Tsuen Wan Government Secondary School

First Term Examination 2019-2020

Business, Accounting and Financial Studies

Secondary 5 Max. mark: 110

Suggested solutions
SECTION A (30 marks)
1 C 6 B 11 D
2 A 7 B 12 D
3 D 8 B 13 B
4 D 9 A 14 D
5 C 10 A 15 B

16 C 21 B 26 B
17 C 22 A 27 C
18 A 23 D 28 A
19 C 24 A 29 B
20 D 25 A 30 C

SECTION B (80 marks)

1.

Purchases Journal
Date Details Amount
20X6 $
Dec 2 Aromatherapy Shop ($3,000 × 95%) 2,850 1
Dec 10 Face Beauty 800 1
Dec 14 Alice House ($3,600 × 95%) 3,420 1
Dec 22 Aromatherapy Shop 1,200 1
Dec 28 Relax Room 1,000 1
Dec 31 Total credit purchases for the month 9,270 1

Returns Outwards Journal

Date Details Amount
20X6 $
Dec 14 Face Beauty 150 1
Dec 27 Aromatherapy Shop ($400 × 95%) 380 1
Dec 31 Total returns outwards for the month 530 1

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2.

Office Cleaning
20X2 $ 20X2 $
1 Sep 18 Bank 780 Sep 1 Accrual b/d 520 1
1 Dec 20 Bank 780 20X3
20X3 Aug 31 Profit and loss 3,280 1
1 Mar 23 Bank 840
1 Jun 19 Bank 840
1 Aug 31 Accrual c/d 560
($280 × 2)
3,800 3,800
20X3
Sep 1 Accrual b/d 560

3.

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4.
(a)
Bank
20X2 20X2
$ $
½ Jun 30 Balance b/d 7,800 Jun 30 Sundry payments 21,416 ½
½ Sundry deposits 15,080 Rent 800 ½
½ Bank deposit interest 1,400 Accounts receivable: 2,240 ½
½ Direct deposits 1,600 Dishonoured cheque
Balance c/d 1,424 ½
25,880 25,880

(b)
Bank reconciliation statement as at 30 June 20X2
$ $
Balance as per adjusted cash book 1,424 ½
Add: Unpresented cheque
Bonnie Woo (#202121) 1,520 1
Johnny Wong (#202121) 1,960 3,480 1
4,904
Less: Uncredited deposit
Jason Yuen 2,000 1
Pearl Pun 1,200 3,200 1
Balance as per bank statement 1,704 1

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5.
(a)
The Journal
Details Dr. Cr.
$ $
(i) Suspense account 800 ½
Purchases ($182,000 – $181,200) 800 ½

(ii) Cash 132,800 ½

Sales 132,800 ½

(iii) Kitchen’s Shop 6,300 ½

Kitchen Company 6,300 ½

(iv) Electricity expenses 10,200 ½

Motor expenses 10,200 ½
Suspense account 20,400 ½

(v) Roomcolor Company 3,500 ½

Suspense account 3,500 ½

(vi) Rent 6,200 ½

Suspense account 6,200 ½

(vii) Equipment 45,000 ½

Repair and maintenance expenses 45,000 ½

Depreciation expense – Equipment (45,000 × 20% × 5/12) 3,750 ½

Accumulated depreciation – Equipment 3,750 ½

(viii) Trade receivables [(100-25) × $200 × 150%] 22,500 ½

Sales 22,500 ½

Inventory (25 × $200) 5,000 ½

Profit and loss – Closing inventory 5,000 ½
(b)
Lifestyle Shop
Statement of revised net profit for the year ended 31 March 20X2
$ $
Net profit before adjustment 344,000
Add: Purchases overstated (i) 800 ½
Sales understated (ii) 132,800 ½
Repair and maintenance expenses overstated (vii) 45,000 ½
Sales understated (viii) 22,500 ½
Closing inventory understated (viii) 5,000 206,100 ½
550,100
Less: Electricity expenses understated (iv) 10,200 ½
Motor expenses understated (iv) 10,200 ½
Rent understated (vi) 6,200 ½
Depreciation expenses omitted (vii) 3,750 30,350 ½
Net profit after adjustment 519,750 ½

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6.(a) Chu and Yuen
Income Statement for the year ended 31 December 20X6
$ $ $
Gross profit 502,248 ½
Add: Other revenue
Discounts received 1,602 ½
Allowance for doubtful debts [$1,200 – ($24,000 × 3%)] 480 1
504,330
Less: Expenses
Electricity ($2,700 + $700) 3,400 ½
Rent and rates ($4,000 – 500) 3,500 ½
Bad debts 1,100 ½
Salaries 320,000 ½
Sundry expenses 8,400 ½
Telephone expenses 4,200 ½
Repair expenses 6,400 ½
Insurance 1,800 ½
Printing and stationery 2,820 ½
Discounts allowed 1,200 ½
Depreciation on
- Motor vehicles ($128,000 × 15%) 19,200 ½
- Office equipment ($120,000 × 10%) 12,000 31,200 384,020 ½
Net profit before appropriation 120,310
Add: Interest charged on current account
- Chu ($2,080 × 5%) 104 ½
Interest on drawings
- Chu 2,100 ½
- Yuen 2,500 4,600 4,704 ½
125,014
Less: Interest allowed on current account
- Yuen ($5,800 × 5%) 290 ½
Interest on capital
- Chu ($600,000 × 5%) 30,000 ½
- Yuen ($400,000 × 5%) 20,000 50,000 ½
Partners’ salaries
- Chu 22,000 ½
- Yuen 35,500 57,500 107,790 ½
17,224

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 Share of profit
- Chu (3/4) 12,918 ½
- Yuen (1/4) 4,306 17,224 ½

(b)

Current
Chu Yuen Chu Yuen
$ $ $ $
Balance b/d 2,080 Balance b/d 5,800
½ Interest charged on current 104 Interest allowed on current 290 ½
account account
1 Drawings 58,000 70,000 Interest on capital 30,000 20,000 1
1 Interest on drawings 2,100 2,500 Partners’ salaries 22,000 35,500 1
½ Balance c/d 2,634 Share of profit 12,918 4,306 1
Balance c/d 6,604 ½
64,918 72,500 64,918 72,500

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(c)
Chu and Yuen
Statement of Financial Position as at 31 December 20X6
Cost Accumulated Net book
depreciation value
$ $ $
Non-current assets
Premises 846,000 846,000 1
Motor vehicles ($57,600 + $19,200) 128,000 76,800 51,200 1½
Office equipment ($72,000 + 12,000) 120,000 84,000 36,000 1½
1,094,000 160,800 933,200
Current assets
Inventory 28,400 ½
Accounts receivable 24,000 ½
Less: Allowance for doubtful 720 23,280 ½
Prepayments 500 ½
Bank 28,702 ½
Cash 128 ½
81,010
Less: Current liabilities
Accounts payable 17,480 ½
Accrued expenses 700 18,180 ½
Net current assets 62,830
996,030

Financed by
Capital account
- Chu 600,000 ½
- Yuen 400,000 1,000,000 ½
Current account (3,970)
- Chu 2,634 ½
- Yuen (6,604) (3,970) ½
996,030

End of Suggested Solutions

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