Accounting 0452/22 May/June 2024: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, May/June 2024. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Lottie is a trader. Her financial year end is 30 April. She keeps her petty cash book using the imprest system. The imprest amount is $150. The totals of the payments analysis columns in her petty cash book for April 2024 are as follows.
$
Cleaning 21
Stationery 47
Sundry expenses 44
During April 2024, Lottie received a refund for damaged stationery, $15. This amount was received into petty cash.
REQUIRED
(a) Calculate the amount required to restore the petty cash imprest on 1 May 2024.
…… [3]
The petty cash book is one of the books of prime entry.
REQUIRED
(b) State
(i) one other book of prime entry
…… [1]
(ii) two advantages of using books of prime entry
…… [2]
On 30 April 2024, Lottie sold a motor vehicle for $6000 on credit to Y Limited. She had purchased the vehicle on 1 May 2021 for $12 000. Lottie charges depreciation on vehicles at 25% using the reducing balance method. No depreciation is charged in the year of disposal.
REQUIRED
(c) (i) Calculate the accumulated depreciation on the vehicle at 30 April 2024.
…… [2]
(ii) Prepare the disposal of motor vehicles account.
Lottie
Disposal of motor vehicles account
Date Details $ Date Details $
[4]
Lottie sells 3 different types of goods. Her inventory at 30 April 2024 is as follows.
Type Number of Purchase Net realisable Carriage inwards units price per unit value per unit per unit
$ $ $
A 60 14 20 1
B 85 17 24 0
C 30 21 22 2
REQUIRED
(d) Calculate the value of Lottie’s inventory at 30 April 2024.
…… [4]
Lottie pays $360 per annum for insurance. On 1 May 2023, insurance of $60 was prepaid.
On 1 August Lottie paid $360 by bank transfer for the year 1 July 2023 to 30 June 2024.
REQUIRED
(e) Prepare the insurance account for the year ended 30 April 2024. Bring down the balance at
1 May 2024.
Lottie
Insurance account
Date Details $ Date Details $
[4]
[Total: 20]
Mark scheme
1(a) ($21 +$47 + $44) (1) – $15(1) = $97 (1)OF 3
1(b)(i) cash book (1) 1
sales journal (1)
sales returns journal (1)
purchases journal (1)
purchases returns journal (1)
journal / general journal (1)
Max (1)
1(b)(ii) Useful for preparing control accounts (1) 2
Assist in collating and summarising accounting information (1)
Remove detail from the ledgers (1)
Bookkeeping can be divided among several people (1)
Accept other valid points
Max (2)
1(c)(i) Depreciation for the year ended 30 April 2022 12 000 × 25% 3 000 } 2
Depreciation for the year ended 30 April 2023 (12 000 – 3 000) 9 000 × 25% 2 250 }(1)
Accumulated depreciation at 30 April 2024 5 250 (1)OF
1(c)(ii) Lottie 4
Disposal of motor vehicle account
Date Details $ Date Details $
2024 2024
Apr 30 Motor vehicles (1) 12 000 Apr 30 Provision for depreciation (1)OF 5 250
Y Limited (1) 6 000
_____ Income statement (1)OF 750
12 000 12 000
Ignore dates
1(d) 4
Valuation per unit Total valuation
Item Number of items
$ $
A (14 + 1 = ) 15 60 900 (1)
B 17 85 1 445 (1)
C 22 30 660 (1)
3 005 (1)OF
1(e) Lottie 4
Insurance account
Date Details $ Date Details $
2023 2024
May 1 Balance b/d } 60 Apr 30 Income statement (1) 360
Aug 1 Bank } (1) 360 Balance c/d 60
420 420
2024
May 1 Balance b/d (1)OF 60
(1) dates
Toyah owns a factory which makes dolls’ houses. Her financial year end is 31 January.
At 31 January 2024, her ledger accounts included the following balances.
$
Inventory at 1 February 2023
Raw materials 12 400
Work in progress 16 970
Finished goods 14 825
Revenue 390 100
Purchases of raw materials 143 000
Wages
Factory operatives 51 000
Factory supervisor 19 000
Sales staff 30 000
Factory electricity 16 000
Rates and insurance 16 200
General factory expenses 6 155
Factory machinery – at cost 120 000
Factory machinery – provision for depreciation 52 500
Additional information
1. Inventory at 31 January 2024
Raw material 11 205
Work in progress 17 682
Finished goods 13 480
2. Rates and insurance are to be apportioned 2/3 to the factory and 1/3 to the office.
3. At 31 January 2024, general factory expenses of $235 were unpaid.
4. Factory machinery is depreciated at 25% per annum using the reducing balance method.
REQUIRED
(a) Prepare Toyah’s manufacturing account for the year ended 31 January 2024.
Toyah
Manufacturing Account for the year ended 31 January 2024
$ $
[9]
(b) Prepare Toyah’s income statement (trading section) for the year ended 31 January 2024.
Toyah
Income statement (trading section) for the year ended 31 January 2024
$ $
[5]
The factory produced 6936 dolls’ houses during the year ended 31 January 2024.
REQUIRED
(c) Calculate the manufacturing cost of each dolls’ house. Round up your answer to the nearest dollar.
…… [1]
Idir, a competitor of Toyah’s, has decided to cease trading. He has offered to sell his inventory of finished goods to Toyah at a discounted price in return for immediate payment in cash. The total price for these items is $9600. Toyah has $1415 cash at bank.
REQUIRED
(d) Advise Toyah whether or not she should buy Idir’s inventory. Justify your answer by providing two points for and two points against buying this inventory.
. ……
…… [5]
[Total: 20]
Mark scheme
2(a) Toyah 9
Manufacturing Account for the year ended 31 January 2024
$ $
Cost of material consumed
Opening inventory of raw material 12 400
Purchases of raw material 143 000
155 400
Less Closing inventory of raw material 11 205
144 195 (1)
Direct wages 51 000 (1)
Prime cost 195 195 (1)OF
Factory overheads
Wages of factory supervisor 19 000
Factory electricity 16 000
Rates and insurance (16 200 × 2/3) 10 800 (1)
General factory expenses (6 155 + 235) 6 390 (1)
Depreciation of factory machinery
(120 000 – 52 500) × 25% 16 875 (1) 69 065
264 260 (1)OF
Add Opening work-in-progress 16 970 *
281 230
Less Closing work-in-progress 17 682 *(1) for both
Cost of production 263 548 (1)OF
2(b) Toyah 5
Income statement (trading section) for the year ended 31 January 2024
$ $
Revenue 390 100 (1)
Cost of sales
Opening inventory 14 825 *
Cost of production 263 548 (1)OF
278 373
Closing inventory 13 480 *(1) for both 264 893 (1)OF
Gross profit 125 207 (1)OF
2(c) $263 548 OF 1
= $38 (1)OF per dolls’ house (rounded up to nearest dollar)
6 936
2(d) For: 5
Sales of discounted inventory should be profitable / make a profit / increase profit margin (1)
Selling extra inventory may increase total sales / more customers / more revenue (1)
Completed inventory may be turned into cash quickly (1)
Her own inventory of finished goods has decreased so there may be scope for her to sell additional inventory (1)
Accept other valid points
Max (2)
Against:
Does not have enough money to buy the inventory (1)
If have to borrow money will incur interest charges (1)
It may incur extra storage costs (1)
May not be able to sell the inventory if unpopular / inferior quality (1)
May increase selling costs (1)
Accept other valid points
Max (2)
Recommendation (1)
Akil prepared his trial balance at 29 February 2024. The total of the debit side was $83 640 and the total of the credit side was $84 025.
Akil later discovered the following errors.
1 The total of the sales journal for January 2024, $3416, had been credited to the sales returns account.
2 A direct debit for insurance, $115, had been credited to both the bank account and the insurance account.
3 Discount allowed, $47, had been credited to the account for discount received.
4 A payment for office equipment, $52, had been debited to the stationery account.
5 The purchases journal for February had been overcast by $90.
REQUIRED
(a) State
(i) which business document shows when the direct debit for insurance was paid
…… [1]
(ii) which of the errors listed in 1 to 5 above is an error of principle
…… [1]
(b) Prepare the journal entries to correct errors 1 to 3 only. Narratives are not required.
Akil
Journal
Error Details Debit Credit number $ $
[7]
(c) (i) State why a balance may remain on the suspense account after errors 1 to 5 have been corrected.
…… [1]
(ii) Prepare the suspense account. Bring down any remaining balance at 1 March 2024.
Akil
Suspense account
Date Details $ Date Details $
[5]
Akil’s draft profit for the year, before correction of the errors, was $17 420.
REQUIRED
(d) Calculate Akil’s profit after items 1 to 5 have been corrected.
…… [5]
[Total: 20]
Mark scheme
3(a)(i) Bank statement (1) 1
3(a)(ii) Error 4 (1) 1
3(b) Akil 7
Journal
Error Details Debit Credit
number $ $
1 Sales returns 3 416 (1)
Sales 3 416 (1)
2 Insurance (115 × 2) 230 (1)
Suspense 230 (1)
3 Discount received 47 (1)
Discount allowed 47 (1)
Suspense 94 (1)
3(c)(i) Shows that all the errors have not yet been found/corrected (1) 1
3(c)(ii) Akil 5
Suspense account
Date Details $ Date Details $
2024 2024
Feb 29 Difference on Trial balance (1) 385 Feb 29 Insurance (1) 230
Purchases (1) 90 Discount received } (1) 47
Discount allowed } 47
___ Balance c/d 151
475 475
March 1 Balance b/d (1)OF 151
Ignore dates
3(d) $ $ $ 5
Plus Minus
Original draft profit 17 420
Error 4 52 (1)
Error 5 90 (1)
Error 2 230 (1)
Error 3 94 (1)
142 324 (182)
Draft profit after corrections 17 238 (1)OF
Tadeen and Yadid are lawyers who have been in partnership for many years.
The partners provided the following trial balance at 30 April 2024.
Tadeen and Yadid
Trial balance at 30 April 2024
$ $
Revenue 236 350
Salaries 79 800
Rates and insurance 17 320
Advertising 16 730
Office expenses 6 150
Interest on loan from Tadeen 1 200
Premises at cost 180 000
Fittings and equipment at cost 70 000
Provision for depreciation of fittings and equipment 31 500
Receivables 24 200
Cash at bank 19 335
Cash in hand 1 375
Loan from Tadeen 20 000
Capital accounts
Tadeen 125 000
Yadid 85 000
Current accounts
Tadeen 3 300
Yadid 4 240
Drawings
Tadeen 34 300
Yadid 46 500
501 150 501 150
Additional information
1 Rates and insurance include an amount of $1920 for the year 1 March 2024 to
28 February 2025.
2 At 30 April 2024, $1800 for salaries was due but unpaid.
3 Irrecoverable receivables of $670 are to be written off.
4 Depreciation on fittings and equipment is to be charged at 15% per annum using the straight‑line method.
5 The partnership agreement provides for
interest on partner’s loan of 6% per annum interest on drawings of 5%
interest on capital of 3% per annum a salary to Yadid of $10 000 per annum residual profits and losses are to be shared 60% to Tadeen and 40% to Yadid.
REQUIRED
(a) Prepare the income statement for Tadeen and Yadid for the year ended 30 April 2024.
Tadeen and Yadid
Income Statement for the year ended 30 April 2024
$ $
[8]
(b) Prepare the appropriation account for Tadeen and Yadid for the year ended 30 April 2024.
Tadeen and Yadid
Appropriation account for the year ended 30 April 2024
$ $
[5]
(c) State
(i) one reason why the partners might consider reducing their drawings
…… [1]
(ii) which accounting principle reflects the partners’ intention to continue trading indefinitely.
…… [1]
The partners employ one lawyer and office staff. The lawyer, Lakia is paid $25 000 but has decided to leave. Tadeen and Yadid have found a replacement lawyer, Raim. He has worked as a lawyer for 15 years and is well known in the local area. However, Raim wants to be a partner in the business rather than an employee and would expect 40% of the residual profit of the partnership each year.
REQUIRED
(d) Advise Tadeen and Yadid whether or not they should offer Raim a partnership. Justify your answer by providing points for and against offering Raim a partnership.
. ……
…… [5]
[Total: 20]
Mark scheme
4(a) Tadeen and Yadid 8
Income Statement for the year ended 30 April 2024
$ $
Revenue 236 350
Expenses
Salaries (79 800 + 1 800) 81 600 (1)
Rates and insurance (17 320 – (10/12 × 1 920)=1 600) 15 720 (2) / (1)OF
Advertising 16 730 }
Office expenses 6 150 }(1)
Depreciation of fittings and equipment (15% × 70 000) 10 500 (1)
Irrecoverable receivables 670 (1) 131 370
Profit from operations 104 980
Loan interest 1 200 (1)
Profit for the year 103 780 (1)OF
4(b) Tadeen and Yadid 5
Appropriation account for the year ended 30 April 2024
$ $
Profit for the year 103 780 OF
Add interest on drawings Tadeen 1 715 }
Yadid 2 325 } (1) 4 040
107 820
Less
Interest on capital Tadeen 3 750 }
Yadid 2 550 } (1)
6 300
Salary Yadid 10 000 (1) 16 300
91 520
Profit share Tadeen 54 912 (1) OF
Yadid 36 608 (1) OF 91 520
4(c)(i) To avoid a debit balance on their current account (1) 1
To keep cash in the business / to benefit the business / less profits / making loss (1)
To reduce interest charged on drawings (1)
Accept other valid points
Max (1)
4(c)(ii) Going concern (1) 1
4(d) For 5
The business will benefit from the skills and experience of Raim (1)
Raim may contribute towards increased revenue and profit / attract more customers (1)
Raim would share workload (1)
Raim would share the risks/responsibilities/losses (1)
They could require Raim to introduce capital (1)
They may need to spend less on advertising as Raim is well known in the area (1)
Accept other valid points
Max (3)
Against
The profits would need to be shared with Raim (1)
Raim’s profit share would be greater than an employee’s salary (1)
Raim’s profit share will significantly reduce the profit available for the existing partners (1)
They would need to take account of Raim’s views / there may be disagreements (1)
They would be liable for the actions of Raim (1)
Accept other valid points
Max (3)
Max (4)
Recommendation (1)
Ajay is a retailer. He has provided the following information.
$
At 1 April 2023
Inventory 5 200
Trade receivables 6 875
Cash at bank 1 946
Trade payables 5 115
For the year ended 31 March 2024
Revenue – credit sales 86 400
– cash sales 10 600
Purchases 51 300
Expenses 23 750
At 31 March 2024
Inventory 6 500
Trade receivables 9 550
Cash at bank 1 200
Trade payables 6 000
REQUIRED
(a) Complete the following table.
ratio working answer
Gross margin
(to 2 decimal places)
Profit margin
(to 2 decimal places)
Rate of inventory turnover (times)
(to 2 decimal places)
Trade receivables turnover days
(round up to next whole day)
Liquid (acid test) ratio
(to 2 decimal places)
[11]
Ajay has been trading for 3 years and he has established a good reputation. He has never changed his selling price. His gross margin for the year ended 31 March 2024 is higher than for the previous years.
REQUIRED
(b) (i) Suggest one reason why Ajay’s gross margin has increased.
…… [1]
(ii) State one reason why Ajay’s customers might be interested in his financial statements.
…… [1]
Ajay is concerned about the levels of his inventory and trade receivables. He is considering reducing his selling price.
REQUIRED
(c) Advise Ajay whether or not he should reduce his selling price. Justify your answer by providing advantages and disadvantages of reducing his selling price.
…… [5]
Although Ajay’s gross margin has increased, his profit margin has fallen for each of the last two years. Sales revenue is Ajay’s only income.
REQUIRED
(d) State two reasons why Ajay should be concerned about his falling profit margin.
1 ……
2 ……
[2]
[Total: 20]
Mark scheme
5(a) Gross margin: 11
Cost of sales 5 200 + 51 300 – 6 500 = 50 000
Gross profit 97 000 – 50 000 = 47 000
47 000 (1) 100
Gross margin = × = 48.45% (1)
97 000 1
Profit margin:
Profit 47 000 OF – 23 750 = 23 250
23 250 (1) OF 100
Profit margin = × = 23.97% (1)OF
97 000 CF 1
Inventory turnover:
50 000 (1) OF
= 8.55 times (1)OF
(5 200 + 6 500) / 2 = 5850 (1)
Trade receivables turnover
9 550 365 (1)
× whole formula = 41 days (1)OF
86 400 1
Liquid (acid test) ratio
(9 550 + 1 200) : 6 000 (1) whole formula = 1.79:1 (1)OF
5(b)(i) His purchase price has fallen / he has been allowed trade discount (1) 1
His sales mix has changed (1)
Max (1)
5(b)(ii) Whether Ajay will be able to continue in business / continue being able to supply them (1) 1
5(c) Advantages 5
Should increase sales / attract new customers (1)
May increase profit for the year (1)
Should increase rate of inventory turnover (1)
Reduces risk of inventory deteriorating / becoming damaged / obsolete (1)
Reduces cost of holding inventory (storage, insurance) (1)
May improve his reputation (1)
Accept other valid points
Max (3)
Disadvantages
Would reduce gross margin / gross profit / profit for the year / profit margins / may make a loss (1)
Less money coming in from each unit sold / liquidity reduced (1)
Customers may question the quality of the goods / it may damage his reputation (1)
Customers may be unwilling to pay the full price in future (1)
It may be better to offer cash discount to reduce trade receivables (1)
Accept other valid points
Max (3)
Max (4)
Recommendation (1)
5(d) May result in loss if expenses continue to increase (1) 2
He may not be able to pay expenses/ suppliers/wages if they continue to increase. (1)
The business cannot continue indefinitely if this trend continues. (1)
Accept other valid points
Max (2)
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Accounting 0452/22 for May/June 2024 is out of 100 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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