HGV 2022 Prelim P2 ANS

HillgroveSecondarySchool4E/5NAPreliminaryExamination2022Principlesof AccountsPaper 2(7087/02)Suggestedanswersandmarkingscheme Q1(a) SedapPteLtdStatementofFinancial Performancefortheyearended30June2022$ $Salesrevenue 900000 Less:Salesreturns (7000)Netsalesrevenue 893000Less:Costofsales (795000)Grossprofit 98000Add:OtherincomeServicefeeincome 12000(1)Discountreceived 100(1) 12100Less:OtherexpensesDiscountallowed 200(1)Rentexpense(-2/3x$9000) 29000(1)Utilitiesexpense 4900Wagesandsalariesexpense 38500Depreciationexpense:officeequipment(10%x$30000) 3000(1)motorvehicles[25%x($90000-$22500)] 16875(1)Reversal ofimpairmentlossontradereceivables(1) (160) (1)[(3%x$8000)-$400]Interestexpense(3/12x2%x$24000) 120 (92435)Profitfortheyear 17665[9m] Page1of 6

(b) SedapPteLtdStatementofFinancial Positionasat30June2022Cost Accumulated NetbookAssets depreciation valueNon-currentassetsOfficeequipment 30000 9000 21000Motorvehicles 90000 39375 50625Total Non-currentassets 71625(1)CurrentassetsCashatbank 10800 Tradereceivables 8000Less:Allowanceforimpairmentoftradereceivables (240) (3%x$8000)Nettradereceivables 7760Inventory 14800Servicefeeincomereceivable($12000-$10800) 1200(1)Prepaidrentexpense(2/3x$9000) 6000(1)Total currentassets 40560Total assets 112185EquityandLiabilitiesShareholders' equitySharecapital,10000ordinaryshares 20000(1)Retainedearnings($50450+$17665(1)*-$1000(1)**) 67115Total equity 87115Non-currentliabilitiesLong-termborrowings(-$4000) 20000(1)CurrentliabilitiesCurrentportionoflong-termborrowings(1) 4000(1)Interestexpensepayable 70Dividendspayable 1000(1)Total currentliabilities 5070Total equityandliabilities 112185 *OFbasedonprofit for theyear in(a)**OFbasedondividendspayableamount [11m] [Q1Total: 20m] Page2of 6

Q2(a)Costofpurchases=$7000+$100+$490+$200+$900=$8690[1m] (b) InthebooksofDurianQueenInventory Dr($) Cr($) Bal ($)2022 Jan1 Bal b/d 480 DrJan5 Tradepayable:FruitsKing 500(1) 980 Jan10 Costofsales(1) 480(1) 500 DrFeb1 Bal b/d 500 Dr (1)* *OF[4m] (c) InthebooksofDurianQueenJournalDate Particulars Dr($) Cr($)2022 Mar31 Impairmentlossoninventory 750(1) Insuranceclaimreceivable 250(1) Inventory 1000(1) [3m] (d)Theprudencetheory[1m]statesthattheaccountingtreatmentchosenshouldbetheonethatleastoverstatesassetsandprofitsandleastunderstatesliabilitiesandlosses[1m].Thus,inventoryshouldbevaluedatthelowerofcostornetrealisablevalueonstatementoffinancial positiontoensurethatinventory(whichisacurrentasset)isnotoverstated[1m]. (e)Salesrevenueandcostofsales[1m]Note: Bothaccountsmust becorrect tobeawarded1m. [Q2Total: 12m] Q3(a)Claimbytheowner(s)onthenetassetsofabusiness. [1m] (b)On12December2020,owner(orMugum)contributed$7000tothebusinessbankaccount. [1m] (c)Mugum’sbusinessmadealossof$3000fortheyearended31October2021andthisamountwastransferredtothecapital accounton31October2021. [1m] (d) InthebooksofMugum’sbusinessJournalDate Particulars Dr($) Cr($)2021 Oct31 Capital 240 Drawings 240 [2m] Page3of 6

(e)Liquidityistheabilityofabusines