SPS POA ANS 2026 4E5NA PRELIMS P2

NAMEFORM CLASSACAD CLASSINDEX NO. ST. PATRICK’S SCHOOLPRELIMINARY EXAMINATION 2026SUBJECT:Principles of AccountsDATE:14 August 2026(7087/02)LEVEL:Secondary 4 Express/5NADURATION :2 hours Candidates answer on the Question Paper. ANSWERSREAD THESE INSTRUCTIONS FIRSTWrite your Name, Form Class, Acad Class and Index No. in the spaces at the top of the page.Write in dark blue or black pen.Do not use staples, paper clips, glue or correction fluid.Answer all questions.If working is needed for any question it must be shown with the answer.The use of an approved scientific calculator is expected, where appropriate.The businesses described in this question paper are entirely fictitious.The number of marks is given in brackets [ ] at the end of each question or part question.The total of the marks for this paper is 60.For Examiner’s UseScore/60This question paper consists of 14 printed pages including this cover page.

2 Answer all questions.1Refer to the Insert for data for Question 1.REQUIRED(a)Prepare the statement of financial performance for the business for the year ended 31 August 2026.[10]Advance Technology Company Statement of financial performance for the year ended 31 August 2026$$Sales revenue602360Less: sales returns9365Net sales revenue592995Less cost of sales126315Gross profit466680Add other incomeDiscount received 1840Commission income (16210 + 4725)2093522775Less expensesSalaries expenses30000Rent expense (60000 – 16000)44000General expense14198Interest expense (40000 x 6%)2400Impairment loss on trade receivables [95700x4%] - 25001328Depreciation of fixtures and fittings (189000 x 15%)28350Depreciation of motor vehicles (80810 – 31240) x 20%9914130190Profit for the year359265

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4 (b)Prepare the statement of financial position as at 31 August 2026. [10]Advance Technology CompanyStatement of Financial Position as at 31 August 2026$$$AssetsCostAccumulated DepreciationNet Book ValueNon-current assetsFixtures and fittings18900087430101570Motor vehicles808104115439656141226Current assetsCash in hand6000Trade receivables95700Less: allowance for impairment of trade receivables3828Net trade receivables91872Inventory (281000 – 70250)210750Prepaid rent expense16000Commission income receivable4725Insurance claim receivable70250399597Total assets540823Equity and liabilitiesOwner’s equityCapital (94992 + 359265 – 9270)444987Non-current liabilitiesLong-term borrowings30000Current liabilitiesBank overdraft1780Trade payable44776

5 Current portion of long-term borrowing10000Salaries payable7600Interest payable168065836Total equity and liabilities540823 [Total: 20]

6 2The trade receivable account for Lancelot Trading in the books of Macbeth Trading is shown below.Trade receivable-Lancelot TradingDateParticularsDebit ($)+Credit ($)-Balance ($)2026Jul 1Balance b/d24 000 Dr8Sales revenue12 30036 300 Dr12Sales returns 90035 400 Dr20Cash at bank4 90030 500 Dr20Discount allowed 10030 400 Dr31Cash at bank 608024 320 Dr31Allowance for impairment of trade receivables243200REQUIREDa) Interpret the entries on the following dates.[3](i) July 8Business sold goods costing $12 300 to Lancelot Trading on credit. (ii) July 20Received a cheque of $4 900 from Lancelot Trading for amount owed after deductingcash discount of $100. (iii) July 31Received a cheque for $6 080 from Lancelot Trading for payment towards his debt. Business decided to write off the balance of $24 320 owed as uncollectible.b) Explain with an accounting theory why it is necessary for Macbeth Enterprise to accountfor impairment loss on trade receivables.The amount of uncollectible debt is charged as an expense against sales revenue of thesame accounting period to calculate the profit or loss. [2]

7 The Matching theory is applied. The following information was obtained from the business for the year ended 31 July 2026.$Sales revenue390 000Sales returns5 900Net trade receivables as at 1 August 2025 31 200Net trade receivables as at 31 July 2026 42 600REQUIREDc) Calculate the following for the year ended 31 July 2026.i) rate of trade receivable turnoverii) trade receivable collection period.i) Rate of trade receivable turnover = Net credit sales revenue Average net trade receivables = [390000 – 5900] (31200+42600)/2 = 10.41 times ii) Trade receivable collection period = 36900/384100 x 365 = 35.07 days The following data was obtained for the year ended 31 July 2025.i) Rate of trade receivables turnover: 16.8 timesii) Trade receivables collection period: 21.72 daysd) Evaluate the efficiency of Macbeth Trading’s trade receivable management over the two years.The rate of receivables turnover has worsened from 16.8 times in 2025 to 10.41 timesin 2026. [2] [2]

8 The trade receivables collection period has lengthened from 21.72 days in 2025 to 35.07 days in 2026. The business has taken longer to collect from trade receivables in 2026. Its efficiency in managing trade receivables in 2026 has worsened. e) Explain the importance of efficient trade receivable management to the business.It is important because when a business takes longer than usual to collect paymentfrom its credit customers, it would have less cash, causing liquidity position to worsen.[1]f) Suggest one way for the business to improve on its trade receivables management.- Improve credit granting process.-Provide cash discounts to encourage customers to pay early.- Increase debt collection effort by sending regular reminders to credit customers who delay payment.-Engage professional debt recovery agencies to collect payment from financially distressed credit customers.Any one of the above [1][Total: 11]3The following information was provided by Comfy Walker Pte Ltd on 1 June 2025.$Share capital, 200 000 ordinary shares200 000Retained earnings25 000

9 On 1 March 2026, 70 000 shares were issued at $0.50 each. All the shares were fully paid via bank transfer. On 30 May 2026, a dividend of $0.20 was declared, to be paid out on 1 July 2026. The profit for the year ended 31 May 2026 was $63 700.REQUIREDa) Prepare journal entries to record the following.[3]i) Issue of share capital on 1 March 2026ii) Issue of dividends on 30 May 2026.iii) The transfer of profits on 31 May 2026.JournalDateParticularsDebit ($)Credit ($)2026Mar 1Cash at bank (70000 x 0.50)35000 Share capital35000May 30Dividends (270000 x 0.20)54000 Dividends payable54000May 31Income summary63700 Retained earnings63700b) Prepare the Statement of financial position of the business as at 31 May 2026, showingonly the equity section.Statement of financial position as at 31 May 2026 (extract)$$Equity and liabilitiesShareholder’s equity[2]

10 Share capital, 270000 Ordinary shares235 000Retained earnings [25000 + 63700 – 54000]34 700Total shareholders’ equity269 700