2016 N Level POA Answers

Bycalebho

Phew! It’s over. 

On Paper 1 day last Friday, we tackled multiple topics + theory just the night before exams. Here’s the result:


The Suggested Solutions

Here’s the draft/suggested/imperfect solutions for Paper 1 and 2.

Paper 1:

ai)   

  1. Business deposits cash into the bank account within a year to reduce the bank overdraft.
  2. Shown as current liabilities in the statement of financial position. 

aii) 

  1.  Business makes regular cash payments in equal instalments over the loan period or pay one lump sum payment at the end of the loan period.
  2. Shown as a non-current liability as long term borrowing in the statement of financial position.

b)

ItemsIncreaseDecreaseNo effect
i)Non-current assets✓
ii)Cash at bank overdrawn (bank overdraft)✓
iii)Long-term loan account✓
iv)Owner’s capital✓
v)Profit for the year✓
vi)Working capital✓

a)

Trade payables control account

DateParticularsDr ($)+Cr ($)-Balance
2015
Jan 1Balance b/d16 260 Cr
Dec 31Inventory41 13057 390 Cr
31Inventory (cash)46056 930 Cr
31Cash at bank32 94023 990 Cr
31Inventory (returns)8 63015 360 Cr
31Trade receivable control12015 240 Cr
2016
Jan 1Balance b/d15 240 Cr

b) Invoice 

c) Historical cost concept

a)

Journal

DateParticularsDr ($)Cr ($)
2015
April 1Motor vehicles7 300
Other payable – Exe Motors7 300
Being bought a motor vehicle from Exe Motors on credit at $7 300

bi) Capital expenditure are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.

ii) Revenue expenditures are short-term expenses used in the current period or typically within one year.

c)

Capital ExpenditureRevenue Expenditure
Diesel for the motor van✓
Painting business name on the motor van✓
Motor van service✓
Motor van insurance✓

a) Wu account

DateParticularsDr ($)+Cr ($)-Balance
2016
Aug 1Balance b/d2 108 Dr
2Sales revenue5 7627 870 Dr
14Sales returns1 5846 286 Dr
31Cash at bank4 5001 786 Dr
Sep 1Balance b/d1 786 Dr

bi) Journal

DateParticularsDr ($)Cr ($)
2016
Sep 5Trade receivable – Wu4 500
Cash at bank4 500

ii) 1. Post-dated cheque

2. Incomplete cheque

ci) Cash discount is to encourage prompt payment.

ii) Discount allowed

Paper 2:

Tung

Statement of Financial Performance for the year ended 30 April 2018

$$
Sales revenue357 500
Less: Sales returns11 700
Net sales revenue345 800
Less: Cost of sales232 800
Gross Profit113 000
Add: Other income
Discount received4 500
117 500
Less: Other Expenses
Insurance expense (3 000 – 500)2 500
Motor vehicle expense (600 – 395)205
General expense (20 795 + 192)20 987
Wages and salaries30 200
Depreciation on fixtures and fittings (10% x 5 000)500
Depreciation on motor vehicle (25% x (10 000 – 2 500)1 87556 267
Profit for the year61 233

Tung 

Statement of Financial Position as at 30 April 2018

CostAccumulated DepreciationNet Book Value
Assets$$$
Non-current assets
Fixtures and fittings (1 000 + 500)5 0001 5003 500
Motor vehicles (2 500 + 1 875)10 0004 3755 625
Total non-current assets9 125
Current assets
Trade receivables39 000
Less: Allowance for impairment of trade receivables2 00037 000
Inventory17 500
Cash at bank23 650
Prepaid insurance expense500
Total current assets78 650
Total assets87 775
Equity and Liabilities
Capital (35 245 + 61 233 – (37 500+395))58 583
Current liabilities
Trade payables29 000
General expense payable192
Total current liabilities29 192
Total equity and liabilities87 775

a) Allowance for impairment of trade receivables account

DateParticularsDr ($)+Cr ($)-Balance
2015
Aug 31Impairment loss on trade receivables (2 500 + 1 320)3 8203 820 Cr
Sep 1Balance b/d3 820 Cr
2016
Aug 31Impairment loss on trade receivables (4 000 – 3 820)1804 000 Cr
Sep 1Balance b/d4 000 Cr

b) Impairment of trade receivables account

DateParticularsDr ($)+Cr ($)-Balance
2015
Aug 31Allowance for impairment of trade receivables(2 500 + 1 320)3 8203 820 Dr
31Income summary3 820–
2016
Aug 31Allowance for impairment of trade receivables180180 Dr
31Income summary180–

c) Prudence concept

a) Cash at bank account (adjusted)

DateParticularsDr ($)+Cr ($)-Balance
2016
Jun 30Balance b/d993 Dr
30Bank charges72921 Dr
Jul 1Balance b/d921 Dr

b) Bank reconciliation statement as at 30 June 2016

$$
Credit balance as per bank statement988
Add: Deposit in transit 
Trade receivables – F Short257
Less: Cheque not yet presented
Trade payables – S Lee324
Credit balance as per adjusted cash at bank account921

c) Current assets

d)1. To reconcile the differences between the cash at bank balance and the bank statement balance at the end of every month

2. To determine what should be the business’ actual balance in the Cash Book

3. To deter fraud

4. To correct any errors in the cash book made by the business

a )Journal

DateParticularsDr ($)Cr ($)
2016
Sep 30Fixtures and fittings5 000
Capital5 000
30Rent expense350
    Capital350
30Depreciation on fixtures and fittings750
Accumulated Depreciation on fixtures and fittings750

b) Correction of errors and drawings of goods for personal use.;

c) It is the brief explanation that provides the details of journal entry and helps understand the account debited or credited.

d) Accounting entity concept

e) Banks, government, competitor, investors

a) General expenses account

DateParticularsDr ($)+Cr ($)-Balance
2015
Jul 1General expense payable220220 Cr
2016
Jun 30Cash at bank5 2505 470 Dr
30General expense payable1755 645 Dr
30Income summary5 645–

bi) Expenses for services that have been paid for but not been used yet.

ii) Income for services which have not been provided yet but have been paid for already.

c) Integrity and objectivity

Feel free to comment or reply with your feedback and suggestions!

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