MI 2021 Prelim Paper 1

Candidate Name: Class:_____________ This question paper consists of 9 printed pages and 1 blank page. [Turn over 2021 Preliminary Examination Pre-university 3 PRINCIPLES OF ACCOUNTING 9593/1 15 September 2021 3 hours Additional Materials: Answer Booklet 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 answer paper ask the invigilator for a continuation booklet. Section A Answer all questions. Section B Answer all questions. Start each answer to a new question on a new page All calculations must be shown adjacent to the answer The number of marks is given in brackets [ ] at the end question or part question.

2 SECTION A Answer all questions in this section. 1. The accountant of Street Wear Pte Ltd, a local company selling fashion apparel, has produced the following set of balances, after preparing the income statement for year ended 31 July 2020. $000 Net Loss for the year 32 Retained earnings at 31 July 2019 680 Property and plant at cost 5 000 Accumulated depreciation for property and plant 1 700 Specialised equipment at cost 700 Accumulated depreciation for specialised equipment 200 Inventory 1 476 Trade receivables 710 Trade payables 2 600 Bank overdraft 88 Ordinary share capital at $1.00 each 2 000 Asset revaluation reserve 650 The directors met to finalise the accounts and agreed to make the following adjustments. 1. Upon consulting an appraisal company, it was determined that the specialised equipment had an estimated fair value of $350 000 and value-in-use of $290 000. 2. Included at cost in inventory are two batches of old clothing items. Their net realisable values are given below. Item Cost $ Net Realisable Value $ 1 30 000 23 000 2 40 500 50 000 3. A review of the bank statement for the month of July revealed $20 000 of cheques which were unpresented by suppliers and several cheques from major credit customers which were directly credited amounting to $128 000. 4. A major credit customer who owed $10 000 has gone bankrupt. Allowance for impairment of trade receivables is estimated to be 5% of trade receivables at year end. 5. An invoice dated 1 March 2020 for $45 000 for a newly built extension for the plant had been posted to repairs and maintenance account. This amount included repair costs of $2 500 and insurance of $2 100 for the 12 months to 28 February 2021. 6. The company depreciates property and plant at 25% on net book value. A full year’s depreciation is charged in the year of acquisition and none in the year of disposal. REQUIRED (a) Prepare a statement to show the corrected net profit or loss for the year ended 31 July 2020. [7] (b) Prepare an extract of the balance sheet as at 31 July 2020, showing only assets o