MI 2020 Prelim P1 QP

2020 Preliminary Exams Pre-University 3 PRINCIPLES OF ACCOUNTING 9593/01 Paper 1 16 September 2020 3 hours Additional Materials: Answer Booklet READ THESE INSTRUCTIONS FIRST If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet. Write your name and class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. Do not use staples, paper clip, glue or correction fluid. You may use a calculator. DO NOT WRITE ON ANY BARCODES Section A and Section B Answer all questions. All calculations must be shown adjacent to the answer. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 10 printed pages [Turn over

2 Section A Answer all questions. 1 Perfect 10 Pte Ltd is a small business that owns retail outlets trading in gifts and novelties for the tourist industry. The accountants have recently advised the company that in 2020 the business’s banking facility will be reviewed and this process will require a revaluation of all the non-current assets being employed in its current operations. You are a bookkeeper for the business. The directors have asked you to provide a range of information in preparation for the banking review. REQUIRED (a) Explain how the non-current assets of the business are currently valued in the accounts. [3] (b) Describe how any increase in the value of the non-current assets upon revaluation would be shown in the existing balance sheet. [3] Additional information The following balances on the ledgers are provided for the existing assets and liabilities on 31 December 2019: $ Property at cost 420 000 Accumulated depreciation on property 280 000 Office equipment at cost 106 000 Accumulated depreciation on office equipment 54 000 Trade receivables 13 750 Allowance for impairment of trade receivables 2 250 Trade payables 87 100 Bank overdraft 32 320 Long-term loan 75 000 Inventory held 116 590 Cash in hand 24 771 The current valuation for property provided by an external surveyor is $510 000. REQUIRED (c) Prepare a draft balance sheet as at 31 December 2019 for the existing business using the surveyor’s latest valuation of non-current assets. Include a separate value for: (i) Shareholders capital and reserves (ii) Asset revaluation reserve [8]

3 Additional information The directors now propose to pay a cash dividend of $200 000 to the shareholders on the basis of the property revaluation. REQUIRED (