r FORM TP 2018026

qto TEST CODE 01239032

JANUARY 20I8
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CARIBBEAN EXAMINATIONS COUNCIL
CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper O32 - General Proficiency

t hour 30 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

I AnswerALL questions.

2 Write your answers in the spaces provided in this answer booklet.

J Do NOT write in the margins.

4 Show ALL working clearly.

5 You may use a silent, non-programmable calculator to answer questions.

6 You are advised to take some time to read through the paper and plan your answers.

7 lf you need to rewrite any answer and there is not enough space to do so on the
original page, you must use the extra lined page(s) provided at the back of this
booklet. Remember to draw a line through your original answer.

8. If youuse the extra page(s) you MUST write the question number clearly in
the box provided at the top of the extra page(s) and, where relevant, include
the question part beside the answer.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright @ 2017 Caribbean Examinations Council

All rights reserved.

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Instructions:
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This paper consists of a case study and ELEVEN questions. Read the case study
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and answerALL the questions that follow.

CASE STUDY

Ardmore works as a business consultant. His main service consists of putting the financial information of
small businesses in good order. On I February 2017 he has several clients who have different accounting
problems. The information for three clients is set out in the following pages.

Client A: Francis Judenath, who sells spare parts for motor vehicles, and performs tests for diagnosing
motor vehicle problems, presents a list of balances as at 3l December 2016.

$ $

Cash in hand l 200 Motor vehicle 7s 000

Bank 22 500 Stock of spare parts 8 980

Purchases of spare parts 48 600 Accounts receivable t9 750

Sale of spare parts 92960 Credit union 67o three-year loan 50 000
Discount received 450 Accounts payable I 720
Diagnostic tests revenue 29 540 Wages l0 ll0
Property 120 000 utilities | 290

1. List TWO kinds of ledgers which Mr Judenath might use in his business.

(2 marks)

Ardmore advises Mr Judenath that he should recognize depreciation, the expense incurred from using
the services offixed assets in a business.

2. State ONE piece of information needed to calculate depreciation.

(1 mark)

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3.
5

Using the data provided on page 4, draw up Francis Judenath's Trial balance as at 3l
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December
2016, labelling the balancing figure correctly.

$ $

(6 marks)

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Mr Judenath presents the following additional information for the year ended 3l December 2016.
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Closing stock $10 690
Accruedwages $ 5660
Profit for the year before interest and depreciation $59 000
Interest on loan was not paid

Mr Judenath agrees to the following suggestion by Ardmore:

Charge depreciation on motor vehicles at20%o of cost.

4. Prepare a classified Statement of Financial Position (Balance Sheet) for Francis Judenath for the
year ended 3l December 2016.

$ $ $

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$ $ $

(9 marks)

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Client B: Sally Murray travels from village to village selling home goods on credit. Mrs Murray's biggest
seller is the towel set. Ardmore receives the stock count card below from Mrs Murray.

Additional information: ten sets of towels from the July purchases were returned to the supplier
in early August.

5. Using the FIFO method, complete the stock count card below and calculate the value of
Mrs Murray's closing stock of towel sets at the end of every month until 30 November 2016.

Sales Balance at
Opening Month End Value
Month Punchases Returns in
Balance FrFO ($)
Units Quantity Unit Cost

140 @
June rs0 @ $7.00 190
s8.00

100 @
July 90
$8.s0

t0@
August
$8.s0

260 @
August 200
$9.00

220 @
September 210
$9.00

120 @
October 200
$10.00

300 @
November 310
$l1.00

(7 marks)

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6.
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Calculate the total value of towel sets purchased from Mrs Murray over the six-month period.
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Month Punchases Value

June

July

August

September

October

November

TOTAL PURCHASES

(2 marks)

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Mrs Murray indicates that all towel sets sold in June, July andAugust were sold for $15.00 each. However,
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she increased her price to $20.00 each in September, October and November.

7. Prepare Mrs Murray's trading account for towel sets for the six-month period ending 30 November
2016. (Use the space provided below to calculate the sales revenue.)

$ $ $

(5 marks)
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8. State ONE revenue expense and ONE capital expense that Mrs Murray might incur in running
her retail business.

Revenue Expense

Capital Expense

(2 marks)

Client C: Mansour Breanna, an electrician, tells Ardmore that a customer paid $12 500 in January Z0l7
to have electrical wires installed in his new house in June 2017. Mr Breanna's financialyear ended on
3l January 2017. He wants to know why Ardmore is not including the amount in calculating his sales
revenue for the year ended 3 I January 2017.

9. Name the accounting principle which guides Ardmore's decision.

(1 mark)

10. Calculate Mr Breanna's gross profit, in dollars, on the planned job if his gross profit percentage
is a standard 2502.

(1 mark)

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Mr Breanna had brought the following information to Ardmore who advises that the accounts should be
adjusted to reflect this information.

(a) A debtor, Novan Manufacturers, has closed its business and will not be able to pay its debt of
$l 7s0.

(b) As at 3l January 2017, total accounts receivable for the year was S45 000 but l0% of receivables
are doubtful

11. Prepare thejournal entries to take account ofthe information in (a) and (b). Include the appropriate
narratives.

Date Details Debit ($) Credit ($)

(4 marks)

Total40 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON TIIIS TEST.

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