Question 4(a) 30-Jun-23 30-Jun-24 Cash at bank 8,500 Bank overdraft 10,800 Income received in advance 800 2,300 Trade receivables 41,700 52,400 Allowance for impairment of trade receivables 834 1,048 Inventory at cost 40,400 82,800 Prepaid expenses 800 250 Trade payables 35,900 45,700 Expenses payable 5,600 3,600 CA 90,566 134,402 QA 49,366 51,352 CL 42,300 62,400 (i) Current Ratio 2.14 √ 2.15 √ (ii) Quick Ratio 1.17 √ 0.82 √ [4] Question 4(b) Current ratio stayed consistent at 2.14 in 2023 and 2.15 in 2024. √ Quick ratio decreased from 1.17 in 2023 to 0.82 in 2024. √ Quick ratio in 2024 is below the general benchmark of 1. √ Liquidity worsened from 2023 to 2024 as seen from the decrease from a bank balance of $8 500 to a bank overdraft of $10 800. √ Inventory doubled from $40 400 in 2023 to $82 800 in 2024, resulting in the drop in quick ratio from an acceptable 1.17 in 2023 to 0.82 in 2024. √ [5] [Total: 9]

TEMASEK SECONDARY SCHOOL Preliminary Examination 2024 Secondary Five Normal Academic Principles of Accounts Paper 2 (7087/2) Marking Scheme Question 1(a) $ $ Sales revenue 585,504 Less sales returns 25,560 Net sales revenue 559,944 Less cost of sales 319,080 Gross profit 240,864 √ Add other income Commission income 33,840 Interest income 2,640 36,480 √ Less expenses Advertising expense (9 360 - 1 800) 7,560 √ Wages and salaries 75,600 Repairs expense 540 Rent expense (12 900 + 3 500) 16,400 √ Interest expense (3% x 96 000) 2,880 √ Depreciation: Office equipment 30,000 √ (10% x (324 000 - 24 000)) Motor vehicles 18,375 √ (25% x (150 000 - 76 500)) Impairment loss on trade receivables 640 √ ((5% x 38 000) - 1 260)) 151,995 Profit for the year 125,349 √ [9] Zion Pte Limited Statement of financial performance for the year ended 30 July 2024

Question 1(b) Assets Non-current assets Cost Accumulated Net book depreciation value $ $ $ Office equipment 324,000 87,600 (+30 000) 236,400 Motor vehicles 150,000 94,875 (+18 375) 55,125 Total non-current assets 474,000 182,475 291,525 √ Current assets Trade receivables 38,000 Less allowance for impairment of 1,900 √ trade receivables (5% x 38 000) Net trade receivables 36,100 √ Inventory 51,000 Bank deposit 18,000 √ Cash at bank 14,280 Prepaid advertising 1,800 √ Total current assets 121,180 Total assets 412,705 Equity and liabilities Shareholders' equity Issued share capital, 50 000 ordinary shares 90,000 Retained earnings (74 216 + 125 349 √ - 5 000 √ ) 194,565 Non-current liabilities Long-term borrowing 96,000 √ Current liabilities Trade payables 20,760 Rent payable 3,500 √ Interest expense payable 2,880 √ Dividend payable (0.10 X 50 000) 5,000 √ Total current liabilities 32,140 Total equity and liabilities 412,705 [11] [Total: 20] Zion Pte Limited Statement of financial position as at 30 July 2024

Question 2(ai) Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases. [1] Question 2(aii) Once an accounting method is chosen, this method should be applied to all future accounting periods to enable meaningful comparison. [1] Question 2(b) It is more likely for banks and other lenders to lend money to the private limited company as compared to a sole proprietorship. [2] Question 2(c) Date Particulars Dr Cr Bal 2022 $ $ $ Apr 1 Balance b/d 90,000 Cr 2023 Apr 1 Balance b/d 90,000 Cr √ 2024 Feb 1 Cash at bank (5 000 x $2.50) 12,500 √ 102,500 Cr Apr 1 Balance b/d 102,500 Cr √ [3] Question 2(d) Date Particulars Dr Cr Bal 2022 $ $ $ Apr 1 Balance b/d 32,750 Cr 2023 Mar 31 Divdends ($0.15 x 45 000) 6,750 √ 26,000 Cr Mar 31 Income summary 7500 √ 33,500 Cr Apr 1 Balance b/d 33,500 Cr 2024 Mar 31 Divdends ($0.07 x 50 000) 3,500 √ 30,000 Cr Mar 31 Income summary 2,800 √ 27,200 Cr Apr 1 Balance b/d 27,200 Cr √ [5] [Total: 12] Share capital account Retained earnings account

Question 3(a) Date Particulars Dr Cr 2024 $ $ Jun 30 Trade payable - Ben (5 400 - 4 500) 900 √ Cash at bank 900 √ [2] Question 3(b) Accounting entity theory √ The activities of the owner is separate from that of the business. All transactions are to be recorded from the point of view of the business. [2] Question 3(b) $ $ Profit before correction 12,000 Add (2) Utilities of owner wrongly debited as expenses 270 √ Add (3) sales recoreded on wrong side ($600 x 2) 1,200 √ Less (4) repairs understated (80) √ 1,390 Profit after correction 13,390 √ [4] [Total: 8] John's business Statement to show the adjusted profit for the year ended 30 June 2024

Question 4(ai) Cost of sales = Net sales revenue - gross profit = 223 900 - 96 300 = 127 600 Mark-up on cost = G