0452/22/O/N/17 Question Paper – Accounting Oct/Nov 2017 Paper 22

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Cambridge Accounting (0452) question paper for paper 22, Oct/Nov 2017 — 0452/22/O/N/17, file 0452_w17_qp_22.pdf.

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Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

* 6 5 6 0 4 2 0 4 2 4 *

0452/22

ACCOUNTING

October/November 2017

Paper 2

1 hour 45 minutes
Candidates answer on the Question Paper.
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use an HB pencil for any diagrams or graphs.
Do not use staples, paper clips, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.
Answer all questions.
You may use a calculator.
Where layouts are to be completed, you may not need all the lines for your answer.
The businesses mentioned in this Question Paper are fictitious.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 20 printed pages.
DC (RCL (KM)) 136499/4
© UCLES 2017

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2
1

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Saffie is a trader. She maintains a three column cash book and also a petty cash book. The
imprest amount is $150. All payments below $100 are made from petty cash.
Saffie had the following transactions in September 2017.
September

Petty cash imprest restored from the business bank account

Paid taxi fare, $12

Paid $461 by cheque for repairs to office machinery

Purchased office stationery, $64

A cheque for $210 received from SL Stores in August was
dishonoured by the bank

Paid Faariqa, a credit supplier, $29

Received a cheque from Thushari, $392, in settlement of the
amount due less 2% cash discount

Cash sales, $4840, of which $4800 was immediately paid into
the bank

Paid Sopitha’s account of $480 after deducting a cash
discount of 2½%

Paid postage, $22

REQUIRED
(a) Record the above transactions in the following books which appear on the next two pages.
Balance each book and bring down the balances on 1 October 2017.
(i)

Petty cash book

(ii)

Cash book

[9]
[10]

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Sept 1

2017

Date

Total
received
$

0452/22/O/N/17

Balance b/d

Details

Saffie
Petty Cash Book

Total
paid
$
Postage and
stationery
$

Ledger
accounts
$

Travel

3
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Balance b/d

Details

Sept 1

2017

Date

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Discount
allowed
$
120

Cash

Bank

Sept 1

2017

Date

Saffie
Cash Book

Balance b/d

Details

Discount
received
$

Cash

3841

Bank

4
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On 30 September 2017 Saffie’s bank statement showed an overdraft of $4649. She compared
the cash book with her bank statement and found that the bank had not recorded the transactions
shown in the cash book on the following dates.
September 26
28
29
In addition, the bank had debited Saffie’s business bank account with $50 which should have
been debited to her personal bank account.
REQUIRED
(b) Prepare a bank reconciliation statement at 30 September 2017.
Saffie
Bank Reconciliation Statement at 30 September 2017

[6]
[Total: 25]

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6
2

Mustafa opened a garment factory on 1 August 2016.
On that date he purchased the following non-current assets.
$
210 000
92 000
29 800
19 600

Premises
Factory machinery
Office fixtures and equipment
Loose tools

Mustafa decided to revalue the loose tools at the end of each financial year and also decided
that no depreciation would be charged on premises. The other non-current assets are to be
depreciated using the straight line (equal instalment) method of depreciation at the following rates.
Factory machinery at 20% per annum
Office fixtures and equipment at 15% per annum
During his first year of trading, Mustafa purchased raw materials costing $447 400 (of which $1800
were returned to the supplier) and finished goods costing $22 200. His sales of finished goods
amounted to $998 500.
Mustafa made the following payments during the year ended 31 July 2017.
$
Wages – factory operatives
factory supervisors
office staff
General expenses
Rates and insurance
Carriage inwards
Carriage outwards

287 400
101 150
75 790
13 400
12 600
2 590
2 180

At 31 July 2017
Inventories were valued at
Raw materials
Work in progress
Finished goods
Loose tools were valued at
Wages of factory operatives accrued

$
62 200
38 200
69 700
18 100
3 760

The general expenses are to be apportioned 3⁄4 to the factory and 1⁄4 to the office.
The rates and insurance are to be apportioned 2⁄3 to the factory and 1⁄3 to the office.

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REQUIRED
(a) Prepare the manufacturing account for the year ended 31 July 2017.
Mustafa
Manufacturing Account for the year ended 31 July 2017
$

[13]

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(b) Calculate the cost of sales for the year ended 31 July 2017.

[4]
Mustafa wants to expand his business and needs to obtain long-term funds to finance this. He
decided to apply for a 10-year bank loan.
REQUIRED
(c) Suggest one disadvantage of raising funds by means of a bank loan.

[1]
(d) Suggest two other ways of raising long-term funds.
1

2
[2]
[Total: 20]

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Question 3 is on the next page.

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10
3

Zikri is a retailer. His financial year ends on 31 August.
Ashley pays Zikri a commission on goods purchased from Ashley by Zikri’s customers. The
commission is paid quarterly in arrears.
Zikri provided the following information:
Commission outstanding on 1 September 2016

$
495

Cheques received
4 September 2016
3 December 2016
5 March 2017
2 June 2017

495
515
374
404

Commission outstanding on 31 August 2017

392

REQUIRED
(a) Prepare the commission receivable account in the ledger of Zikri for the year ended
31 August 2017. Balance the account and bring down the balance on 1 September 2017.
Zikri
Commission receivable account
Date

Details

Date

Details

[6]

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On 1 January 2017 Zikri rented premises at an annual rent of $9600, payable six-monthly in
advance.
Rent was paid by cheque on 1 January 2017 and 1 July 2017.
REQUIRED
(b) Prepare the rent account in the ledger of Zikri for the year ended 31 August 2017. Balance
the account and bring down the balance on 1 September 2017.
Zikri
Rent account
Date

Details

Date

Details

[4]

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12
The following account appeared in Zikri’s ledger.
Stationery account
Date
2016
Sept 1
2017
Feb 8

Details

Balance b/d

XY Limited

212

Date
2017
July 31

Details
Drawings

$
15

On 31 August 2017 the inventory of stationery was valued at $76.
REQUIRED
(c) Explain each entry in the stationery account.
State where the double entry for each transaction would be made.
Balance b/d 1 September 2016
Explanation

Double entry
XY Limited 8 February 2017
Explanation

Double entry
Drawings 31 July 2017
Explanation

Double entry [6]
(d) Calculate the amount which would be transferred from the stationery account to the income
statement on 31 August 2017.

[1]

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(e) Name the section of the statement of financial position at 31 August 2017 in which the balance
of the stationery account should be included.
[1]
After the preparation of Zikri’s financial statements for the year ended 31 August 2017 some errors
were discovered.
REQUIRED
(f)

Complete the following table to indicate the effect of each error on the gross profit and the
profit for the year. Where the error does not affect the profits write No Effect.
The first one has been completed as an example.
Error

Effect on gross
profit

General expenses omitted from income
statement

No Effect

Effect on profit for
the year
Overstated

Opening inventory over-valued
Wages account over-added
Sales returns omitted from income
statement
Carriage inwards included in the
expenses in the income statement
Purchases returns added to the
purchases

[10]
[Total: 28]

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Rashida is a wholesaler. Her financial year ends on 30 September. She provided the following
information.
$
At 1 October 2016
Fixtures and fittings at cost
Provision for depreciation of fixtures and fittings
Office equipment at valuation
Inventory
Trade receivables

65 000
23 500
21 000
37 150
34 800

During the year ended 30 September 2017
Revenue
Purchases
Returns by customers
Returns to suppliers
Payments by cheque
Carriage inwards
Wages
General expenses
Rates and insurance
Loan interest
Office equipment

572 000
455 900
1 840
2 750
6 940
74 200
1 300
2 800
400
2 800

Additional information
1

Inventory at 30 September 2017 was valued at $41 160.

A loan of $20 000 was received on 1 April 2017. Interest is charged at 6% per annum.

Rashida lives in a flat above the business premises. One quarter of the rates and insurance
relate to the flat.

The fixtures and fittings are being depreciated at the rate of 20% per annum using the
reducing (diminishing) balance method.

The office equipment is revalued at the end of each financial year. The value at
30 September 2017 was $20 600.

The trade receivables include $300 which should be written off. A provision for doubtful debts
of 2% of the remaining amount should be created.

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15
REQUIRED

(a) Prepare the income statement for the year ended 30 September 2017.
Rashida
Income Statement for the year ended 30 September 2017
$

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[14]
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(b) Explain how the accruals (matching) principle has been applied in the preparation of the
income statement. Support your answer by reference to one of the items in your answer
to (a).

[2]
(c) Explain how the business entity principle has been applied in the preparation of the income
statement. Support your answer by reference to one of the items in your answer to (a).

[2]
Rashida was disappointed with the performance of her business in the year ended
30 September 2017 and decided to compare her financial statements with those of another
business.
REQUIRED
(d) Explain two factors Rashida should consider when comparing her financial statements with
those of another business.
1

[4]
[Total: 22]

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17
5

Ben opened a retail store on 1 April 2017. He introduced the following into the business.
Inventory
Shop fittings
Cash

$
15 200
14 300
17 900 (of which $17 400 was paid into a business bank account)

On the same day, Ben received a business start-up loan of $15 000 which was paid into the
business bank account. Interest at 5% per annum was payable at six-monthly intervals.
REQUIRED
(a) Prepare the opening journal entry. A narrative is not required.
Ben
Journal
Debit
$

Credit
$

[5]

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18
The following transactions took place in September 2017.
September 3
28

Invoice received from EF Limited for office equipment, $1900
Goods taken by Ben for personal use, $430

REQUIRED
(b) Prepare journal entries to record these transactions. Narratives are required.
Ben
Journal
Debit
$

Credit
$

[6]

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Example
Revenue expenditure
Explanation

Example
Revenue receipts
Explanation

Example
[6]

Question 5(d) is on the next page.

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On 30 September 2017 Ben calculated his profit for his first six months of trading. The following
errors were then discovered.
Error 1

$500 received from the sale of old shop fittings (book value $550) was debited to the
cash account and credited to the sales account. No other entries were made to record
this disposal.

Error 2

6 months’ loan interest was treated as part-repayment of the loan.

Error 3

The shop fittings account was debited with $1450. Of this $1300 was for new shop
fittings and the balance was for repairs.

REQUIRED
(d) Complete the following table to indicate the effect of each of the errors. The first one has
been completed as an example.
Effect on assets

Error 1

Effect on liabilities

Effect on profit

Overstated
$

Understated
$

Overstated
$

Understated
$

Overstated
$

Understated
$

550

–

450

–

Error 2
Error 3
[8]
[Total: 25]

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reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
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 International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
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Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

0452/22/O/N/17

Accounting (0452) · Oct/Nov 2017 · Question paper 22

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