MSHS 2024 POA P2 MS

POA P2 Prelim 2024 1 Answer Key MARIS STELLA HIGH SCHOOL (SECONDARY) PRELIMINARY EXAMINATIONS 2024 SECONDARY 4 EXPRESS PRINCIPLES OF ACCOUNTS Paper 2 7087/02 22 August 2024 2 hours MARK SCHEME MAXIMUM MARK: 60

POA P2 Prelim 2024 2 Answer Key Question 1 [Total: 20] (a) Happiness Pte Limited Statement of financial performance for the year ended 31 May 2024 $ $ Sales revenue 642 000 Less: Sales returns 4 100 Net sales revenue 637 900 1 Less: Cost of sales 448 310 Gross profit 189 590 1 Other income Commission income (4400+600) 5 000 1 Discount received 1 830 6 830 ½ Less: Other expenses Interest expense 2 500 Utilities expense (7200 – 1200) 6 000 1 Wages and salaries (54220+1780) 56 000 1 Rent expense 72 000 Discount allowed 1 900 ½ Depreciation – Motor vehicles (0.1 X 240000) 24 000 1 Depreciation – Fixtures and fittings (0.2 X 57600) 11 520 1 Impairment loss on trade receivables * 1 550 1 Impairment loss on inventory 3 500 178 970 1 Profit for the year 17 450 [10] *N = 0.05 X (31400-1400) = 1500 N-(O-W) = 1500 – (1350-1400) = 1500 – (-50) = +1550

POA P2 Prelim 2024 3 Answer Key (b) Happiness Pte Limited Statement of Financial Position as at 31 May 2024 $ $ $ Assets Cost Accumulated depreciation Net book value Non-current assets Motor vehicles (48000+24000) 270 000 72 000 198 000 ½ Fixtures and fittings (6400+11520) 64 000 17 920 46 080 ½ 244 080 Current assets Inventory (83500-3500) 80 000 1 Trade receivables (31400 – 1400) 30 000 ½ Less: Allowance for impairment of trade receivables 1 500 28 500 ½ Commission income receivable 600 1 Prepaid utilities expense 1 200 110 300 1 Total assets 354 380 Equity and Liabilities Shareholders’ Equity Share capital, 110 000 ordinary shares 220 000 ½ Retained earnings (5000+17450-6600) 15 850 235 850 1 Non-current liabilities Long term borrowings 80 000 ½

POA P2 Prelim 2024 4 Answer Key Current liabilities Trade payables 9 150 Bank overdraft 1 000 ½ Wages and salaries payable 1 780 1 Current portion of long -term borrowings 20 000 ½ Dividends payable 6 600 38 530 1 Total equity and liabilities 354 380 [10] Question 2 [Total: 12] (a) Cash at bank account Date Particulars Dr $ Cr $ Balance $ 2024 Apr 30 Balance b/d 1 280 Dr Trade receivable - Timothy 1 500 [1] 2 780 Dr Rent expense 3 000 [1] 220 Cr Inventory (error) 1 800 [1] 1 580 Dr Trade receivable – Matthew ight (dishonoured) 2 000 [1] 420 Cr Bank charges 300 [1] 720 Cr May 1 Balance b/d 720 Cr [5] (b) Bank Reconciliation Statement as at 30 April 2023 $ Balance as per bank statement 300 Add: Cheques not yet credited Max Lights 580 [1] Bank’s error 100 [1] Less: Cheques not yet presented Jair Enterprise 1 700 [1] Balance as per updated cash at bank account (720) [1] [4] (c) Adjusted profit = $8 000 - $3 000 [1/2] - $300 [1/2] = $4 700

POA P2 Prelim 2024 5 Answer Key (d) Any two of the following [2] • Segregation of duties • Authorisation • Custody of cash Question 3 [Total: 12] (a) Cost of sales on 20 January = 2400 + (3600+500) = $6500 [ 1 1/2] Cost of sales on 30 January = $2200 [1/2] Total cost of sales for January 2024 = 6500 + 2200 = $8700 (b) Journal Date Particulars Debit Credit 2024 $ $ Jan 10 Inventory 500 Trade payable – Fast Delivery 500 Jan 20 Trade receivable – Kenneth Trading 10 000 Sales revenue 10 000 Cost of sales 6 500 Inventory 6 500 [1/2 mark each : 3] (c) Kaellen Trading Statement of Financial Performance for the month ended 31 January 2024 (extract) $ Sales revenue (10000+4000) 14 000 [1] Less : Cost of sales 8 700 CF [1] Gross profit 5 300 (d) Kaellen Trading Statement of Financial Position as at 31 January 2024 (extract) $ Current assets Inventory 2 600 [1]

POA P2 Prelim 2024 6 Answer Key (e) • The rate of inventory turnover of has decreased and worsened from 8.9 times in 2022 to 6.4 times in 2023. [1] • This shows that Kaellen Trading has become less efficient in its inventory management. [1] • This may be due to lack of popularity of its product / overstocking in inventory / increased competition from other suppliers [1] (f) Any one of the following [1] • Sell more goods through online platforms • Reducing selling price for slow-moving goods (unpopular products). • Provide trade discount to customers to encourage bulk purchase. • Attract more customers through marketing campaign. • Use technology to improve accuracy prediction about customer demand so that business can know when and how much inventory to buy. Question 4 [Total: 16] (a) Any one of the pair [2] TRADE DISCOUNT CASH DISCOUNT 1 A deduction off the list price A deduction off the net invoice price 2 Given to encourage bulk purchases Given to encourage prompt payment 3 Not recorded in the general ledger Recorded in the general ledger as discount allowed or discount received (b) Percentage discount = 130 / (2470+130) X100% = 130 / 2600 X 100% = 5% [1] (c) (i) Jonas Trading returned goods of $100 previously bought from the business. [1] (ii) The cheque of $2470 received on 22 August from Jonas Trading was dishonoured [1] and the discount allowed of $130 was withdrawn [1]. (iii) The business wrote off the outstanding debts amounting to $4500 owed by Jonas Trading. [1] (d) Profit would be understated [1/2] by $130 [1/2] Trade receivables would be understated [1/2] by $130 [1/2]

POA P2 Prelim 2024 7 Answer Key (e) Decision [1] I would advise James Trading to extend credit to Jerrick Firm Evidence #1 [1] Jerrick Firm has been in business for 10 years, 7 more years than Joel Trading of 3 years. Explanation for Evidence #1 [1] Since it has been in operation for 10 years, it should be more stable and would have built up a reputation for the quality of products it supplies in addition to the goodwill it gives to its customers. It will be less likely to close down and more likely to be able to repay its debt. Evidence #2 [1] Jerrick Firm paid late twice compared to Joel Trading w ho paid late 5 times. Explanation for Evidence #2 [1] Jerrik Firm is more reliable , and James Trading can be more assured of collecting money from Jerrick Firm than from J oel Trading. Evidence #3 [1] Jerrick Firm has 3 physical outlets in major shopping districts in Singapore, while Joel Trading operates online. Explanation for Evidence #3 [1] Since Jerrick Firm physical outlets are conveniently located in major shopping districts, it will have easy access to customers, and will also attract customers who would prefer to see and touch the clothing before buying. Jerrick Firm can generate consistent sales revenue to pay James Trading on time. Evidence #4 [1] Jerrick Firm is popular with affluent working professionals with high purchasing power (wealthy). Explanation for Evidence #4 [1] Jerrick Firm is likely to generate high sales revenue and more likely to pay on time. OR

POA P2 Prelim 2024 8 Answer Key Decision [1] I would advise James Trading to extend credit to Joel Trading Evidence #1 [1] Joel Trading has a better repayment history. It has collection days of 35 days as compared to Jerrick Firm of 37 days. Explanation for Evidence #1 [1] Joel Trading is more prompt in payment and James Trading will be able to obtain cash earlier which can be used for other purposes. Evidence #2 [1] Joel Trading operates online whereas Jerrick Firm only has p