Mark Scheme Paper 1

2017 BGSS Sec 4 POA Prelim

Question 1 (Total 8 marks)

(a) 5 marks
Cash at bank
Date Details Debit Credit Balance
2017 $ $ $
Jan 31 Balance b/d 2 050 Cr
Utilities expense 138 [1] 2 188 Cr
Minho 5 560 [1] 3 372 Dr
Yomin (dishonoured cheque) 1 900 [1] 1 472 Dr
Daewon Supplies (correction of error) 200 [1] 1 672 Dr
Bank charges 180 [1] 1 492 Dr

Feb 1 Balance b/d 1 492 Dr

[-1m overall] for no dates / wrong dates

(b) 3 marks

Starting with bank statement

Bank Reconciliation Statement as at 31 January 2017

  $  
Debit balance as per bank statement (2 008)
Add: cheque not yet credited
Cho-yim 7 600 [1]
  5 592
Less: cheque not yet presented
Salaries 4 100 [1]

Debit balance as per adjusted cash at bank account 1 492 [1]

   

Starting with cash at bank account

Bank Reconciliation Statement as at 31 January 2017

  $  
Debit balance as per adjusted cash at bank account 1 492
Add: cheque not yet presented
Salaries 4 100 [1]

  5 592
Less: cheque not yet credited
Cho-yim 7 600 [1]
Debit balance as per bank statement (2 008) [1]
   

1
Question 2 (Total 10 marks)

(a) 2 marks
Motor vehicles provide more benefits to the business in the earlier years of its useful life
compared to its later years. [1] Hence, a higher depreciation amount is recorded in the
earlier financial periods and a lower amount is recorded in the later financial periods of its
useful life. [1]

(b) 3 marks
Motor vehicles

Date Particulars Dr Cr Balance

$ $ $
2015
Oct 1 Balance b/d 240 000 Dr

2016
Aug 31 Sale of non-current asset 25 000 [1] 215 000 Dr
Sep 1 Capital 20 500 [1] 235 500 Dr

Oct 1 Balance b/d 235 500 Dr 1

(c) 3 marks

Accumulated depreciation of motor vehicles

Date Particulars Dr Cr Balance

$ $ $
2015
Oct 1 Balance b/d 45 600 Cr

2016
Aug 31 Sale of non-current asset 9 000 [1] 36 600Cr
(5000+4000)
Sep 30 Depreciation of motor vehicles 39 780 [1] 76 380 Cr
(4100+35680)

Oct 1 Balance b/d 76 380 Cr 1

(c) 4 marks

Sale of non-current asset

Date Particulars Dr Cr Balance

2016 $ $ $
Aug 31 Motor vehicles 25 000 25 000 Dr 1
Accumulated depreciation of 9 000 16 000 Dr 1
motor vehicles
Other receivable - Cars & 8 000 8 000 Dr 1
Such
Sep 30 Profit and loss 8 000 0 1

2
Question 3 (Total 11 marks)

(a) 4 marks

Error Type of Error

(i) Error of original entry 1
(ii) Error of omission 1
(iii) Error of complete reversal 1
(iv) Compensating errors 1

(b) 3 marks
General Journal
Date Details Dr ($) Cr ($)
2017
Jun 30 Rental expense 200 1
Cash at bank 200 1
To correct understatement of $200 of rental expense paid with cheque 1

(c) 4 marks

Statement of adjusted profit for the year ended 30 June 2017

$
Unadjusted profit for the year 47 800
(i) Less: rental expense understated (200) 1
(ii) Add: sales revenue understated 1 000 1
(iii) Less: maintenance expense understated (1 520) 1
(iv) Add: utilities expense overstated 90
Less: interest income overstated (90)

Adjusted profit for the year 47 080 1

3
Question 4 (Total 9 marks)

(a) 2 marks
Interest expense for the year ended 30 April 2016
= 3% x $80000 x 4/12
= $800 2

(b) 3 marks
Interest expense

Date Particulars Dr Cr Balance

2016 $ $ $
May 1 Accrued interest 800 800 Cr 1
2017
Jan 1 Cash at bank (3% x 80 000) 2 400 1 600 Dr 1
April 30 Accrued interest 640 2 240 Dr 1
(3% x $64 000 x 4/12)
Profit and loss 2 240 0

(c) 2 marks

Balance sheet as at 30 April 2017 (extract)

$
Current liabilities
Accrued interest 640 [1]
Current portion of long-term borrowings 16 000 [1]

(d) 2 marks

According to the matching concept [1], all expenses incurred must be recognised and
recorded in the same period as the income generated. Therefore, interest expense for the
year must be recognised in the same period that the business has used the benefits of the
loan. [1]

OR

According to the accrual concept [1], expenses are recognised and recorded when they are
incurred/when their benefits are used to generate income. Therefore, interest expense for
the year must be recognised even though it has not been paid as the business has used the
loan for business operations. [1]