2023-24

Mock Exam
BAFS
Paper 2A
Jockey Club Ti-I College

BUSINESS, ACCOUNTING AND FINANCIAL STUDIES

Form Six Mock Exam 2023-2024 – Paper 2A

Accounting Module

2 February 2024

10:30 am – 12:45 pm (2 hours 15 minutes)

This paper must be answered in English.

Answer Key

1
 SECTION A (24 marks)

1.
(a)
Eugene Nee
Bank Reconciliation Statement as at 31 October 2023
$ $
Unadjusted balance as per Cash Book (derived) (20,245)
Add: Unpresented cheques ($220 + $460 + $1,380) (iii) 2,060 0.5
-2766 < -2677 Trade payables — Incorrect amount entered ($2,766 – $2,677) (iv) 89 0.5
< +800 Dividends — Credit transfer (v) 800 0.5
Under 500 < Overstatement of credit side total of cash book (vii) 500 0.5
< +1200 Amount wrongly credited to the bank statement (ix) 1,200 4,649 0.5
(15,596)
+6000 > Less: Post-dated cheque (i) 6,000 0.5
+880 > +440 Cheque receipt debited twice in cash book (ii) 440 0.5
> -650 Standing orders — Subscription to a trade association (vi) 650 0.5
> -4000 Office rent (vi) 4,000 0.5
Uncredited item (viii) 3,000 (14,090) 0.5
Balance as per Bank Statement (29,686) 0.5

(b)
The Journal
Dr Cr
$ $
(iv) Bank 89 0.5

Trade payable 2,677 0.5

Suspense 2,766 0.5

(vii) Bank 500 0.5

Suspense 500 0.5

Correct Entries Incorrect Entries Corrections Required

(iv) DR Creditor 2677 DR Suspense 2766 DR Bank 89

CR Bank 2677 CR Bank 2766 DR Creditor 2677

CR Suspense 2766

2
2.
(a) Depreciation charge for the year 2023:
Cost of machine $
List price 660,000
Less: Trade discount (20%) (132,000)
528,000 0.5
Add: Insurance and freight charges 8,500 0.5
Design fee 12,000 0.5
Testing fee 9,500 0.5
Labour and overheads installation 10,600 0.5
568,600 0.5

Depreciation charge = ($568,600 - $8,600)  5 x 3/12 = $28,000 1

(b) (i) Direct materials Variable cost 0.5

(ii) Direct wages Variable cost 0.5
(iii) Depreciation Fixed cost 0.5
(iv) Town gas Mixed cost 0.5

(c) Costs at 80,000 units: $

(i) Direct materials ( x $13) 1,040,000 0.5
(ii) Direct wages (x $7) 560,000 0.5
(iii) Depreciation 28,000 0.5
(iv) Town gas (W1) 90,000 0.5
1,718,000
(W1)
Variable cost per unit = ($85,000 - $75,000) / (70,000 - 50,000) units = $0.5
Total fixed cost = $85,000 - $0.5 x 70,000 units = $50,000
Total cost at 80,000 units = $50,000 + $0.5 x 80,000 units = $90,000

<Alternative answer>
Variable cost per unit $
Direct materials 13
Direct wages 7
Town gas (W1) 0.5
20.5

Costs at 80,000 units: $

Variable cost ($20.5 x 80,000 units) 1,640,000 1
Depreciation 28,000 0.5
Town gas – fixed portion (W1) 50,000 0.5
1,718,000
3
3.
(a) $
Original fixed costs 950,000 0.5
Additional rental 10,000 0.5
Additional monthly depreciation ($120,000 ÷ 5 years ÷ 12 months) 2,000 0.5
Total monthly fixed costs 962,000 0.5

(b) Weighted average unit contribution of V1 and V2:

[$76 × 5 + ($200 – $90 – $10) × 1] ÷ (5 + 1) 0.5
= $80 0.5

Breakeven sales volume:

$962,000 ÷ $80 0.5
= 12,025 units 0.5

<Alternative answer>
Let Q be the breakeven sales volume.
$76 × 5/6 × Q + (200 – 90 – 10) × 1/6 × Q = $962,000
Q = 12,025 units

Breakeven quantities of V1 and V2:

V1: 12,025 units × 5/6 = 10,021 units 0.5
V2: 12,025 units × 1/6 = 2,005 units 0.5

(c)
$
Total monthly fixed costs 962,000 0.5
Less: Contribution from V1 ($76 × 9,000) (684,000) 0.5
Uncovered monthly fixed costs 278,000
Monthly target profit 13,800 0.5
291,800 0.5

Contribution per unit of V2 ($200 – $90 – $10) $100 0.5

The quantity of V2 required to achieve the target profit 2,918 units 0.5

<Alternative answer>
Let Q be the quantity of V2 required to achieve the target profit.
(200 – 90 – 10) × Q = 962,000 – 76 × 9,000 + 13,800
Q = 2,918

Therefore, the quantity of V2 required to achieve the target profit is 2,918 units.

4
SECTION B (24 marks) Answer TWO questions in this section.
4.
(a)
Machining Department:

Production overheads $11,000,000 1

Machine hours  500,000
$22

Budgeted production overhead absorption rate = $22 per machine hour 0.5

Finishing Department:

Production overheads $5,040,000 1

Direct labour hours  600,000
$8.4

Budgeted production overhead absorption rate = $8.4 per direct labour hour 0.5

(b) $
Direct materials 350,000 0.5
Direct labour:
Machining Department ($60 × 400) 24,000 1
Finishing Department ($50 × 15,000) 750,000 1
Royalty 25,000 0.5
Prime cost 1,149,000 0.5
Production overheads:
Machining Department ($22 × 18,000) 396,000 1
Finishing Department ($8.4 × 15,000) 126,000 1
Production cost 1,671,000
Administrative overheads 29,000 0.5
Total cost 1,700,000
Mark up (30%) 510,000 0.5
Selling price 2,210,000 0.5

(c) $
Production overheads absorbed ($22 × 480,000) 10,560,000 1
Production overheads incurred 10,800,000 0.5
Under absorption of production overheads 240,000 0.5

5
5.
(a)
Esther
Computation of the correct value of inventory as at 31 March 2023
$ $
Value of inventory as at 31 March 2023 459,080 0.5
Add Inventory sheet under-added (iii) 3,800 0.5
462,880
Less Goods received on a sale or return basis (i) 15,000 0.5
Goods overvalued (ii) ($1,200 × 2/3) (W3) 800 0.5
Not-for-sale gifts included in inventory (iv) 2,000 (17,800) 0.5
Correct value of inventory as at 31 March 2023 445,080 0.5

(b) Esther
Calculation of inventory lost in the fire on 5 June 2023
$ $
Inventory as at 31 March 2023 445,080 0.5
Add Purchases between 1 April and 5 June 2023 (W1) 299,660 2.5
Carriage inwards 18,260 317,920 0.5
763,000
Less Cost of goods sold between 1 April and 5 June 2023 (W2) (W3) (186,170) 4
Inventory as at 5 June 2023 576,830 0.5
Less Undamaged inventory (38,550) 0.5
Inventory lost in the fire on 5 June 2023 538,280 0.5

<Alternative> Income Statement for the period ended 5 June 2023

$ $
Sales 558,510
Less Cost of goods sold
Opening inventory 445,080 0.5
<Add> Purchases 299,660 2.5
Carriage inwards 18,260 0.5
<Less>Closing inventory (bal.figure) (W3) (576,830) (186,170) 0.5 4
Gross profit 372,340

Inventory lost = $576,830 - $38,550 = $538,280 1

(W1)
Total Trade Payables
$ $
Bank 201,350 Balance b/f 450,120
Discounts received 880 Credit purchases (bal. figure) 252,960
Balance c/d 500,850
703,080 703,080

Total purchases during the period = Cash purchases + Credit purchases

= $46,700 + $252,960 = $299,660
6
(W2)
Total Trade Receivables
$ $
Balance b/f 609,080 Bank 104,960
Credit sales (balancing figure) 319,430 Discounts allowed 4,250
Bad debts 13,000
Balance c/d 806,300
928,510 928,510

Total sales during the period = Cash sales + Credit sales

= $239,080 + $319,430 = $558,510

Cost of goods sold = $558,510 × 1/3 = $186,170 (W3)

6.

(a)
Realisation
$ $
Premises 441,380 Capital –– Bacon: Motor vehicles 60,000 0.25 0.25

Motor vehicles 176,220 taken over 0.25

Goodwill 125,000 Bank –– Premises 458,580 0.25 0.5

Inventory 62,500 ($441,380 + $17,200) 0.25

Trade receivables ($48,800− $1,200) 47,600 Bank –– Inventory [$14,000 + 47,950 0.25 0.5

Bank — Realisation expenses 36,500 ($62,500 − $14,000) × 70%] 0.25

Capital –– Ham: Commission 9,272 Bank –– Trade receivables 46,360 0.5 0.5

(46,360 x 20%) (48,800 x 95%)

Share of loss on realisation:
Capital –– Bacon (1/3) 95,194 0.5 0.25

–– Ham (1/3) 95,194 0.5 0.25

–– Sausage (1/3) 95,194 0.5 0.25

898,472 898,472

7
b)
Capital
Bacon Ham Sausage Bacon Ham Sausage
$ $ $ $ $ $
Realisation –– Motor vehicles 60,000 − − Balances b/f 350,000 200,000 100,000 0.5 0.25 0.25 0.25
Current − − 5,860 Current 44,160 54,220 − 0.5 0.5 0.5 0.5

Realisation –– Share of loss 95,194 95,194 95,194 Trade payables − 123,800 − 0.25 0.25 0.25 0.5

Capital –– Sausage: Share of 277 277 − Bank − − 500 0.5 0.5 0.5 0.5

deficiency Capital –– Ham: Share of − − 277 0.5

Bank –– Final settlement 238,689 291,821 − deficiency 0.25 0.25

Capital –– Bacon: Share of − − 277 0.5

deficiency
Realisation –– Commission − 9,272 − 0.5

394,160 387,292 101,054 394,160 387,292 101,054

8
SECTION C (20 marks)

Answer ONE question in this section.

7.
(a)
Le Printemps Limited
Income statement for the year ended 30 June 2023
$ $
Sales [$5,348,000 – ($650 x 1,200)] (ii) 4,568,000 1

Less: Cost of goods sold:

Opening inventory 550,000 0.5

<Add> Purchases 2,683,500 0.5

3,233,500
<Less> Closing inventory (i) (ii) (iv)
[$700,000 + $400,000 – $132,000 (W1)] (968,000) (2,265,500) 1.5

Gross profit 2,302,500

Add Other revenues:
Gain on disposal (W2) (ix) 76,875 1.5

2,379,375
Less Expenses:
Administrative expenses (W3) 323,075 2

Selling and distribution expenses (W4) 146,070 3.5

Finance costs ($1,500,000 x 10%) 150,000 (619,145) 1

Net profit 1,760,230

(W1) Net realisable value of the obsolete goods:

$120 × (1 – 25%) – $6.5 = $83.5
Reduction in inventory value = 8,000 × ($100 – $83.5) = $132,000 1

(W2)
Net book Sales Gain on
Cost Accumulate depreciation value proceeds disposal
$220,000 (1 Jan 2019 – 30 Jun 2022) $103,125 $180,000 $76,875
$220,000 x 12.5% x 3.5 years = $96,250
(1 Jul 2022 – 1 Apr 2023)
$220,000 x 12.5% x 9/12 = $20,625 0.5

Total: $116,875 0.5

9
(W3)
Administrative expenses (xi) $
Administrative expenses 181,700 0.5

Depreciation: Property and plant [($1,700,000 – 85,000) × 5%] (viii) 80,750 0.5

Depreciation: Machinery (W5) (ix) 60,625 1

323,075

(W4)
Selling and distribution expenses (xi) $
Selling and distribution expenses 107,470 0.5

Bad debts 1,200 0.5

Allowance for doubtful accounts [$1,005,000 – ($650 x 1,200)] x 1% (ii) (vi) 2,250 1

Depreciation: Motor vehicles [($329,000 – $188,400) ÷ 4] (x) 35,150 1.5

146,070

(W5) Depreciation for Machinery:

i) Machine sold = $20,625 (from W2)
ii) Other machines = ($540,000 – $220,000) × 12.5% = $40,000 0.5

Total = $60,625

Accumulated depreciation as at 30 Jun 2023 = $216,250 – $116,875 + $60,625 = $160,000

$99,375 0.5

10
(b)
Le Printemps Limited
Statement of Financial Position as at 30 June 2023
$
ASSETS
Non-current Assets
Property and plant, net ($1,700,000 – $85,000 – $80,750) (viii) 1,534,250 0.5

Machinery, net [($540,000 – $220,000) – $160,000 (W5)] 160,000 1

Motor vehicles, net ($329,000 – $188,400 – $35,150) 105,450 0.5

1,799,700
Current Assets
Inventory 968,000 0.5

Trade receivables, net [$1,005,000 – ($650 x 1,200) × (1 – 1%)] (ii) 222,750 1

Other receivables (ix) 180,000 0.5

Cash at bank [$4,000,000 – ($150,000 x 10% x 1/2)] (iii) 3,925,000 1

5,295,750

Total Assets 7,095,450

EQUITY AND LIABILITIES

Equity
Ordinary share capital ($750,000 + $400,000 × $1.2) (v) 1,230,000 1

Retained profits ($2,432,720 + $1,760,230) 4,192,950 1

5,422,950

Non-current Liabilities
10% debentures 1,500,000 0.5

Current Liabilities
Trade payables 52,500 0.5

Share subscription refundable [$600,000 – ($400,000 × $1.2)] (v) 120,000 0.5

172,500

Total Liabilities 1,672,500

Total Equity and Liabilities 7,095,450

11
8.
(a)
The Journal
Date Details Dr Cr
2023 $ $
Dec 31 (i) Drawings 15,000 0.5
Bank 10,000 0.5
Purchases 5,000 0.5

Dec 31 (ii) Pauline (trade payables) 11,200 0.5

Paul Lin (trade payables) 11,020 0.5
Suspense ($11,200 – $11,020) 180 0.5
Dec 31 (iii) Rates 7,600 0.5
Suspense 7,600 0.5
Dec 31 (iv) Suspense ($38,838 – $38,388) 450 0.5
Purchases 450 0.5
Dec 31 (v) Discounts allowed 1,600 0.5
Discounts received 1,600 0.5
Suspense 3,200 0.5

Dec 31 (vi) J Fox 1,500 0.25

Bad debts recovered ($3,000  1/2) 1,500 0.5

(vi) Bank 1,500 0.5

J Fox 1,500 0.25
Dec 31 (vii) Returns inwards 880 0.5
Returns outwards 1,080 0.5
Suspense 1,960 0.5

Dec 31 (viii) Bank ($10,000 × 1/2) 5,000 0.5

Loss on disposal of motor vehicles 5,000 0.5
Motor vehicles 10,000 0.5
Returns outwards 5,000 0.5
Suspense 5,000 0.5

Dec 31 (ix) Bank 34,000 0.5

Insurance compensation 34,000 0.5

12
(b)
Statement of Revised Net Profit for the year ended 31 December 2023
$ $
Draft Net Profit 88,888 0.5

Add Drawings of goods omitted (i) 5,000 0.5

Purchases overstated ($38,838 – $38,388) (iv) 450 1

Bad debts recovered omitted (vi) 1,500 0.5

Insurance compensation omitted (ix) 34,000 40,950 0.5

129,838
Less Rates omitted (iii) 7,600 0.5

Discounts allowed recorded as discounts received ($1,600  2) (v) 3,200 1

Returns inwards recorded as returns outwards ($1,080 + $880) (vii) 1,960 1

Loss on disposal of a motor vehicle omitted (viii) 5,000 0.5

Disposal of a motor vehicle recorded as returns outwards (viii) 5,000 (22,760) 0.5
Revised Net Profit 107,078 0.5

13