MI 2023 Prelim Examination P2 Qns and Ans

2023 Preliminary Examination Pre-University 3 PRINCIPLES OF ACCOUNTING 9593/2 Paper 2 12 September 2023 3 hours READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional paper, ask the invigilator for a continuation booklet. Section A Answer all questions. Section B Answer all questions. Start each answer on a new page. You may use a calculator. All calculations must be shown adjacent to the answer. The number of marks is given in brackets [ ] at the end of each question or part question. ___________________________________________________________________________ This document consists of 8 printed pages. [Turn over

2 Section A Answer all questions in this section. 1 Magnet Ltd, a relatively young business, plans to sell gaming puzzles at a standard selling price of $16 per unit but to encourage sales, the selling price will be reduced to 20% off the standard selling price for the month of September when the product will be launched. The budgeted unit sales for the first 6 months are as follows: Year 2023 Months SP Sales Forecast (in units) September $12.80 50 000 October $16 30 000 November 25 000 December 28 000 Year 2024 January 32 000 February 30 000 Estimated production costs per unit of product are as follows: Direct materials (2 units @ $1.50) $3.00 Direct labour (3 hours @ $2 per hour) $6.00 Selling expenses $1.00 Additional information 1 90% of sales are on credit and credit customers is expected to pay in full, 1 month after sale. Cash customers are allowed a discount of 10%. 2 Production began in August. Monthly production will be scheduled so that the finished goods inventory at the end of any month is sufficient to meet the forecast sales target for the following one and a half months. 3 The raw materials needed for production will be purchased so that the closing inventory of raw materials at the end of any month are sufficient to meet the production requirements of the next month. 4 If more than 60 000 units of raw materials are purchased in a month, the raw materials supplier has agreed to give a special discount of 20% off the usual price of $1.50 for each additional unit purchased. 5 The supplier of the raw materials has agreed to give half -month credit terms, that is, purchases made in September will be paid in the middle of October.

3 6 All other expenses are paid as incurred. Fixed production expenses for the year including annual depreciation of $48 000, amounted to $480 000. The fixed expenses are incurred uniformly throughout the year. 7 The firm bought non - current assets costing $50 000 in August 2023 , to be paid in November 2024. 8 At the end of August 2023, there is a bank balance of $200 000. REQUIRED (a) A production bud