ACSBR 2024 Prelims 4E Paper 2 with ANS

Answer all questions.1Refer to the Insert for data for Question 1.REQUIRED(a)Prepare the statement of financial performance for the year ended 31 July 2024.Tulip LtdStatement of Financial Performance for the year ended 31 July 2024

Preliminary Examination 20242Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2[10]

Preliminary Examination 20243Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 (b)Prepare the statement of financial position as at 31 July 2024.Tulip LtdStatement of Financial Position as at 31 July 2024

Preliminary Examination 20244Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2[10][Total: 20]

Preliminary Examination 20245Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 2Lamech provided the following information for the financial year ended 30 June 2024: $Gross profit25 800Operating expenses6 450Average equity215 000Mark-up on cost25%REQUIRED(a)Calculate the following for the year ended 30 June 2024.(i)Cost of sales[1](ii)Net sales revenue[1](iii)Gross profit margin[1](iv)Profit margin[1](v)Return on equity[1]

Preliminary Examination 20246Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 Japheth is a direct competitor of Lamech in the same industry. Its financial ratios for the year ended 30 June 2024 are as follow:Gross profit margin22%Profit margin12%Return on equity8%REQUIRED(b)Compare and comment on the profitability of both businesses for the year ended 30 June 2024.[4] (c)State two ways in which a business could increase its gross profit margin.[2](d)Suggest two ways in which a business could reduce its expenses.[2][Total: 13 marks]

Preliminary Examination 20247Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 3Lumberstone buys and sells furniture. His accounting period ends on 30 April. The following information was extracted from the books of Lumberstone for 2023 and 2024: Year ended30 April 202330 April 2024$$Inventory 80 000100 000Cost of Sales400 000350 000Inventory turnover rate8.0 times?REQUIRED(a)State the formula and calculate, to one decimal place, the inventory turnover rate for the year ended 30 April 2024.[2](b)With your answer to (a), comment on the efficiency of the business in managing its inventory over the two years from 2023 to 2024.[3]On 1 May 2024, Lumberstone had 20 units of wine racks valued at $1800.During the month of May, the following purchases (paid by cheque) took place:5 MayBought 20 units of wine racks for $1500.13 MayBought 30 units of wine racks for $1950.25 MayBought 10 units of wine racks for $1400.

Preliminary Examination 20248Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 During the month of May 2024, Lumberstone sold 70 units of wine racks for $13 500. Lumberstone assumes FIFO (First In First Out) for recording cost of inventory sold.REQUIRED(c)Prepare the inventory account for May 2024. Show the balance brought down to the next month.[3]Inventory (d)Explain, with an accounting concept, how inventory is valued.[2]

Preliminary Examination 20249Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 (e)At the end of the financial period 30 April 2023, the ending inventory of wine racks was $2500 while the net realisable value was $2200.Complete the following table by stating the effects of the unadjusted inventory.State the amount ‘overstated’ or ‘understated’ for gross profit and profit for the year. Write ‘No effect’ where there is no effect.[2]Gross ProfitProfit for the year30 April 202330 April 2024(f)On 31 May 2024, Lumberstone’s warehouse caught fire and destroyed some wine racks worth $5200. Prepare the journal entries to record the wine racks destroyed on 31 May 2024.[2] [Total: 14]

Preliminary Examination 202410Secondary 4 Express / Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 2 4Buster Boy Toys is a supplier of soft toys and cushions with local designs. The following is the allowance for impairment of trade receivables account of Buster Boy Toys for the year ended 31 December 2023.Allowance for impairment of trade receivables accountDateParticularsDebitCreditBalance2023$$$Jan 1Balance b/d9 400 CrApr 19Trade receivable: Casper3 3006 100 CrDec 31Impairment loss on trade receivables4 1002 000 Cr2024Jan 1Balance b/d2 000 CrREQUIRED (a)Explain the matching theory. [1](b)Name the source document that Buster Boy Toys would issue if a credit customer returns goods to Buster Boy Toys. [1](c)State the effect of the 19 April 2023 entry on profit. [1](d)State one reason for the 19 April 2023 entry. [1]