Accounting 0452/22 October/November 2021: question paper and mark scheme
Cambridge IGCSE Accounting (0452), Paper 2, October/November 2021. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Ayesha is a trader who maintains a full set of accounting records and prepares control accounts at the end of each month.
She provided the following information for the month of August 2021.
$
On 1 August
Sales ledger control account debit balance 9 800
Sales ledger control account credit balance 420
Purchases ledger control account credit balance 7 700
Totals for the month
Credit sales 88 850
Credit purchases 55 400
Cash purchases 1 860
Receipts from customers 82 100
Payments to credit suppliers 50 600
Discount received 600
Discount allowed 900
Irrecoverable debt written off 300
Provision for doubtful debts 450
Sales returns 2 400
Interest charged to customer on overdue account 90
Contra between sales ledger and purchases ledger 2 920
The sales ledger control account credit balance brought down on 1 September 2021 was $350.
REQUIRED
(a) Prepare the sales ledger control account and the purchases ledger control account for August
2021.
Balance the accounts and bring down the balances on 1 September 2021.
Ayesha
Sales ledger control account
Date Details $ Date Details $
2021 2021
Purchases ledger control account
Date Details $ Date Details $
2021 2021
[14]
(b) Name the book of prime entry which Ayesha would use to obtain the following information when preparing her sales ledger control account.
Item Book of prime entry
Returns
Discount allowed
Interest charged to customer on overdue account
Contra entry
[4]
(c) Suggest two reasons why the sales ledger control account had a credit balance of $420 on
1 August 2021.
1 ……
2 ……
[2]
[Total: 20]
Mark scheme
1(a) Ayesha 14
Sales ledger control account
Date Details $ Date Details $
2021 2021
Aug 1 Balance b/d 9 800 Aug 1 Balance b/d 420
31 Sales (1) 88 850 31 Bank (1) 82 100
Interest (1) 90 Discount allowed (1) 900
Balance c/d 350 Irrecoverable debts (1) 300
Sales returns (1) 2 400
Contra (1) 2 920
Balance c/d 10 050
99 090 99 090
2021 2021
Sep 1 Balance b/d (1)OF 10 050 Sep 1 Balance b/d (1) 350
Purchases ledger control account
Date Details $ Date Details $
2021 2021
Aug 31 Bank (1) 50 600 Aug 1 Balance b/d 7 700
Discount received (1) 600 31 Purchases (1) 55 400
Contra (1) 2 920
Balance c/d 8 980
63 100 63 100
2021
Sep 1 Balance b/d (1)OF 8 980
1(b) 4
Item Book of prime entry
Returns Sales returns journal (1)
Discount allowed Cash book (1)
Interest charged to customer on overdue account General journal/Journal (1)
Contra entry General journal/Journal (1)
1(c) Overpayment by credit customer (1) 2
Credit customer returned goods after settling the account (1)
Credit customer paid for goods in advance (1)
Payment by credit customer before cash discount was deducted (1)
Max (2)
Jabir owns an electrical wholesale business.
The following balances appeared in his books on 30 September 2021.
$
Inventory 8 000
Purchases 109 000
Trade payables 11 600
Revenue 160 000
Trade receivables 22 600
Operating expenses 35 200
The inventory on 1 October 2020 was $11 000.
All sales and purchases were on a credit basis.
REQUIRED
(a) Calculate the gross profit and profit for the year.
…… [2]
(b) (i) Calculate the gross margin.
…… [2]
(ii) Advise Jabir on two actions he could take to improve his gross margin.
1 ……
2 ……
[2]
(c) Calculate the trade receivables turnover. Round up your answer to the next whole day.
…… [2]
Jabir wants to increase his credit sales and is considering allowing his credit customers an extra
14 days above his current trade receivables turnover.
REQUIRED
(d) Advise Jabir whether he should allow his credit customers an extra 14 days above his current trade receivables turnover. Justify your answer.
…… [5]
(e) Calculate the trade payables turnover. Round up your answer to the next whole day.
…… [2]
Jabir’s credit suppliers are prepared to double the rate of his trade discount provided he increases his current monthly purchases by 20%.
REQUIRED
(f) Advise Jabir whether he should increase his current monthly purchases by 20% to earn the additional trade discount. Justify your answer.
…… [5]
[Total: 20]
Mark scheme
2(a) $ $ 2
Revenue 160 000
Cost of sales
Opening inventory 11 000
Purchases 109 000
120 000
Closing inventory 8 000
112 000
Gross profit 48 000 (1)
Operating expenses 35 200
Profit for the year 12 800 (1)OF
Accept other forms of presentation
2(b)(i) 48 000 100 2
Gross margin × (1) OF whole formula = 30% (1) OF
160 000 1
2(b)(ii) Increase selling price / reduce trade discount to customers (1) 2
Obtain cheaper supplies / obtain higher trade discount from suppliers (1)
Purchase lower quality goods (1)
Change proportion of different types of goods sold/sell more goods with higher profit margin(1)
Accept other valid points
Max 2
2(c) 22 600 365 2
Trade receivables turnover × (1) whole formula = 52 days (1)
160 000 1
2(d) Advantages Disadvantages 5
Sales may increase (1) Delays the receipt of money (1)
May attract more customers (1) Additional working capital may be required (1)
Profit may increase (1) May be an increase in irrecoverable debts (1)
May improve relationship with customers (1) May be an increase in administration costs (1)
Accept other valid points
Max (4)
Recommendation (1)
2(e) 11600 365 2
Trade payables turnover × (1) whole formula = 39 days (1)
109 000 1
2(f) Reduction in cost of sales (1) 5
If goods can be sold the gross profit will increase (1)
May reduce selling price to increase sales revenue (1)
Could increase range of products to sell (1)
Accept other valid points
Consider if the additional goods can be sold (1)
Increase in quantity / value of inventory (1)
Increased cost of storage (1)
Additional working capital may be required (1)
Increase in amount payable to suppliers each month (1)
Accept other valid points
Max (4)
Recommendation (1)
On 31 July 2021 the following information was provided by KA Limited, a manufacturer of garden tools.
$
Inventory 1 August 2020
Raw materials 5 820
Work in progress 1 750
Finished goods 12 360
Purchases
Raw materials 34 200
Finished goods 3 900
Carriage on purchases
Raw materials 410
Finished goods 80
Direct wages 67 200
Indirect factory wages 24 000
Factory machinery at cost 47 000
Provision for depreciation of factory machinery 11 000
Factory general overheads 16 400
Rates 5 300
Inventory 31 July 2021
Raw materials 6 030
Work in progress 2 780
Finished goods 10 340
Revenue 223 000
Additional information
1 On 31 July 2021 rates, $500, were prepaid.
Rates are to be apportioned 75% factory, 25% office.
2 On 31 July 2021 factory general overheads, $230, were accrued.
3 Factory machinery is to be depreciated at 20% per annum using the reducing balance method.
REQUIRED
(a) Prepare the manufacturing account of KA Limited for the year ended 31 July 2021.
KA Limited
Manufacturing Account for the year ended 31 July 2021
$ $
[10]
(b) Prepare the income statement (trading section) of KA Limited for the year ended 31 July 2021.
KA Limited
Income Statement (Trading section) for the year ended 31 July 2021
$ $
[4]
DH Limited, a customer of KA Limited, has been declared bankrupt. A debt of $350 was owing to
KA Limited. This is to be written off.
REQUIRED
(c) Prepare the journal entry to record the irrecoverable debt. A narrative is not required.
KA Limited
Journal
Details Debit Credit
$ $
[2]
KA Limited maintains a provision for doubtful debts.
REQUIRED
(d) Explain how maintaining a provision for doubtful debts is an application of each of the following accounting principles.
(i) Matching
…… [2]
(ii) Prudence
…… [2]
[Total: 20]
Mark scheme
3(a) KA Limited 10
Manufacturing Account for the year ended 31 July 2021
$ $
Cost of material consumed
Opening inventory raw material 5 820
Purchases raw material 34 200
Carriage inwards 410 (1)
40 430
Closing inventory raw material 6 030
34 400 (1)
Direct wages 67 200 (1)
Prime cost 101 600 (1) OF
Factory overheads
Indirect factory wages 24 000
Factory general overheads (16 400 + 230) 16 630 (1)
Rates (5300 – 500) × 75% 3 600 (1)
Depreciation of factory machinery
(36 000 × 20%) 7 200 (1)
51 430
153 030 (1) OF
Add opening work in progress 1 750 *
154 780
Less closing work in progress 2 780 (1)* for both WIP
Cost of production 152 000 (1) OF
3(b) KA Limited
Income Statement (Trading section) for the year ended 31 July 2021 4
$ $
Revenue 223 000
Less Cost of sales
Opening inventory finished goods 12 360 *
Cost of production 152 000 (1) OF
Purchases of finished goods 3 900 }
Carriage inwards 80 } (1)
168 340
Less Closing inventory finished goods 10 340 (1) * both
158 000
Gross profit 65 000 (1) OF
3(c) KA Limited 2
Journal
Details Debit Credit
$ $
Irrecoverable debts 350 (1)
DH Limited 350 (1)
3(d)(i) The amount of sales for which the business is unlikely to be paid (1) is regarded as an expense of the year in which those 2
sales are made (1)
3(d)(ii) The profit for the year is not overstated (1) and the amount of trade receivables is shown at a realistic level in the statement 2
of financial position (1)
Nikita is a trader. The totals of her trial balance at 30 June 2021 did not agree. The debits exceeded the credits by $2600. Nikita opened up a suspense account.
The following errors were later discovered.
1 Insurance of $2500 had been entered as $4500 in the insurance account. The correct entry had been made in the cash book.
2 The total of the discount received column in the cash book of $500 had been debited to the discount allowed account in the general ledger.
3 Credit sales of $1400 to Kajal had been correctly entered in the sales account, but debited as
$1000 in Kajal’s account.
4 A cheque of $700 received from Anisah had been correctly entered in the cash book, but credited to Aisha’s account.
REQUIRED
(a) Prepare journal entries to correct errors 1 to 4. Narratives are not required.
Nikita
Journal
Error Details Debit Credit number $ $
[10]
(b) Prepare the suspense account. Start with the difference on the trial balance.
Nikita
Suspense account
Date Details $ Date Details $
[5]
(c) Complete the statement to show the effect on the profit for the year of correcting errors
1 to 4.
Where the error does not affect profit write ‘no effect’. Calculate the corrected profit for the year.
Nikita
Statement of corrected profit for the year ended 30 June 2021
$
Profit for the year before corrections 28 000
Increase Decrease in profit in profit
$ $
Error 1 …… ……
Error 2 …… ……
Error 3 …… ……
Error 4 …… ……
Corrected profit for the year ……
[5]
[Total: 20]
Mark scheme
4(a) Nikita 10
Journal
Error Details Debit Credit
$ $
1 Suspense 2000 (1)
Insurance 2000 (1)
2 Suspense 1000 (2)
Discount received 500 (1)
Discount allowed 500 (1)
3 Kajal 400 (1)
Suspense 400 (1)
4 Aisha 700 (1)
Anisah 700 (1)
4(b) Nikita 5
Suspense account
Date Details $ Date Details $
Insurance (1) 2 000 Difference on trial
Discount received (1) 500 balance (1) 2 600
Discounts allowed (1) 500 Kajal (1) 400
3 000 3 000
4(c) Nikita 5
Statement of corrected profit for the year ended 30 June 2021
$
Profit for the year before corrections 28 000
Increase in Decrease
profit in profit
$ $
Error 1 2 000 (1) –
Error 2 1 000 (1) –
Error 3 no effect (1) –
Error 4 no effect (1) –
3 000 3 000
Corrected profit for the year 31 000 (1) OF
Simon has a business selling office stationery. On 1 January 2019 he owned two delivery vehicles which had been purchased on 1 January 2018.
Delivery vehicle A had cost $30 000 and delivery vehicle B had cost $25 000.
Simon uses the straight-line method for depreciating the delivery vehicles. A rate of 20% per annum on cost is used, with the rate being applied for each part of the year for which the delivery vehicles are owned.
Due to a decline in business, delivery vehicle B was sold on 31 March 2020 and a cheque for
$10 350 was received. Delivery vehicle A was still in use at the end of 2020.
REQUIRED
(a) Complete the following accounts for each of the years ended 31 December 2019 and 2020.
Balance the accounts at the end of each year where appropriate.
Simon
Delivery vehicles account
Date Details $ Date Details $
2019
Jan 1 Balance b/d 55 000 …… …… ……
Provision for depreciation of delivery vehicles account
Date Details $ Date Details $
2019
…… …… …… Jan 1 Balance b/d 11 000
Delivery vehicles disposal account
Date Details $ Date Details $
[15]
Simon’s sister Yasmin is also in business and depreciates her delivery vehicles by the reducing balance method.
Simon is considering whether to apply the reducing balance method of depreciation to his delivery vehicles.
REQUIRED
(b) Advise Simon whether he should apply the reducing balance method of depreciation. Justify your answer.
…… [5]
[Total: 20]
Mark scheme
5(a) Simon 15
Delivery vehicles account
Date Details $ Date Details $
2019 2020
Jan 1 Balance b/d 55 000 Mar 31 Disposal (1) 25 000
Dec 31 Balance c/d 30 000
55 000 55 000
2021
Jan 1 Balance b/d (1) 30 000
Provision for depreciation of delivery vehicles account
Date Details $ Date Details $
2019 2019
Dec 31 Balance c/d 22 000 Jan 1 Balance b/d 11 000
Dec 31 Income statement
6000 (1)
5000 (1) 11 000
22 000 22 000
2020 2020
Mar 31 Disposal Jan 1 Balance b/d (1)OF 22 000
(5000 + 5000) (1) Dec 31 Income statement
+1250 (1) 11 250 6000 (1)
Dec 31 Balance c/d 18 000 1250 (1) 7 250
29 250 29 250
2021
Jan 1 Balance b/d (1)OF 18 000
5(a) Delivery vehicles disposal account
Date Details $ Date Details $
2020 2020
Mar 31 Delivery vehicles (1) 25 000 Mar 31 Prov for Dep. (1)OF 11 250
Bank (1) 10 350
Dec 31 Income
statement (1)OF 3 400
25 000 25 000
Dates (1)
5(b) Reducing balance Straight line 5
Has to be recalculated each year Easier to calculate / only one calculation needed
Suitable when lose more value in early years Suitable when lose equal value each year
Shows a more realistic book value Suitable when annual usage is the same
Matches cost more closely with revenue Should not change method without good reason /
Unable to compare with previous accounts apply consistency
Accept other valid points
Max (4)
Recommendation (1)
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Accounting 0452/22 for October/November 2021 is out of 100 marks, with 1 hour 45 minutes to answer it, across 5 questions.
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