2021 GMSS POA 4EXP PRELIM PAPER 1

40 Geylang Methodist School (Secondary) Preliminary Examination 2021 Candidate Name Class Index Number PRINCIPLES OF ACCOUNTS Paper 1 7087/01 Sec 4 Express No additional materials are required. 1 hour 27 August 2021 Setter: Ms Tan Kai Wei READ THESE INSTRUCTIONS FIRST Write your index number and name in the spaces at the top of this page. Write in dark blue or black pen. Do not use staples, paper clips, glue or correction fluid/tape. The use of an approved calculator is allowed. Answer all questions on the question paper. The number of marks is given in brackets [ ] at the end of each question or part question. The total marks for this paper is 40 marks. This document consists of 8 printed pages. [Turn over

GMS(S)/POA/P1/PRELIM2021/4EXP 2 1 Meng runs a business which trades drones. The following information is available for the month of April 2020. There is no opening inventory. Apr 5 Purchased goods on credit from Zane, $105 000. 8 Sold goods costing $25 600 to Umar on credit for $81 920. 11 Return of goods by Zane, previously bought on credit, $10 210. 19 Sold goods and received cheque of $51 300. These goods cost $21 700. REQUIRED (a) Prepare the inventory account for the month of April 2020. Inventory account ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ..................................................................................................................................... [4] (b) State the source document issued on April 8. ..................................................................................................................................... [1] (c) Name and explain one accounting theory that is applied to valuation of inventory when the net realisable value of inventory falls below its cost. Name: .................................................................................................................................. Explanation: ......................................................................................................................... ............................................................................................................................................. ............................................................................................................................................. ..................................................................................................................................... [3]

GMS(S)/POA/P1/PRELIM2021/4EXP 3 Elsa runs a similar business. The rate of inventory turnover for two years are shown for both businesses. Meng Elsa 2019 2020 2019 2020 Rate of inventory turnover 5.91 times 3.48 times 7.24 times 5.62 times REQUIRED (d) Evaluate the rate of inventory turnover for both businesses for both years. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ..................................................................................................................................... [3] (e) Suggest and explain one way to improve the rate of inventory turnover for both businesses. ............................................................................................................................................. ............................................................................................................................................. ...................................................................................................................................... [2] [Total: 13]

GMS(S)/POA/P1/PRELIM2021/4EXP 4 2 The allowance for impairment of trade receivables account in the books of Zeth Trading is shown below. The business ends its financial year on 30 June. Allowance for impairment of trade receivables account Date Particulars Dr ($) Cr ($) Balance ($) 2018 July 1 Balance b/d 4 500 Cr Oct 18 Trade receivables – Amy 800 3 700 Cr 2019 Mar 10 Trade receivables - Jolly 150 3 550 Cr June 30 Impairment loss on trade receivables 50 3 500 Cr July 1 Balance b/d 3 500 Cr REQUIRED (a) Interpret the entries on the following dates in the allowance for impairment of trade receivables account. (i) 1 July 2018 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………………… [1] (ii) 10 March 2019 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………………… [1] (iii) 30 June 2019 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………………… [1] (b) State the effect and amount after adjusting allowance for impairment of trade receivables on profit for the year ended 30 June 2019. ………………………………………………………………………………………………... [2]

GMS(S)/POA/P1/PRELIM2021/4EXP 5 The following information is provided with regards to Zeth Trading’s trade receivables for the years ended 30 June 2019 to 2021. 2019 2020 2021 Rate of trade receivables turnover 11.82 times 12.38 times 15.56 times Trade receivables collection period 80.45 days 74.31 days 65.18 days (c) Comment on the trend of rate of trade receivables turnover and trade receivables collection period over the three years from 2019 to 2021. .............................................................................................................................................. .............................................................................................................................................. .................................................................................