2015 POA O Level Answer

2015 O Level POA Answers

Congratulations to all Jump Grades’ students!

We’ve been slogging it out over the past week focussing on the key chapters we were spotting that might come out for Os:

At Jurong East:

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At Macpherson (Bedok + Kovan Students)

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DAY BEFORE EXAM CAMPING AT SAIZERIYA:

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The results are out. Comparing Caleb’s guess vs what came out. It’s not too bad:

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Alright. Here you go. My SUGGESTED solutions attached. If you find any errors, please feel free to let me know in the comments section below or via whatsapp (better!) – Caleb

Paper 1 :

 ai) Purchases journal 

    aii) General journal 

    aiii) General Journal 

    aiv) Cash Book 

b) 

 Trade payables control account

Date Particulars Dr Cr Bal 
2015$$$
Jun 1Balance b/d15400 Cr
30 Inventory 84500
Cash at bank77000
Trade receivables control (contra) 1100
Discount received84
Interest expense 35022066 Cr
Jul 1 Balance b/d22066 Cr

ai) 

Tan Chin’s account

Date Particulars Dr Cr Bal 
2015$$$
Jul 1 Balance b/d2800 Dr
3Sales 3200
15Cash at bank (95% x 2800) 2660
15Discount allowed140
20Sales 960
23Sales returns 6253535 Dr
Aug 1Balance b/d 3535 Dr

aii) Current assets: presented as trade receivables 

b) Record returns of goods from customers.

c) To acknowledge returns of goods of a customer. 

di) Total sales of $7240 will be posted to the credit of sales account. 

dii) General ledger. 

a)

Kim:

Gross profit margin = (Profit + Sales revenue) × 100%

= (21 300 ÷ 154 000) × 100%

= 13.83%

Chan: Gross profit margin = (Profit + Sales revenue) × 100%

= (24 500 ÷ 193 000) × 100%

= 12.69%

b) In terms of absolute figures, Chan’s gross profit and profit for the year are both higher than Kim. This is due to Chan’s much higher sales revenue of $193 000 as compared to Kim’s sales revenue of $154 000.

However, in terms of ratio, Kim’s profit margin of 13.83% is higher than Chan’s profit margin of 12.69%. This shows that Kim is able to earn a higher profit for every dollar of sales revenue earned as compared to Chan. This is largely due to Chan’s higher expenses of $81 000 as compared to Kim’s expenses of only $54 000.

a) 

 Inventory account

Date Particulars Dr Cr Bal 
2015$$$
Sep 1 Earl Hock35700
Cost of sales24000
15Geeta 22000
24Cost of sales278005900 Dr
Oct 1 Balance b/d 5900 Dr

b) 

Cost of sales account

Date Particulars Dr Cr Bal 
2015$$$
Sep 9Inventory 24000
24Inventory 2780051800 Dr
30 Trading account51800

c) 

Sales revenue account

Date Particulars Dr Cr Bal 
2015$$$
Sep 9P Tham45600
24Zahir5300098600 Cr
30Trading account 98600

b) Name: Prudence theory

    Explanation: The lower value of inventory is recorded as assets should not be overstated and any possible expenses or losses should be recorded.

Paper 2 :

 Adi 

Statement of financial performance for the year ended 30 June 2015

$$
Sales revenue  (311380 + 3400) 314780
Less : cost of sales 156460
Gross profit 158320
Less : Other Expenses 
Freight charges230
Wages94300
Insurance (5200 – 800) 4400
General expenses 14900
Impairment loss on trade receivables850
Interest on loan (9000 x 8% x 3/12) 180
Depreciation on motor vehicles ((110000 – 21000) x 20%)17800
Depreciation on fixtures and fittings (35500 x 15%) 5325
137985
Profit for the year20335

 Adi                         

Statement of financial position as at 30 June 2015

Assets$$$
Non-current asset costAcc. dep.    N.B.V
Motor vehicles1100003880071200
Fixtures and fittings 355001292522575
Total non-current assets93775
Current assets
Trade receivables (20110 + 3400) 23510
Less: Allowance for impairment on trade receivables85022660
Inventory24500
Prepaid insurance800
Total current assets 47960
Total assets141735
Equity and liabilities
Owner’s equity
Capital(123400 + 20335 – 25400)118335
Total equity118335
Non-current liabilities
Long term borrowings9000
Current liabilities
Trade payables13020
Bank overdraft1200
Interest on loan payable180
Total current liabilities 14400
Total equity and liabilities141735

a) 

31 Dec 201231 Dec 201331 Dec 2014
Average inventory(12000+18500)/2= 15250(18500+25500)/2= 22000(25500+28000)/2= 26750
Inventory turnover rate63500/15250= 4.2 times71000/22000= 3.2 times77500/26750= 2.9 times

bi) Despite the increase in cost of sales over three years, Joe’s inventory turnover rate is on a declining trend from 4.2 times in 2012 to 3.2 times in 2013 to 2.9 times in 2014. 

bii) From the increasing inventory balances for the three years, the reasons for the trend could be due to buying of more stocks or selling slower and obsolete stocks. 

c) Inventory turnover rates can be improved by buying less so as to clear the existing inventory first and by giving discounts to sell more and faster. 

a) 

  General journal 

DateParticularsDr Cr 
2015$$
Jul 31Dividend (200000 x $0.25) 50000
        Cash at bank50000
Aug 1Cash at bank (80000 x $2.50)200000 
          Issued share capital200000

bi) Issued share capital on 1 Aug 2015 = $200000 + $200000

                                                                = $400000

bii) Retained earnings on 1 Aug 2015 = $70000 + $120000 – $50000

                                                              = $140000

biii) Total equity on 1 Aug 2015 = $400000 + $140000

                                                    = $540000

c) The two professional ethics which must be applied by accountants are: 

  1. Integrity. That is being straightforward and honest in all professional and business relationships. 
  2. Objective. That is to be unbiased when making professional judgement in the accounting process. 

ai) Trade receivables are current assets arising from selling of goods on credit. 

aii) Allowance for impairment on trade receivables is the identification of special customers whose debt may not be collectible in the immediate future. It is presented in the balance sheet as a deduction against trade receivables. 

b) 

 Accumulated depreciation of motor vehicles account

Date Particulars Dr Cr Bal 
2013$$$
Apr 30 Impairment loss on trade receivables235235 Cr
May 1Balance b/d 235 Cr
2014
Apr 30Impairment loss on trade receivables137372 Cr
May 1 Balance b/d 372 Cr
2015
Apr 30Impairment loss on trade receivables168540 Cr
May 1 Balance b/d 540 Cr

c) 

Statement of financial position as at 30 April 2015

Current assets $$
Trade receivables27600
Less: allowance of impairment on trade receivables540
27060

All the best for the rest of the papers!

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