Deoxification POA WA1 PP Answer Key

Deoxyfication NA/G2 Sec 4 WA1 POA Practice Paper Answer Key DISCLAIMER: This is not an OFFICIAL paper created by a school. Although this is a practice paper, it may not cover the entire syllabus and marks in questions may differ from actual WA papers. It is advisable to practice using practice papers provided by an OFFICIAL SCHOOL/SOURCE. Some questions has been taken from school papers and worksheets so that you can practice with possible WA questions. Names and numbers in questions has been changed subsequently. Instructions: This is an answer key. Use this after you have completed the NA/G2 Sec 4 WA1 POA Practice Paper 1. You can also use this to self-study. Chapters included in this practice paper: - Chapter 10: Trade Receivables - Chapter 12: Trade Payables Total Duration: 1 hour The total marks for this paper is 30.

1. Isaac is a sole trader who buys and sells shoes. He buys goods on credit from Raiden. During May 2024, Isaac had the following transactions with Raiden. May 1 Isaac owed Raiden $1400. 10 Isaac bought goods from Raiden at a list price of $2000, less 10% trade discount. 13 Isaac returned damaged goods bough on 10 October to Raiden, list price of $450. 22 Isaac paid Raiden to settle the amount owed on 1 May by cheque, less 5% cash discount. REQUIRED (a) Define Trade Payables. [1] Trade Payables refer to the amounts owed to suppliers when business buys goods and non-current assets on-credit. (b) Why do businesses buy on credit instead of paying cash? [2] When a business buys goods and non-current assists on credit, it can receive the goods and non-current assets first and pay later. Thus, cash can be used for other operations of the business. (c) Prepare Raiden’s Account for the month of May 2024 in the books of Isaac. [8] Trade Payable - Raiden Date Particulars Dr Cr Bal 2024 $ $ $ May 1 Balance b/d 1400 Cr May 10 Inventory (90% x $2000) 1800 3200 Cr May 13 Inventory (90% x $450) 405 2795 Cr May 22 Cash at bank (95% x 1400) 1330 1465 Cr Discount received (5% x 1400) 70 1395 Cr Jun 1 Balance b/d 1395 Cr (d) Give one reason why Raiden gave Isaac a discount on 22 May 2024. [1] - It is to encourage Isaac to pay early.

2. On 1 May 20X2, Sigma Trading had the following balance: $ Allowance for impairment of trade receivables 2600 On 9 December 20X2, a credit customer, Aura Co, closed down and the business wrote of its debts amounting to $500. On 30 April 20X3, the trade receivables balance was $55 000. The business decides to make an allowance for impairment of trade receivables based on 5% of its trade receivables. REQUIRED (a) Calculate the allowance for impairment of trade receivables for the year ended 30 April 20X3. [1] 5% x 55 000 = $2750 (b) Prepare the journal entry to record the following: [8] (i) Write off debt owed by Aura Co. (ii) Adjustment of allowance for impairment of trade receivables for the financial year ended 30 April 20X3. Journal Date Particulars Dr ($) Cr ($) 20X2 Dec 9 Allowance for impairment of trade receivables 500 Trade receivables – Aura Co 500 20X3 Apr 30 Impairment loss on trade receivables 650 Allowance for impairment of trade receivables 650 (c) Prepare an extract of statement of financial performance for the year ended year ended 30 April 20X3, showing only the expenses portion. [2] Sigma Trading Extract of statement of financial performance for the year ended 30 April 20X3 Less: Other Expenses $ $

Impairment loss on trade recievables 650

3. The following allowance for impairment of trade receivables account is extracted from the books of Kino Books for the year ended 31 July 2022 and 2023. REQUIRED (a) Interpret the entries on the following dates: [4] 27 January 2022: On 27 January 2022, Kino Books wrote off $1360 worth of debts owed by Pop Journals 31 July 2022: On 31 July 2022, Kino Books reviewed its trade receivables and increase allowance for impairment of trade receivables by $1140 to $3180. (b) State the effect of adjusting allowance for impairment of trade receivables on current assets and profit for the year ended 31 July 2022. [1] Current assets will decrease by $1140 Profit for the year will decrease by $1140 Allowance for impairment of Trade Receivables (Cr) Date Particulars Dr ($) Cr ($) Bal ($) 2021 Aug 1 Balance b/d 3400 Cr 2022 Jan 27 Trade receivables: Pop Journals 1360 2040 Cr Jul 31 Impairment loss on trade receivables 1140 3180 Cr Aug 1 Balance b/d 3180 Cr 2023 Jul 31 Impairment loss on trade receivables 780 2400 Cr Aug 1 Balance b/d 2400 Cr

(c) The balance of the trade receivables account as at 31 July 2023 is $12 000. Prepare an extract of statement of financial position as at 31 July 2023, showing only the current assets section. [2] End Of Paper Kino Books Extract of statement of financial position as at 31 July 2023 Assets $ $ Current Assets Trade receivables 12000 Less: Allowance for impairment of trade receivables (2400) 9600