2018 POA N Level Answer

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 chargesBank statement
ii)Sale of goods for cashReceipt
iii)Purchase of goods on creditInvoice
iv)Return of goods sold on creditCredit note

d)

Journal

ParticularsDr ($)Cr ($)
Drawings320
    Inventory320

a)

Rental income

DateParticularsDr ($)+Cr ($)-Balance
2017
Aug 1Rental income received in advance1 5001 500 Cr
Nov 1Cash at bank3 5005 000 Dr
2018
May 1Cash at bank3 5008 500 Dr
Jul 31Rental income received in advance1 7506 750 Dr
Jul 31Income summary6 750

b)

Advertising expense

DateParticularsDr ($)+Cr ($)-Balance
2018
Jun 1Cash at bank2 1002 100 Dr
Jul 31Prepaid advertising expense1 750350 Dr
31Income summary350

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
1Increase in trade receivablesIncrease
2Increase in accumulated depreciationDecrease
3Payment of wages which were owingDecrease

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

ParticularsDr ($)Cr ($)
Impairment loss on inventory(200-165)x10350
    Inventory350
Being impairment loss on inventory

e) Matching concept

Paper 2 :

Delun

Statement of financial performance for the year ended 30 April 2018

$$
Sales revenue266 425
Less: Sales returns1 325
Net sales revenue265 100
Less: Cost of sales186 730
Gross Profit78 370
Add: Other income
Discount received465
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 expenses15 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 25089 592
Loss of the year10 757

Delun

Statement of financial position as at 30 April 2018

CostAccumulated DepreciationNet Book Value
Assets$$$
Non-current assets
Motor vehicles (4 000+3 200)20 0007 20012 800
Fixtures and fittings (2 250+2 250)15 0004 50010 500
Total non-current assets23 300
Current assets
Trade receivables46 300
Less: Allowance for impairment of trade receivables1 38944 911
Inventory19 632
Cash in hand55
Prepaid motor vehicles expense375
Total current assets64 973
Total assets88 273
Equity and Liabilities
Capital (79 625-10 757-15 160)53 708
Current liabilities
Bank overdraft1 680
Trade payables32 675
General expense payable210
Total current liabilities34 565
Total equity and liabilities88 273

a)

Interest expense account

DateParticularsDr ($)+Cr ($)-Balance
2017
Jun 30 Interest expense payable 300300 Dr
Jun 30Income summary300
July 1Interest expense payable 300 Cr
Dec 31Cash at bank600300 Dr
2018
Jun 30Interest expense payable240540 Dr
Jun 30Income summary540

b)

Non-current liabilitiesCurrent liabilities
$$
as at 30 June 201710,0006%*10,000*6/12=300
as at 30 June 20188,0006%*8,000*6/12= 240

a) To prevent overcrowding ledger and to prevent fraud.

b)

Trade receivables control account

DateParticularsDr ($)+Cr ($)-Balance
2017
Apr 1Balance b/d32 850 Dr
2018
Mar 31Sales revenue85 195118 045 Dr
31Cash at bank74 95543 090 Dr
31Discount allowed4 06039 030 Dr
31Sales returns2 59036 440 Dr
31Trade payables control48035 960 Dr
Apr 1Balance b/d35 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

DateParticularsDr ($)Cr ($)
2018
May 1Fixtures and fittings 1275
Inventory 3855
Bank loan2000
Capital 3130
Assets is able to pay its current liabilities. 

b) Correction of errors 

c)

Trade payable – Lim

DateParticularsDr ($)+Cr ($)-Balance
2018
Jun 1Balance b/d2 480 Dr
4Inventory2 6555 135 Dr
18Inventory(returns)2204 915 Dr
28Cash at bank (95%x2 480)2 3562 559 Dr
28Discount received (5%x2 480)1242 435 Dr
Jul 1Balance b/d2 435 Dr

a)

Cash in hand account

DateParticularsDr ($)+Cr ($)-Balance
2018
Jul 1Balance b/d75 Dr
3Sales revenue905980 Dr
25Wages expense50930 Dr
29Cash at bank820110 Dr
Aug 1Balance b/d110 Dr

b)

Cash at bank account

DateParticularsDr ($)+Cr ($)-Balance
2018
Jul 1Balance b/d180 Dr
6Trade receivables – Lionel (dishonoured) 1728 Dr
10Trade receivables – Sasha (96% x 550)528536 Dr
10Discount allowed (4% x 550)22558 Dr
14Trade payable – Rayzal (95% x 1 260)1 197639 Cr
14Discount received (5% x 1 260)63702 Cr
19Electricity expenses3501 052 Dr
29Cash in hand820232 Cr
Aug 1Balance b/d232 Cr

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