Accounting (0452) · May/June 2021 · Question paper 21

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Cambridge IGCSE™

* 4 3 0 0 9 0 8 0 3 3 *

ACCOUNTING

0452/21

Paper 2 Structured Written Paper

May/June 2021
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. Any blank pages are indicated.
DC (PQ) 200793/6
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Rahat is a trader.
The following transactions took place in March 2021.
March

3

Cash sales, $580, were paid directly into Rahat’s business bank account

6

Paid insurance, $360, by direct debit

9

Paid $196 to GH Limited by telephone transfer, having deducted 2% cash
discount from the amount due

13

Paid $75 cash for stationery

17

Cash sales, $140

27

Sold old office equipment to Burgess, who paid $50 by cheque in full settlement

30

Paid $340 to Colin by cheque in full settlement of a debt of $350

REQUIRED
(a) Complete Rahat’s cash book on the page opposite.
Balance the cash book and bring down the balances on 1 April 2021.

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b/d

Balance

Details

March 1

2021

Date

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150

$

$

Bank

Cash

Discount
allowed
$

March 1

2021

Date

Rahat
Cash Book

b/d

Balance

Details

Discount
received
$

$

Cash

[11]

1980

$

Bank

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(b) Complete the following table by placing a tick (3) in the correct column to indicate whether
each item would be used to update the cash book or would appear in the bank reconciliation
statement.
Update the
cash book

Bank
reconciliation
statement

Cheque from Burgess dishonoured
Cheque to Colin unpresented
Overdraft interest
Standing order paid for rates
[4]
Rahat is concerned about the level of her bank overdraft. She is considering applying for a bank
loan. This would enable her to pay off her bank overdraft and to purchase new office furniture.
REQUIRED
(c) Advise Rahat whether she should apply for the bank loan. Justify your answer by providing
two advantages and two disadvantages.

[5]
[Total: 20]

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John and Banu are partners.
The partners provided the following list of balances at 31 March 2021.
$
158 000
9 400
69 200
11 250
10 475
9 675
2 000
4 800
4 000
14 150
5 835
130 000
18 000
8 100
10 000

Revenue
Inventory at 1 April 2020
Purchases
Rates and insurance
Wages
General expenses
Discount allowed
Commission receivable
Balance at bank
Trade receivables
Trade payables
Premises at cost
Fittings at cost
Provision for depreciation of fittings
Loan from John
Capital accounts
John
Banu
Current accounts
John
Banu
Drawings
John
Banu

75 000
50 000
4 050
2 365
19 000
21 000

Additional information
1

Inventory at 31 March 2021 was valued at $9200.

2

Rates of $650 were unpaid at 31 March 2021.

3

Commission receivable of $300 was due at 31 March 2021.

4

Depreciation on fittings is to be charged at 15% per annum using the straight-line method.

5

The partnership agreement provides for:
interest on partner’s loan of 5% per annum
interest on drawings of 6%
interest on capital of 3% per annum
a salary to John of $8500 per annum
residual profits and losses to be shared 40% to John and 60% to Banu.

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REQUIRED
(a) Prepare the income statement for John and Banu for the year ended 31 March 2021.
John and Banu
Income Statement for the year ended 31 March 2021
$

$

[9]

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(b) Prepare the appropriation account for John and Banu for the year ended 31 March 2021.
John and Banu
Appropriation Account for the year ended 31 March 2021
$

$

[5]

(c) State the purpose of:
(i)

charging interest on the partners’ drawings

[1]

(ii)

paying interest on the loan from John.

[1]

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(d) Complete the table by placing a tick (3) against each statement which describes an advantage
to John of being in a partnership with Banu.
Continuity of existence of the business
Banu may have skills and knowledge which John does not have
John is only liable for business debts up to the amount he agreed to
contribute
Additional finance is available to the business
Risks and responsibilities are shared
John is bound by the actions of Banu carried out on behalf of the
business
John can discuss matters with Banu before making decisions
[4]
[Total: 20]

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TC Limited is a manufacturing company. The company’s year end is 31 January.
On 31 January 2021, the company’s ledger account balances included the following.
Inventory at 1 February 2020
Raw materials
Work in progress
Finished goods
Purchases
Raw materials
Finished goods
Wages
Factory operatives
Factory supervisor
Rent and rates
Insurance
General factory expenses
Carriage inwards on raw materials
Factory equipment at cost
Provision for depreciation of factory equipment

$
7 500
11 220
925
91 400
6 850
52 000
23 100
19 620
4 600
4 200
6 280
90 000
30 960

Additional information
1

Inventory at 31 January 2021
Raw materials
Work in progress
Finished goods

8 000
11 900
1 075

2

The factory equipment is to be depreciated at 20% per annum using the reducing balance
method.

3

In December 2020, $3600 was paid for rent for the period 1 December 2020 to
28 February 2021.

4

At 31 January 2021 rates of $550 were unpaid.

5

Rent and rates are to be apportioned equally between the factory and the office.

6

Insurance is to be apportioned 75% to the factory and 25% to the office.

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REQUIRED

(a) Prepare the rent and rates account for TC Limited for the year ended 31 January 2021.
Balance the account and bring down the balances on 1 February 2021.
TC Limited
Rent and rates account
Date

Details

$

Date

Details

$

[5]

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(b) Prepare the manufacturing account for TC Limited for the year ended 31 January 2021.
TC Limited
Manufacturing Account for the year ended 31 January 2021
$

$

[10]

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The directors of TC Limited are considering the purchase of various low-value items of office
equipment.
REQUIRED
(c) Advise the directors whether or not they should charge depreciation on these items.
Justify your answer by providing two advantages and two disadvantages.

[5]
[Total: 20]

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Neith is a trader. Her financial year ends on 31 March.
Neith prepared the following trial balance which contains errors.
Neith
Trial Balance at 31 March 2021
Debit
$
Fixtures and equipment at cost
Provision for depreciation of fixtures and equipment
Inventory
Trade receivables
Provision for doubtful debts
Petty cash
Bank overdraft
Trade payables
Capital at 1 April 2020
Sales
Purchases
Rent and rates
Office expenses
General expenses
Suspense

300 000
120 000
322
100
11 400

41 520
16 000
9 000
8 150
506 492

Credit
$

9 100
16 100

3 200
160 000
107 498

210 594
506 492

Additional information
1

The value of inventory on 31 March 2021 was included in the trial balance.
On 1 April 2020 the inventory was valued at $8800.

2

On 30 March 2021, a motor vehicle was sold at book value, $2750. The disposal was
correctly recorded but no entry was made in the account of the purchaser. The purchaser
was expected to pay the amount due on 30 April 2021.

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REQUIRED
(a) Prepare the corrected trial balance at 31 March 2021.
Neith
Corrected Trial Balance at 31 March 2021
Debit
$

Credit
$

Fixtures and equipment at cost

Provision for depreciation of fixtures and equipment

Inventory

Trade receivables

Provision for doubtful debts

Petty cash

Bank overdraft

Trade payables

Capital at 1 April 2020

Sales

Purchases

Rent and rates

Office expenses

General expenses

[6]

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Neith later discovered the following errors.
1

The total of the general expenses column of the petty cash book, $32, for May 2020 had
been posted to the office expenses account.

2

A payment received, $75, from Anya, a credit customer, had been credited to the sales
account.

3

A credit purchase, $120, from Samir had been omitted from the books of account.

4

A cheque payment, $19, for office expenses, had been recorded as $91.

5

An invoice for office cleaning, $235, had been debited to the fixtures and equipment account.

REQUIRED
(b) Prepare the journal entry to correct each of the above errors. Narratives are not required.
Neith
Journal
Error
number

Details

Debit
$

Credit
$

[10]

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(c) Complete the table by placing a tick (3) to indicate the effect of correcting each error 2 to 5.
Ignore depreciation of non-current assets.
The effect of correcting error 1 has been shown as an example.
Error number

Increases
capital

1

Decreases
capital

No effect
on capital

3

2
3
4
5
[4]
[Total: 20]

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Omer is a trader. He provided the following information.
$

For the year ended 30 April 2021
Credit sales
Credit purchases
Gross profit
Commission receivable
Expenses

191 000
120 000
80 220
20 280
29 830

At 30 April 2021
Trade receivables
Trade payables

12 400
7 000

REQUIRED
(a) Calculate the following ratios.
Trade receivables turnover (days)
workings

answer
(round up to next
whole day)

Trade payables turnover (days)
workings

answer
(round up to next
whole day)

[4]

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The year ended 30 April 2021 was Omer’s first year of trading. His main competitor is Ahu who
has been trading for many years. Ahu has established a good reputation.
The following information relates to Ahu’s business for the year ended 30 April 2021.
Trade receivables turnover
Trade payables turnover

36 days
31 days

REQUIRED
(b) (i)

Suggest two reasons for the difference in the trade receivables turnover of the two
businesses.
1

2

[2]

(ii)

Suggest two reasons for the difference in the trade payables turnover of the two
businesses.
1

2

[2]

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Omer wants to increase sales and is considering employing a marketing manager who would be
paid $28 000 per annum.
REQUIRED
(c) Advise Omer whether or not he should employ a marketing manager. Justify your answer.
You may include reference to the possible effects on the income and expenses of the
business.

[5]
Omer is concerned that an increase in sales would lead to an increase in irrecoverable debts.
REQUIRED
(d) State three ways by which Omer could reduce the possibility of irrecoverable debts.
1

2

3

[3]

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By writing off any irrecoverable debts, Omer would be applying the matching and prudence
principles.
It is also important for Omer to apply other accounting principles.
REQUIRED
(e) State why Omer should apply each of the following accounting principles.
Matching

Prudence

Consistency

Business entity

[4]
[Total: 20]

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