CAIE - ACCOUNTING

9706/21 Paper 2 Fundamentals of Accounting – Structured Questions

Summative Assessment 1 2023- 2024
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 and grade
● Write your answer to each question in the space provided.
● Do not use an erasable pen or correction fluid.
● 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 90.
● 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

1
 1. Jakoub owns a restaurant. The business’s financial year end is 31 December.
The business owns many small items of kitchen equipment. The following
information is available.

1 On 1 January 2022 kitchen equipment was valued at $3450.

2 Additional kitchen equipment was purchased for cash, $1680, during the year ended
31 December 2022.
3 On 31 December 2022 kitchen equipment was valued at $3950.

REQUIRED
(a) Prepare the kitchen equipment account for the year ended 31 December 2022.
Kitchen equipment

[10]
(b) State two reasons why the reducing balance method of depreciation might be chosen by a
business for depreciating non-current assets.

[4]

2
Additional information On 1 January 2022, a new delivery vehicle was purchased in part
exchange for the business’s old delivery vehicle. A payment of $22500 was made. The old
delivery vehicle had originally cost $24000 when it was purchased on 1 January 2020. The
old delivery vehicle was part exchanged at net book value.
Delivery vehicles are depreciated by 25% per annum using the reducing balance method of
depreciation.
REQUIRED
(c) Prepare a journal entry to record the charge for depreciation of vehicles for the year ended
31 December 2022. A narrative is not required.

[10]

3
(d) Define each of the following terms:
1. Drawings

2. Cost of sales

3. Prepaid expenses

[6]
Total [30]

4
2. Stand extracted the following trial balance at 30 June 2020:
$ $
Bank 4 188
Capital at 1 July 2019 117 640
Discounts allowed 1 754
Discounts received 2 301
Drawings 20 000
Inventory at 1 July 2019 18 365
Mortgage (repayable 2027) 118 467
Motor expenses 17 437
Motor vehicles 25 600
Office equipment 19 240
Office expenses 26 759
Premises 160 000
Purchases 217 044
Purchase returns 2 243
Rent received 8 712
Revenue 320 857
Sales returns 1 709
Trade payables 11 066
Trade receivables 13 444
Wages and salaries 64 122
585 474 585 474

The following information at 30 June 2020 was also provided:

1. inventory was valued at $30 170.
2. office expenses of $750 had been paid in advance.
3. wages and salaries of $3 200 was owing.
4. rental income of $1 650 had been paid in advance.
REQUIRED
a Prepare the statement of profit or loss for the year ended 30 June 2020. [15]
b Prepare the statement of financial position at 30 June 2020. [15]
[Total: 30]

5
 3. On 1 August 20–9 Anna’s cash book showed the following balances:
cash $72
bank $673 overdrawn
Anna’s transactions for the month ended 31 August 20–9 included the following:

August
3 Transferred sufficient funds from the bank to bring the cash balance to $150
6 Cash sales, $640, of which $600 was paid into the bank
8 Danish, a credit customer, settled his account of $700, by credit transfer, less 3%
cash discount
14 A bank loan, $2000 , was paid into the bank
16 Paid a cheque to Barney, a credit supplier, in settlement of his account of $800,
less 2% cash discount.
18 Cash sales, $736 , of which $500 was paid into the bank
18 Paid wages, $200 , in cash
21 Purchased a motor vehicle, $3100 , by bank transfer
28 Anna took $100 in cash for personal use
30 Cash sales, $835 , paid $600 into the bank and paid sundry expenses, $85 , in cash
31 Cam, a credit customer, paid his account of $400 , by cheque less 2.5% cash
discount.
REQUIRED
a. Using the template below, write up Anna’s cash book for the month of August
20–9.
Balance the cash book and bring down the balances on 1 September 20–9.
Total the discount columns. [15]
Anna
Cash book
Date Details Discount Cash Bank Date Details Discount Cash Bank
20–9 allowed 20–9 received
$ $ $ $ $ $
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........
....... .............. ............. ....... ....... ...... .............. ............. ....... ........

6
b. Using the templates, prepare the discount allowed account and the discount
received account for August 20–9. [4]

Discount allowed account

Date Details $ Date Details $

...........................................… ............................................….

Discount received account

Date Details $ Date Details $

...........................................… ............................................….

c. State where the double entry will be found for the transactions recorded in the
cash book on the following dates. The first one has been completed as an example.

Date Double entry

August 6 Credit sales account

8
14
16
18
18
21
28
30
31
[9]

d. State 2 differences between capital expenditure and revenue expenditure. [2]

Total [30]