2020 POA O Level Answer

2020 O Level POA Answers 7175

Paper 1 :

a)

DateParticularsDr ($)Cr($)
Motor vehicle20500
Motor vehicle expense150
Cash at bank20650
orMotor vehicle20500
Cash at bank20500
Motor vehicle expense150
Cash at bank150
Discount allowed45
Cash in hand1455
Trade receivable-Xavier  (1455/97%)1500

b) The business is assumed to continue indefinitely.

a) 

General journal

DateParticularsDr ($)Cr($)
Trade receivable, Ming4950
Sales Revenue4950
Trade receivable J Yin625
Trade receivable SYin625

b)

Increase by 4950
No effect

Profit after adjustment = $24,822

(c)

Error of PrincipleRecord of transaction made in the wrong account which is of different category/class of the correct account
Compensating ErrorsError in computation or recording of a transaction that is offset by an error that is equal and opposite. / Amounts are overstated or understated . Keywords : overstated / understated
CompleteReversal ErrorsThe double entries made were reversed. Or amounts are debited and credited to the wrong nature.

a)        

Statement of financial performance for the year ended 31 August 2020

$$
Sales revenue 75180
Less: sales returns (2700)
Net sales revenue 74180
Less : cost of sales (45300) 
Gross profit 27180


b) 

Internal StakeholdersInformation neededReason
1. Owners and managersProfit and liquidityNeed to make decisions on how to plan, control, monitor and operate the business
2. EmployeesProfit and cash1)To evaluate their career prospects with the company2) To know if the business has sufficient cash to pay their salaries3) To know if they can get any bonuses

c) Money Measurement / Monetary theory. Only transactions that can be presented in dollars and cents can be recorded. Reputation, while valuable to a business, cannot be recorded into the books as it is not possible to put a monetary value on them.

Paper 2 :

Makiet Pte Ltd 

Statement of financial performance for the year ended 31 August 2019

$$
Sales revenue 425,725
Less: sales returns 18,015
Net sales revenue 407,260
Less : cost of sales 226,930
Gross profit 180,330
Less : expenses 
Wages and salaries 72,800 
Rent 38,400
General expense 20,870
Selling expense 8,225
Depreciation of equipment 34,500
Depreciation of motor vehicle 7,360
Reversal of impairment loss on trade receivables (235)
Impairment loss on inventory 1990183,910
Loss  for the year(3,580)

Makiet Pte Ltd 

Statement of financial position for the year ended 31 August 2019

Assets$$$
Non-current asset costAcc. dep.    N.B.V
Motor vehicle 57,50028,06029,440
Equipment 345,000205,000140,000
169,440
Current assets 
Trade receivables 43,950
Less: allowance for impairment of trade receivables (985)
Net trade receivables 42,950
Inventory 33,310
Prepaid rent 9,600
Total current assets85,875
Total assets 255,315
Equity and liabilities 
Issued share capital , 150,000 ordinary shares150,000
Retained earnings 32,020
Total equity 182,020182,020
Current liabilities 
Accrued general expense 570
Short term borrowing 8,700
Trade payable 34,025
Total current liabilities 43,295
Total equity and liabilities 255,315

a)

-Act as an independent check on all individual trade receivable accounts. [1]

-Provide a summary of all the individual trade receivable accounts. [1]

2(b)

Trade receivable control account 

Date Particulars Dr Cr Bal 
2020 $$$
Jun 1 Balance b/d 5,996 Dr
Jun 30 Discount allowed 1,824
Sales returns 3,750
Interest income 846
Trade payable control1,650
Cash at bank 9,527
Cash at bank (dishonoured cheque )292
Sales revenue 16,865
Jul 1 Balance b/d 7,248 Dr

Q2c)

Offset entry is the entry that allows a party and the business who is a receivable and payable to contra

its balances in order to obtain a net position. This will avoid the hassle of making payments for the

amount owing and amount owed between the business and the party involved. 

(d)(i) and (d)(ii) General journal 

(a)

 Adjusted cash at bank account 

Date Particulars Dr Cr Bal 
2020 $$$
Apr 30Balance b/d 5,517 Dr
Trade receivables – M lin 1,524
Rent expense 850
Bank charges 25
May 1Balance b/d5,806 Dr

(b)

Bank reconciliation statement as at 30 Apr 2020

Credit balance as per bank statement 4,577
Add: cheques not yet credited 
Sales revenue 1,926
Add: Error in recording 200
Less: cheques not yet presented 
Tung 897
Adjusted cash at bank 5,806

(c)

-To prevent fraud [1]

-To reconcile for the differences between cash at bank and bank statement balance in order to find the

accurate cash at bank amount [1]

(d)

Cash at bank deposited in bank is viewed as an asset by the company [1] while Cash at bank received

from the company is viewed as a liability by the bank. [1]

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