SINGAPORE POLYTECHNIC

SCHOOL OF BUSINESS
BUSINESS ACCOUNTING (BA0275)

2021/2022 Semester 2

Mid-Semester Test

Time allowed : 1 hour + 10 min reading time

Total marks : 50 marks

Instructions to Candidates:

1. Write your admission number and class on the answer booklet.

2. Answer all questions in ink.

3. This continual assessment consists of three questions:

Question 1 29 marks
Question 2 9 marks
Question 3 12 marks
Total: 50 marks

4. This continual assessment consists of 5 pages.

1
Question 1

Jay Tan started his trading business under JayJay Pte Ltd on 1 March 2021. The business
transactions of JayJay Pte Ltd for the month of March 2021 are as follows:

March 1 Issue 90,000 ordinary shares to Jay at $1.50 per share for cash.
5 Bought office equipment for $28,000 from EqSoh paying $12,000 cash and
the balance in 2 instalments of equal amounts, first instalment commencing
in April.
6 Bought $49,500 of inventory on credit from TNC.
9 Sold $28,200 of inventory on credit to Miram. The cost of inventory sold
was $9,100.
1 Miram returned $4,100 of inventory due to wrong specifications. The cost of
7 inventory returned was $1,000.
2 Received $7,000 from Miram for partial settlement of amount owing.
5
2 Paid the following expenses by cash:
9
Salary $5,000
Rent $3,000

Required:

(a) Prepare the general journal entries for transactions listed above, for the month of
March 2021 for JayJay Pte Ltd (narration is not required).
(16 marks)

(b) Prepare the Statement of Financial Position for JayJay Pte Ltd as at 31 March 2021.
(11 marks)

(c) On 15 March 2021, JayJay Pte Ltd bought a new office photocopier costing $5,300.
However, one week later, the office photocopier was moved to Jay Tan’s residence
for the family’s use. Explain an accounting concept that Jay Tan should have adhere
to with regards to the office photocopier.
(2 marks)

(Total: 29 marks)

2
Question 2

Mayo Pte Ltd provides consultancy services. The following information relates to its
financial year ended 31 March 2021.

(1) On 1 November 2020, the company paid $84,000 for TV advertisement which will
commence on 1 November 2020 to 30 April 2021. The amount was recorded as
prepaid advertising on 1 November 2020.

(2) The company received cash amounting to $48,000 for consultancy fees to be provided
from 1 February 2021 to 31 July 2021. This amount was recorded as unearned
consultancy fees on 1 February 2021.

(3) On 1 August 2020, the company took a 5-years bank loan amounting to $60,000 from
ANZ bank. The interest rate on the bank loan was 5% per annum payable half yearly
every 1 February and 1 August.

(4) The company provided consultancy services amounting to $16,000 on 25 March

2021. The client has not been billed for the services and the amount has not been
recorded in the books at the financial year end.

Additional information:

The unadjusted net profit for the year ended 31 March 2021 was $11,000.

Required:

(a) Prepare the adjusting journal entries based on the above information, for the year
ended 31 March 2021 (narration is not required).
(6 marks)

(b) After taking into account the adjusting entries in part (a) above, calculate the adjusted
net profit or adjusted net loss for the year ended 31 March 2021. All workings must
be shown clearly.
(3 marks)

(Total: 9 marks)

3
Question 3

Sunnydale Pte Ltd runs a trading business and also provides consultancy services. The
company has been making losses for the past few years. The company needed to show a
good financial report for the bank to approve their bank loan application. The company’s
financial year end is 30 April 2021. The following actions were taken by the director, Sunny.

(i) On 29 April 2021, inventory sold on credit amounting to $15,000 was

intentionally recorded as $35,000. The cost of inventory sold was $9,000 but was
intentionally recorded as $6,000 instead.

(ii) The company paid a one-year insurance premium amounting to $54,000

commencing on 1 October 2020 and this was recorded in the books as prepaid
insurance. It was decided not to do any adjusting entries at the financial year end.

(iii) On 30 April 2021, a customer returned inventory amounting to $12,000 that was
sold on credit. The cost of inventory returned was $5,000. It was decided not to
record this transaction.

(iv) Consultancy fees amounting to $15,600 received on 1 February 2021 was

recorded as Unearned Consultancy Fees. It was decided at year end to record
$15,600 as consultancy fee revenue even though only one-third has been earned.

(v) Salary expense of $10,800 and rental expense of $25,000 have been incurred for
the month of April 2021. It was decided not to accrue for these expenses at the
financial year end.

(vi) Supplies purchased amounting to $4,800 was recorded in the books on 31

December 2020 as Supplies. Unused supplies at year end amounted to $800. It
was decided not to do any adjusting entries at the financial year end.

Required:

Based on each of the six actions taken by Sunny which were listed above, state the amounts
overstated or understated (for example $500 O or $500 U) that will impact the following
financial items, including the overall impact as indicated in the table below. Write your
answers in the answer booklet using the format below. O is for overstated and U is for
understated.

4
 Shareholders' Expense/Contra
Assets Liabilities equity Revenue Revenue
(i)

(ii)
(iii)

(iv)
(v)

(vi)
Overall
Impact

(Total: 12 marks)

- End of paper –