Meridian Sec 2024 POA P2 MS

2024 4E Prelim Exam Paper 2 Marking Scheme1(a)WongStatement of financial performance for the year ended 31 December 2023$$Advertising fee revenue 948 000 [1]Add: Other income Comission income 17 000 [1] Less: Other expenses Rent expense (90 000 – 22 000)68 000[1] Salaries 85 700General expenses20 550 Interest expense (5% x 160 000)8 000[1] Depreciation on fixtures and fittings (20% x 350 000)70 000[1] Depreciation on equipment (10% x 70 000)7 000[1] Reversal on impairment loss on trade receivables (8% x 42 000 – 7 300)(3 940)[1]Profit for the year 709 690 [1] of

(b) WongStatement of financial position as at 31 December 2023Cost$Accumulated depreciation$Net book value$Non-current assetsFixtures and fittings350 00070 000280 000 [1]Equipment70 0007 00063 000 [1]343 000Current assetsTrade receivables (45 000 – 3 000)42 000 [1] Less: Allowance for impairment of trade receivables (8% x 42 000)3 360 38 640 [1]Cash at bank 567 050Prepaid rent expense22 000 [1]Commission income receivable17 000 [1]644 690Total assets987 690Equity and liabilitiesOwner’s equityCapital (120 000 + 709 690 [1] of – 3 000 [1])826 690Non-current liabilitiesLong-term borrowings (3/4 x 160 000)120 000 [1]Current liabilitiesCurrent portion of long-term borrowings (1/4)40 000 [1]Interest expense payable1 000 [1]41 000Total equity and liabilities987 690 [1] of

2 (a) Trade receivable - Daily SupermarketDateParticularsDebit$Credit$Balance$2023Aug 2Sales revenue (4 000 x 90%)3 600 [1]3 600 Dr 5 Sales returns (600 x 90%)540 [1] 15Cash at bank (95% x 3 060)2 907 [1] 15Discount allowed (5% x 3 060)153 [1]-(b) Trade discount is a deduction off the list price [1] while cash discount is a deduction off the invoiced price. [1]Trade discount is given to encourage bulk purchase [1] while cash discount is to encourage earlier payment. [1](c) (i)Fashion DreamRate of trade receivables turnover14.67 times [1]Trade receivables collection period24.89 days [1](ii) Style Right’s rate of trade receivables turnover of 4.57 times, which is worse than Fashion Dream’s 14,67 times. [1]Style Right’s trade receivables collection period of 79.84 days, which is worse than Fashion Dream’s 24.89 days. [1]This means that Style Right is collecting payment from its credit customers on a less timely basis than Fashion Dream. [1] OR taking longer time to collect back the payment from trade receivables. [1]Style Right is less efficient in managing its trade receivables than Fashion Dream. [1] 3 (a) Retained earnings account

DateParticularsDebit$Credit$Balance$2023Jan 1Balance b/d37 700 Cr [1]Dec 31Dividends (60 000 x 0.05)3 000 [1]Income summary88 190 [1]122 890 Cr2024Jan 1Balance b/d122 890 Cr (b) JournalDateParticularsDebit$Credit$2024Jan 1Cash at bank (40 000 x 3)120 000 [1]