2018 N Level POA Answers
Paper 1 :
a)
1. Source documents
2. Journal entries
3. Ledger
4. Trial balance
5. Statement of financial performance
6. Statement of financial position
b) All business transactions must be supported by a verifiable unbiased piece of evidence.
c)
| Source document | ||
| i) | Bank charges | Bank statement |
| ii) | Sale of goods for cash | Receipt |
| iii) | Purchase of goods on credit | Invoice |
| iv) | Return of goods sold on credit | Credit note |
d)
Journal
| Particulars | Dr ($) | Cr ($) |
| Drawings | 320 | |
| Inventory | 320 |
a)
Rental income
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2017 | ||||
| Aug 1 | Rental income received in advance | 1 500 | 1 500 Cr | |
| Nov 1 | Cash at bank | 3 500 | 5 000 Dr | |
| 2018 | ||||
| May 1 | Cash at bank | 3 500 | 8 500 Dr | |
| Jul 31 | Rental income received in advance | 1 750 | 6 750 Dr | |
| Jul 31 | Income summary | 6 750 | – |
b)
Advertising expense
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2018 | ||||
| Jun 1 | Cash at bank | 2 100 | 2 100 Dr | |
| Jul 31 | Prepaid advertising expense | 1 750 | 350 Dr | |
| 31 | Income summary | 350 | – |
c) Expenses are recognised when incurred not paid and income are recognised when earned not received.
ai) Assets are resources of value owned by the business.
ii) Liabilities are amounts owed by a business to external parties.
iii) Owner’s equity is the owner’s interest or claim on the assets of the business.
b) (10 000 + 25 000) – (12 000 + 5 000) = $18 000
c)
| Effect on equity | ||
| 1 | Increase in trade receivables | Increase |
| 2 | Increase in accumulated depreciation | Decrease |
| 3 | Payment of wages which were owing | Decrease |
a) Inventory should be valued at the lower of cost or net realisable value.
b) 75 x (85 + 150 + 95 + 225) = $41 625
c) 165 x 10 = $1 650
d)
Journal
| Particulars | Dr ($) | Cr ($) | |
| Impairment loss on inventory(200-165)x10 | 350 | ||
| Inventory | 350 | ||
| Being impairment loss on inventory |
e) Matching concept
Paper 2 :
Delun
Statement of financial performance for the year ended 30 April 2018
| $ | $ | |
| Sales revenue | 266 425 | |
| Less: Sales returns | 1 325 | |
| Net sales revenue | 265 100 | |
| Less: Cost of sales | 186 730 | |
| Gross Profit | 78 370 | |
| Add: Other income | ||
| Discount received | 465 | |
| 78 835 | ||
| Less: Expenses | ||
| Motor vehicles expenses (9 280- 375) | 8 905 | |
| General expenses (11 275+210) | 11 485 | |
| Wages and salaries | 48 300 | |
| Rental expenses | 15 000 | |
| Impairment loss on inventory (1 389-937) | 452 | |
| Depreciation on motor vehicles (20%x(20 000-4 000)) | 3 200 | |
| Depreciation on fixtures and fittings (15% x 15 000) | 2 250 | 89 592 |
| Loss of the year | 10 757 |
Delun
Statement of financial position as at 30 April 2018
| Cost | Accumulated Depreciation | Net Book Value | |
| Assets | $ | $ | $ |
| Non-current assets | |||
| Motor vehicles (4 000+3 200) | 20 000 | 7 200 | 12 800 |
| Fixtures and fittings (2 250+2 250) | 15 000 | 4 500 | 10 500 |
| Total non-current assets | 23 300 | ||
| Current assets | |||
| Trade receivables | 46 300 | ||
| Less: Allowance for impairment of trade receivables | 1 389 | 44 911 | |
| Inventory | 19 632 | ||
| Cash in hand | 55 | ||
| Prepaid motor vehicles expense | 375 | ||
| Total current assets | 64 973 | ||
| Total assets | 88 273 | ||
| Equity and Liabilities | |||
| Capital (79 625-10 757-15 160) | 53 708 | ||
| Current liabilities | |||
| Bank overdraft | 1 680 | ||
| Trade payables | 32 675 | ||
| General expense payable | 210 | ||
| Total current liabilities | 34 565 | ||
| Total equity and liabilities | 88 273 |
a)
Interest expense account
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2017 | ||||
| Jun 30 | Interest expense payable | 300 | 300 Dr | |
| Jun 30 | Income summary | 300 | – | |
| July 1 | Interest expense payable | 300 Cr | ||
| Dec 31 | Cash at bank | 600 | 300 Dr | |
| 2018 | ||||
| Jun 30 | Interest expense payable | 240 | 540 Dr | |
| Jun 30 | Income summary | 540 | – |
b)
| Non-current liabilities | Current liabilities | |
| $ | $ | |
| as at 30 June 2017 | 10,000 | 6%*10,000*6/12=300 |
| as at 30 June 2018 | 8,000 | 6%*8,000*6/12= 240 |
a) To prevent overcrowding ledger and to prevent fraud.
b)
Trade receivables control account
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2017 | ||||
| Apr 1 | Balance b/d | 32 850 Dr | ||
| 2018 | ||||
| Mar 31 | Sales revenue | 85 195 | 118 045 Dr | |
| 31 | Cash at bank | 74 955 | 43 090 Dr | |
| 31 | Discount allowed | 4 060 | 39 030 Dr | |
| 31 | Sales returns | 2 590 | 36 440 Dr | |
| 31 | Trade payables control | 480 | 35 960 Dr | |
| Apr 1 | Balance b/d | 35 960 Dr |
c) General journal
d) Sales ledger
e) Set off / contra entries. Sometimes, the same person may be trade payable and trade receivable for the business. At the end of the month, the smaller amount in his account from one ledger is transferred to his account in the ledger with a large amount. The entry passed for recording this transfer is known as set off or contra entry.
a)
Journal
| Date | Particulars | Dr ($) | Cr ($) |
| 2018 | |||
| May 1 | Fixtures and fittings | 1275 | |
| Inventory | 3855 | ||
| Bank loan | 2000 | ||
| Capital | 3130 | ||
| Assets is able to pay its current liabilities. |
b) Correction of errors
c)
Trade payable – Lim
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2018 | ||||
| Jun 1 | Balance b/d | 2 480 Dr | ||
| 4 | Inventory | 2 655 | 5 135 Dr | |
| 18 | Inventory(returns) | 220 | 4 915 Dr | |
| 28 | Cash at bank (95%x2 480) | 2 356 | 2 559 Dr | |
| 28 | Discount received (5%x2 480) | 124 | 2 435 Dr | |
| Jul 1 | Balance b/d | 2 435 Dr |
a)
Cash in hand account
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2018 | ||||
| Jul 1 | Balance b/d | 75 Dr | ||
| 3 | Sales revenue | 905 | 980 Dr | |
| 25 | Wages expense | 50 | 930 Dr | |
| 29 | Cash at bank | 820 | 110 Dr | |
| Aug 1 | Balance b/d | 110 Dr |
b)
Cash at bank account
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2018 | ||||
| Jul 1 | Balance b/d | 180 Dr | ||
| 6 | Trade receivables – Lionel (dishonoured) | 172 | 8 Dr | |
| 10 | Trade receivables – Sasha (96% x 550) | 528 | 536 Dr | |
| 10 | Discount allowed (4% x 550) | 22 | 558 Dr | |
| 14 | Trade payable – Rayzal (95% x 1 260) | 1 197 | 639 Cr | |
| 14 | Discount received (5% x 1 260) | 63 | 702 Cr | |
| 19 | Electricity expenses | 350 | 1 052 Dr | |
| 29 | Cash in hand | 820 | 232 Cr | |
| Aug 1 | Balance b/d | 232 Cr |
