NASS 2022 Prelim P1 ANS

Answerallquestions. 1 Tanyais a soleproprietorwhobuysandsellsmusicalinstruments.ThecashatbankaccountforTanya’sbusinessforthemonthofMarch2022isasfollows. CashatbankaccountDate Particulars ChequeNo. Debit Credit Balance2022 $ $ $Mar1 Balanceb/d 1800Dr 3 Kelly 172253 930 870DrDrawings 172254 180 690Dr8 Salesrevenue 700 1390Dr12 Inventory 172255 1900 510Cr16 JJTrading 1200 690Dr21 Stephanie 172256 800 110Cr25 Officeequipment 172257 1000 1110Cr29 Salesrevenue 320 790Cr31 Kit 2400 1610Dr TanyareceivedthefollowingbankstatementforthemonthofMarch2022. BankStatementDate Details Withdrawal Deposit Balance2022 $ $ $Mar1 Balanceb/d 2300 Cr 2 Chequeno.172250 500 1800 Cr5 Chequeno.172254 180 1620 Cr8 Credittransfer–Olivia 460 2080 Cr12 Deposit 700 2780 Cr15 Chequeno.172255 1900 880 Cr18 Deposit 1200 2080 CrChequeno.172253 930 1150 Cr20 Returnedcheque 1200 50 Dr26 Directpayment–Insurance 300 350 Dr31 Bankcharges 20 370 Dr

2 REQUIRED(a)UpdateTanya’scashatbankaccountforthemonthofMarch2022. [3] Cashatbankaccount2022 Dr($) Cr($) Balance($) Mar31 Balanceb/d 1610Dr Tradereceivable–Olivia ✔460 Tradereceivable–JJTrading ✔1200 Insuranceexpense ✔300 Bankcharges ✔20 550Dr Apr1 Balanceb/d ✔✔550Dr (b)Preparethebankreconciliationstatementat31March2022. [4]TanyaBankReconciliationStatementasat31March2022✔ $ $ Balanceasperbankstatement ✔(370) Add:Depositsintransits*(✔both*correct) Salesrevenue ✔320 Kit ✔2400 2720 2350 Less:Chequesnotyetpresented* Stephanie(chequeno.172256) ✔(800) Officeequipment(chequeno.172257) ✔(1000) (1800) Adjustedbalanceaspercashatbankaccount ✔550 NAS/2022/PRELIM/4E5N/POA/7087/01

3 (c)Statetheeffectof thebankreconciliationadjustmentson Tanya’s profitforthemonthended31March2022. [1]Profitwilldecreaseby$320✔✔ (d)Otherthanbankreconciliation,statetwowaysofinternalcontrola businessmayusetosafeguardcashbalances. [1]Anytwoofthefollowing(✔each): Segregationofduties/Custodyofcash/Authorisation (e)GiveonepossiblereasonwhyTanyachoseto operateherbusinessasa soleproprietorship. [1]Tanyawantstohavefullcontroloverthebusiness.✔✔ Oranyotherreasonableanswersbasedonfeaturesofsoleproprietorship [Total:10] 2 ThefollowingbalanceswereextractedfromPokemonTrader’s bookson1 January2021. The4%bankloanwasobtainedon1October2020topurchaseawarehouse.Theloanis tobepaidequallyover10years.Thepartialprincipalsumrepaymentandinterestpaymentaretobemadeon30Septembereachyear.Partofthewarehousewasthenleasedouttoatenantat$3500permonth.Duringtheyearended31 December2021,PokemonTraderreceivedchequesamountingto$54250fromthetenant. REQUIRED(a)Calculatetheinterestexpenseincurredfortheyearended31December2021. [2](4%x300000x9/12)+[4%x(300000–(300000/10))x3/12]✔✔ =$11700✔✔ NAS/2022/PRELIM/4E5N/POA/7087/01 {p136/5} $4%Bankloan 300000Rentalincomereceivable 1750

4 (b)Calculatetheamountofinterestexpensepayableat31December2021. [1]4%x[300000–(300000/10)]x3/12✔ =$2700✔ (c)Preparethebankloanaccountforthetwoyearsended31December2020and2021. [2]Bankloanaccount2020 Dr($) Cr($) Balance($) Oct1 Property/Cashatbank ✔300000 300000Cr 2021 Jan1 Balanceb/d ✔300000CrSep30 Cashatbank(300000/10) ✔30000 270000Cr 2022 Jan1 Balanceb/d ✔270000CrCr (d)Prepareanextractof PokemonTrader’s statementof financialpositionasat31December2021,showingtheliabilitiessectiononly. [3]PokemonTrader* StatementofFinancialPositionasat31December2021(extract)* $ Non-currentliabilities* Long-termborrowings✔(270000–30000) ✔240000 Currentliabilities*(✔all*correct) Currentportionoflong-termborrowings✔(300000/10) ✔30000 NAS/2022/PRELIM/4E5N/POA/7087/01

5 Interestexpensepayable ✔2700 (e) PreparejournalentriestoaccountforPokemonTrader’s rentalincomefortheyearended31December2021includingtheclosingentry. Narrationsarenotrequired.[5] Journal2021 Dr($) Cr($) Jan1 Rentalincome ✔1750 Rentalincomereceivable ✔1750 Dec31 Cashatbank ✔54250 Rentalincome ✔54250 31 Rentalincome(-1750+54250–42000)✔ ✔10500 Rentalincomereceivedinadvance ✔10500 31 Rentalincome(3500x12)✔ ✔42000 Incomesummary ✔42000 (f) StatetwoaccountingtheoriesappliedbyPokemonTraderwhenrecordingitsrentalincome. [1]Revenuerecognitiontheory✔ Accrualbasisofaccounting✔ [Total:14] NAS/2022/PRELIM/4E5N/POA/7087/01

6 3 DonkiSnacksprovidedthefollowingledgeraccountfortheyearended31May2022. Tradereceivable–Donpenaccount2021 Debit($) Credit($) Balance($)Jun 1 Balanceb/d 2800DrJul 15 Cashinhand 450 2350DrAug24 Salesrevenue 5700 8050DrAug27 Cashatbank 6200 1850DrDiscountallowed 300 1550DrAug31 Cashatbank 6200 7750DrDiscountallowed 300 8050Dr2022May31 Cashatbank 1800 6250DrAllowanceforimpairmentoftradereceivables 6250 -- REQUIRED(a) Interprettheentriesinthetradereceivable–Donpenaccounton: [5] (i) 1June2021: AmountowedbycreditcustomerDonpentoDonki Snackswas$2800.✔✔ (ii) 15July2021: Received$450cashfromcreditcustomerDonpen. ✔✔ (iii) 24August2021: SoldgoodstoDonpenfor$5700oncredit.✔✔ (iv) 31August2021: Chequeof$6200receivedfromDonpenon 27Augustwasdishonoured✔andcashdiscount of$300waswithdrawn.✔ (v) 31May2022: Receivedchequeof$1800fromcreditcustomer NAS/2022/PRELIM/4E5N/POA/7087/01

7 Donpen✔andwroteoff$6250owedbyDonpen.✔ (b) Explainthepurposeofthediscountallowedon27August2021. [1]Toencouragecreditcustomerstopayearly. ✔✔ (c) Statetheeffectofthetransactionon31May2022onDonkiSnacks’profitfortheyear. [1]Noeffect✔✔ (d) Usingrelevantaccountingtheories,explaintheneedforbusinessestomaintainanallowanceforimpairmentoftradereceivables. [3] Accordingtothematchingtheory✔,expensesincurred(impairmentlossontrade receivables)mustbematchedagainsttheincomeearned(creditsales)inthesame accountingperiodtodeterminetheprofitforthatperiod. ✔✔ Accordingtotheprudencetheory✔,expectedlossesduetoafallinvalueof assetsshouldberecordedtoavoidunderstatingexpensesandtoenableamore realistictradereceivablesbalancetobereportedintheStatementofFinancial Positiontoavoidoverstatingassets. ✔✔ [Total:10] NAS/2022/PRELIM/4E5N/POA/7087/01

8 4 CatMountainKingisa duriantrader. InthemonthofJune2022,hehadthefollowingpurchasesandsales: Date Purchases Date Sales Jun 3 300duriansfor$1500 Jun 4 350duriansfor$4100 11 400duriansfor$2100 13 700duriansfor$7300 16 200duriansfor$900 20 200duriansfor$1950 20 200duriansfor$1300 28 700duriansfor$7800 26 500duriansfor$2800 29 300duriansfor$1700 Cat MountainKingusesthe First-In-First-Out(FIFO)methodto accountfor hisinventory.On1June2022,hisinventoryaccounthadabalanceof350durianscosting$1820. REQUIRED(a) CalculatethecostofsalesforthemonthofJune2022. [2]1820+1500+2100+900+1300+2800✔✔ =$10420✔✔ (b) Statethevalueoftheinventoryon30June2022. [1]$1700✔✔ (c) StatehowCatMountainKingshouldvalueitsendinginventory. [1]Endinginventoryshouldbevaluedatlowerofcostandnetrealisable value.✔✔ NAS/2022/PRELIM/4E5N/POA/7087/01

9 (d) Statethesourcedocumentsusedineachofthefollowingtransactions: [2] (i) Creditpurchases:Invoice✔ (ii) Cashpurchases:Paymentvoucher/Receipt✔ (iii) Cashsales: Receipt✔ (iv) Salesreturns: Creditnote✔ [Total:6] ENDOFPAPER NAS/2022/PRELIM/4E5N/POA/7087/01