0452/21/M/J/20 Question Paper – Accounting May/June 2020 Paper 21

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Cambridge Accounting (0452) question paper for paper 21, May/June 2020 — 0452/21/M/J/20, file 0452_s20_qp_21.pdf.

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Cambridge IGCSE™

* 8 9 1 1 3 1 4 5 8 2 *

ACCOUNTING

0452/21

Paper 2 Structured Written Paper

May/June 2020
1 hour 45 minutes

You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
●
Answer all questions.
●
Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
●
Write your name, centre number and candidate number in the boxes at the top of the page.
●
Write your answer to each question in the space provided.
●
Do not use an erasable pen or correction fluid.
●
Do not write on any bar codes.
●
You may use a calculator.
●
International accounting terms and formats should be used as appropriate.
●
You should show your workings.

INFORMATION
●
The total mark for this paper is 100.
●
The number of marks for each question or part question is shown in brackets [ ].
●
Where you are asked to complete a layout, you may not need all the lines for your answer.

This document has 24 pages. Blank pages are indicated.
DC (RCL (GO)) 186085/2
© UCLES 2020

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The ZED Sports Club has a shop which sells sportswear. The following details relate to the shop
for the year ended 29 February 2020.
Opening inventory
Closing inventory
Purchases

$
900
970
7600

Mark-up

40%

REQUIRED
(a) Calculate the shop sales for year ended 29 February 2020.

[4]
All the shop sales and purchases are for cash. All the club’s receipts are paid into the bank and
all payments are made by cheque. On 1 March 2019 the club’s bank balance was overdrawn by
$845.
In addition to the shop sales and purchases, the following receipts and payments were made
during the year ended 29 February 2020.
$
11 400
915
390
4 000
4 575
2 000

Subscriptions received
Competition fees received
Payments for competition prizes
Purchases of fittings
Rent and insurance
Wages of shop assistant

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3
REQUIRED

(b) Prepare the receipts and payments account for the ZED Sports Club for the year ended
29 February 2020. Balance the account and bring down the balance on 1 March 2020.
ZED Sports Club
Receipts and Payments Account for the year ended 29 February 2020
Date

Details

Date

Details

………

………
[8]

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The club’s bank statement at 29 February 2020 showed a positive balance of $7162.
On comparing the bank statement with the cash book, the treasurer found:
1

Competition fees, $260, had not been recorded by the bank.

A cheque paid for $25 for competition prizes had been charged twice by the bank.

The payment for fittings, $4000, was made on 27 February 2020, and had not been recorded
on the bank statement.

REQUIRED
(c) Prepare the bank reconciliation statement for ZED Sports Club at 29 February 2020.
ZED Sports Club
Bank Reconciliation Statement at 29 February 2020

[5]
(d) State three differences between a receipts and payments account and an income and
expenditure account.
Receipts and payments account

Income and expenditure account

3
[3]
[Total: 20]
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Ame provided the following balances from his books at 31 March 2020.
Capital
Drawings
Equipment at cost
Provision for depreciation of equipment
Inventory at 1 April 2019
Trade receivables
Bank overdraft
Trade payables
Sales
Purchases
Purchases returns
Carriage inwards
Discount received
Commission receivable
Rent and insurance
Office expenses

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$
10 369
4 000
15 500
3 100
1 765
1 290
475
1 600
31 250
18 330
910
640
815
1 500
5 700
2 425

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REQUIRED
(a) Prepare Ame’s trial balance at 31 March 2020.

Show the difference in the trial balance totals as a suspense account balance.
Ame
Trial Balance at 31 March 2020
Debit
$

Credit
$

Capital

Drawings

Equipment at cost

Provision for depreciation of equipment

Inventory at 1 April 2019

Trade receivables

Bank overdraft

Trade payables

Sales

Purchases

Purchases returns

Carriage inwards

Discount received

Commission receivable

Rent and insurance

Office expenses

Suspense

[6]

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Ame later discovered several errors had been made in the accounting records.
REQUIRED
(b) Complete the table to show the entries required to correct each error.
The first one has been completed as an example.
Entries required to correct the error
Debit

Error

Account

Credit
$

Account

No entry had been made for cash
sales, $60.

Cash

Office expenses, $240, had been
credited to the wages account.
No debit entry had been made.

The purchases journal total for
March 2020 was $2165. This
amount was incorrectly recorded
in the purchases account as
$2651.

An insurance payment, $375, had
been correctly recorded in the

cash book but no other entry had
been made.

The purchase of equipment,
$800, was correctly recorded in
the cash book but debited to the
office expenses account.

Sales

[9]

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(c) Prepare the suspense account. Start with the difference on the trial balance prepared in
Part (a). Balance or total the account as necessary.
Ame
Suspense account
Date

Details

Date

Details

………

[5]
[Total 20]

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Chippo owns a manufacturing business which produces product S. She provided the following
information for the year ended 30 April 2020.
Revenue
Purchases of raw materials
Purchases of finished goods
Wages of factory operatives
Royalties paid to the inventor of product S
Factory general expenses
Factory fuel and power
Rent and insurance
Factory machinery at cost
Provision for depreciation of factory machinery
Inventory at 1 May 2019: raw materials
work in progress
finished goods

$
254 000
46 500
59 000
38 250
7 690
4 500
5 325
28 000
60 000
21 600
3 120
5 400
8 220

Additional information
1

Factory machinery is depreciated at 20% per annum using the reducing balance method.

Rent and insurance is to be split equally between the factory and the office.

The annual salary of the factory supervisor is $28 500.

Closing inventory at 30 April 2020 was:
Raw materials
Work in progress
Finished goods

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$
3000
5590
7885

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REQUIRED
(a) Prepare Chippo’s manufacturing account for the year ended 30 April 2020.
Chippo
Manufacturing Account for the year ended 30 April 2020
$

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[10]
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(b) Prepare Chippo’s income statement (trading account section) for the year ended
30 April 2020.
Chippo
Income Statement (Trading Account section) for the year ended 30 April 2020
$

[4]

(c) Complete the table by placing a tick (ü) in the correct column, to indicate whether each of the
following actions would increase or decrease Chippo’s gross margin.
Action

Increase gross margin

Decrease gross margin

Increase wages of
factory supervisor
Reduce trade discount
allowed to customers

[2]

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Chippo is considering converting her sole trader business into a limited company because she
thinks that this will make it easier for her to obtain finance for future expansion.
REQUIRED
(d) Advise Chippo whether or not she should convert her business to a limited company, in order
to obtain finance. Justify your answer by providing advantages and disadvantages.

[4]
[Total: 20]

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Rani is a trader. Her financial year ends on 31 March.
She provided the following information about her three types of inventory at 31 March 2020.
Inventory
item
A
B
C

Number
of units
110
85
90

Cost
per unit
$
17
18
15

Selling price
per unit
$
20
19
16

Selling expenses
per unit
$
2
1
2

REQUIRED
(a) Calculate the total value of Rani’s inventory at 31 March 2020.

[4]
Rani later discovered that she had an amount of inventory of item D at 31 March 2020. This
inventory originally cost $1660. She considered this inventory to be obsolete.
REQUIRED
(b) Explain to Rani how the value of the inventory of item D affected the profit for the year ended
31 March 2020.

[2]

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(c) Advise Rani whether or not she should stop purchasing item D to avoid having obsolete
inventory in the future. Justify your answer by providing advantages and disadvantages.

[5]

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Rani earns advertising income by placing advertising boards in her shop window. The
following details relate to her advertising income.
On 1 April 2019 Rani had received $420 in advance, and $300 was owed to her.
During the year ended 31 March 2020, Rani received cheque payments totalling $6000. She
decided to write off the amount of $300 due to her.
On 31 March 2020 Rani had received $500 in advance, and $400 was owed to her.
REQUIRED
(d) Prepare the advertising income account in the ledger of Rani for the year ended 31 March
2020. Balance the account and bring down the balances on 1 April 2020.
Rani
Advertising income account
Date

Details

Date

Details

………

………
[7]

(e) Explain to Rani the effect on gross profit of recording sales of inventory as advertising income.

[2]
[Total: 20]

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MPT Limited prepares its financial statements to 30 April each year.
The company’s retained earnings at 1 May 2019 were $14 000. The general reserve was $35 000.
During the year ended 30 April 2020 the following took place.
1

The company made a profit for the year of $28 000 after charging debenture interest.

A transfer of $5000 was made to the general reserve.

A dividend of $4500 was paid. No other dividends were payable for the year.

MPT Limited provided the following balances at 30 April 2020.
$
152 000
60 400
30 330
6 200
24 900
31 500
630
20 000
150 000

Fixtures and equipment at book value
Motor vehicles at book value
Inventory
Bank overdraft
Trade payables
Trade receivables
Provision for doubtful debts
5% Debentures (repayable 2025)
Ordinary share capital
REQUIRED

(a) Calculate the retained earnings of MPT Limited at 30 April 2020.

[3]

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(b) Prepare the statement of financial position for MPT Limited at 30 April 2020.
MPT Limited
Statement of Financial Position at 30 April 2020
$

[7]

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The directors of MPT Limited are considering using the general reserve to repay the bank
overdraft.
REQUIRED
(c) State why it is not appropriate to use the general reserve to repay the bank overdraft.

[1]
(d) Calculate the return on capital employed (ROCE) for the year ended 30 April 2020. The
calculation should be correct to two decimal places and should be based on closing capital
employed.

[4]

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The directors are considering increasing dividend in 2021 as a way of increasing return on capital
employed (ROCE).
REQUIRED
(e) Advise the directors how the return on capital employed (ROCE) can be increased. Justify
your answer by commenting on both profit and capital employed.

[5]
[Total: 20]

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publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

0452/21/M/J/20

Accounting (0452) · May/June 2020 · Question paper 21

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