Books of prime entry — Paper 2 · IGCSE Accounting (9-1) 0985

1 Bilal is a trader. He buys goods on credit and for cash. He sells goods on a cash basis only. The following transactions took place in April 2020. April 4 Bought goods on credit from Milly, list price $320, subject to a trade discount of 20% 5 Bought goods on credit from EHL Limited, $500 6 Bought stationery, $145, paying by cheque 8 Cash sales, $280, were paid immediately into Bilal’s bank account 10 Paid $128 cash to Milly 12 Cash sales, $110 13 Bought goods on credit, $250, from Todd who offers 4% cash discount for payments made within 14 days 17 Bought office equipment, $500, paying by bank transfer 21 Paid by cheque for the goods purchased from Todd on 13 April after deducting the cash discount 24 Paid $485 to EHL Limited by telephone transfer, having deducted 3% cash discount 28 Sold old office equipment for $50 cash REQUIRED (a) Prepare the purchases journal for April 2020. Total the journal and indicate the ledger account to which the total would be posted. Bilal Purchases journal Date Details $ $ ……..… … ……………………………………………… … …………... ……… … ……… … ……………………………………………… … …………... ………….. ……..… … ……………………………………………… … …………... ………….. ……… … ……………………………………………… … …………... ……… … ……… … ……………………………………………… … …………... ……… … ……… … ……………………………………………… … ………….. …………... [4] (b) Complete Bilal’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 May 2020. [12] $ Bank … … … … … … … … … … … … … … … … $ Cash … … … … … … … … … … … … … … … $ Discountreceived … … … … … … … … … … … … … … Details … … … … … … … … … … … … … … … Date 2020 … … … … … … … … … … … … … … … … Book Bilal Cash $ Bank 1960 … … … … … … … … … … … … … … $ 160 Cash … … … … … … … … … … … … … … $ Discountallowed … … … … … … … … … … … … … … … b/d Details Balance … … … … … … … … … … … … … … (c) Name one accounting principle applied by Bilal in each of the following situations. accounting principle The double entry for the posting of the purchases journal entries is completed by posting the individual amounts to the purchases ledger. The purchase of goods on 5 April did not include goods costing $55 which Bilal bought for his own use. The stationery purchased on 6 April had been recycled. This is expected to improve the reputation of the business. Reputation is not recorded in the accounting statements. The value of office equipment shown in the financial statements was based on its purchase price. [4] [Total: 20] PLEASE TURN OVER

20 marks

Mark scheme: 1(a) Bilal Purchases journal Date Details $ 2020 April 4 Milly (320 – 64) 256 (1) 5 EHL Limited 500 (1) 13 Todd 250 (1) 30 Transfer to purchases account 1 006 (1)OF 4 1(b) Bilal Cash Book Disc. Alld $ Cash $ Bank $ Disc. Recd $ Cash $ Bank $ 2020 2020 Apr 1 Balance b/d 160 1 960 Apr 6 Stationery (1) 145 8 Sales (1) 280 10 Milly (1) 128 12 Sales (1) 110 17 Office equip. (1) 500 28 Disposal (1) 50 21 Todd (1) 10 240 24 EHL Limited (1) 15 485 30 Balance c/d 192 870 320 2 240 25(1) 320 2 240 2020 May 1 Balance b/d 192 870 (1)OF (1)OF Dates (1) 12 Question Answer Marks 1(c) accounting principle The double entry for the posting of the purchases journal entries is completed by posting the individual amounts to the purchases ledger. duality (1) The purchase of goods on 5 April did not include goods costing $55 which Bilal bought for his own use. business entity (1) The stationery purchased on 6 April had been recycled. This is expected to improve the reputation of the business. Reputation is not recorded in the accounting statements. money measurement (1) The value of office equipment shown in the financial statements was based on its purchase price. historic cost (1) 4

This question in 0985/22 May/June 2020

1 Dev owns a business selling furniture. The following transactions took place during August 2020. Transaction Date Details $ 1 August 9 Sold goods on credit to Petra 675 2 14 Petra returned damaged goods to Dev 120 3 23 Banked cash sales 412 4 29 Petra settled her outstanding balance at 1 August by credit transfer after taking a cash discount of 5% On 1 August 2020, the balance on credit customer Petra’s sales ledger account was $940 debit. REQUIRED (a) Complete the table to name each business document and book of prime entry for the following transactions in Dev’s accounting records. Transaction Business document Book of prime entry 2 3 4 [6] (b) Prepare the account of Petra for August 2020 as it would appear in Dev’s sales ledger. Balance the account and bring down the balance on 1 September 2020. Dev Petra account Date Date 2020 Details $ 2020 Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6] (c) Identify the section of Dev’s statement of financial position at 31 August 2020 in which the balance on Petra’s account would appear. … [1] Dev allows his credit customers a cash discount of 5% for prompt payment. He is considering reducing this to 2%. REQUIRED (d) State one advantage and one disadvantage to Dev of this proposal. … … … … [2] Dev is considering turning his business into a limited company. REQUIRED (e) Advise Dev whether or not he should form a limited company. Justify your answer with two advantages and two disadvantages of forming a limited company. … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Transaction Business document Book of prime entry 2 Credit note (1) Sales returns journal (1) 3 Paying-in slip (1) Cash book (1) 4 Bank statement (1) Cash book (1) 6 1(b) Dev Petra account 2020 $ 2020 $ Aug 1 Balance b/d 940 Aug 14 Sales returns 120 (1) 9 Sales 675 (1) 29 Bank 893 (1) Discount allowed 47 (1) 31 Balance c/d 555 1 615 1 615 2020 Sept 1 Balance b/d 555 (1)OF + (1) dates 6 1(c) Current assets (1) OF 1 1(d) Advantage Increase profit for the year (1) Increase cash inflow (1) Accept other valid responses Max (1) Disadvantage May lose customers/sales may fall (1) Customers may take longer to pay (1) Accept other valid responses Max (1) 2 Question Answer Marks 1(e) Advantages Dev will have limited liability for the debts of the company (1) The limited company will have a separate legal identity to Dev (1) Dev will have access to different forms of finance/increase in capital employed (1) Accept other valid responses Max (2) Disadvantages The limited company will have greater regulation than Dev as a sole trader (1) The accounting requirements of the limited company will be more complex than for Dev as a sole trader (1) The financial statements of the limited company may be viewed by the public unlike those of Dev as a sole trader (1) Accept other valid responses Max (2) Recommendation (1) 5

This question in 0985/22 Oct/Nov 2020

1 Rahat is a trader. The following transactions took place in March 2021. March 3 Cash sales, $580, were paid directly into Rahat’s business bank account 6 Paid insurance, $360, by direct debit 9 Paid $196 to GH Limited by telephone transfer, having deducted 2% cash discount from the amount due 13 Paid $75 cash for stationery 17 Cash sales, $140 27 Sold old office equipment to Burgess, who paid $50 by cheque in full settlement 30 Paid $340 to Colin by cheque in full settlement of a debt of $350 REQUIRED (a) Complete Rahat’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 April 2021. [11] $ Bank 1980 … … … … … … … … … … … … $ Cash … … … … … … … … … … … … … $ Discountreceived … … … … … … … … … … … … … b/d Details Balance … … … … … … … … … … … … 1 Date 2021 March … … … … … … … … … … … … Book Rahat Cash $ Bank … … … … … … … … … … … … … $ 150 Cash … … … … … … … … … … … … $ Discountallowed … … … … … … … … … … … … … b/d Details Balance … … … … … … … … … … … … (b) Complete the following table by placing a tick (3) in the correct column to indicate whether each item would be used to update the cash book or would appear in the bank reconciliation statement. Update the Bank cash book reconciliation statement Cheque from Burgess dishonoured Cheque to Colin unpresented Overdraft interest Standing order paid for rates [4] Rahat is concerned about the level of her bank overdraft. She is considering applying for a bank loan. This would enable her to pay off her bank overdraft and to purchase new office furniture. REQUIRED (c) Advise Rahat whether she should apply for the bank loan. Justify your answer by providing two advantages and two disadvantages. … … … … … … … … … … … [5] [Total: 20] PLEASE TURN OVER

20 marks

Mark scheme: 1(a) Rahat Cash Book Date 2021 Mar 1 3 17 27 31 Apr 1 Details Balance b/d Sales (1) Sales (1) Disposal (1) Balance c/d Balance b/d Disc. $ Cash $ 150 140 290 215 (1)OF Bank $ 580 50 2246 2876 Date 2021 Mar 1 6 9 13 30 31 Apr 1 Details Balance b/d Insurance (1) GH Limited (1) Stationery (1) Colin (1) Balance c/d Balance b/d Disc. $ 4 10 14 (1)OF Cash $ 75 215 290 Bank $ 1980 360 196 340 2876 2246 (1)OF +(1) dates 1(b) Updating cash book Bank reconciliation statement Cheque from Burgess dishonoured  (1) Cheque to Colin unpresented  (1) Overdraft interest  (1) Standing order paid for rates  (1) 4 Question Answer Marks 1(c) Advantages Loan interest may be lower than overdraft interest (1) No interest on overdraft to pay (1) Have a longer time to repay a loan (1) May improve relationship with bank (1) Bank balance would be improved/liquidity would be improved (1) New office furniture should lead to a better working environment (1) Accept other valid points (Max 2) Disadvantages Loan will have to be repaid (1) Loan interest will have to be paid (1) Early repayment may not be allowed (1) The bank may require security (1) No income/profit is generated from the office furniture (1) Accept other valid points (Max 2) Recommendation (1) 5

This question in 0985/21 May/June 2021

1 Leo maintains a petty cash book using the imprest system. The imprest amount, which is $200, is restored on the first day of each month. All payments of less than $100 are made from petty cash. All cash receipts of less than $100 are paid into petty cash. On 1 April 2021 Leo had $48 in his petty cash box. Leo provided the following information for April 2021. April 1 Restored petty cash imprest from the business bank account 5 Paid for office cleaning, $21 7 Paid for train ticket, $13 13 Paid $72 to Hunter, a trade payable 18 Paid taxi fare, $14 25 Received cash, $11, from Conrad, a trade receivable REQUIRED (a) Prepare Leo’s petty cash book for the month of April 2021, on page 3. Balance the petty cash book and bring down the balance on 1 May 2021. [10] $ Ledger accounts … … … … … … … … … … … … $ Office expenses … … … … … … … … … … … … $ Travel … … … … … … … … … … … … $ Totalpaid … … … … … … … … … … … … Book Leo Cash Petty Details … … … … … … … … … … … … Date 2021 … … … … … … … … … … … … (b) (i) Name the ledger to which each of the following would be posted. The total of the column for travel expenses … The payment to Hunter … [2] (ii) Name the accounting principle which is being applied when figures from the petty cash book are posted to the appropriate ledgers. … [1] Leo received a statement of account from Hunter. REQUIRED (c) State two purposes of issuing this statement to Leo. 1 … … 2 … … [2] Leo is considering making all payments over $50 to trade payables by credit transfer. REQUIRED (d) Advise Leo whether he should go ahead with this change. Justify your answer by providing two advantages and two disadvantages. … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Leo Petty Cash Book Total received Date Details Total paid Travel Office expenses Ledger accounts $ 2021 $ $ $ $ 48 Apr 1 Balance b/d (1) 152 Bank (1) 5 Office cleaning (1) 21 21 7 Train ticket (1) 13 13 13 Hunter (1) 72 72 11 18 Taxi fare (1) 14 14 25 Conrad (1) 120 27 21 72 91 211 30 Balance c/d 211 91 May 1 Balance b/d (1)OF + (1) dates + (1) OF totalling analysis columns Question Answer Marks 1(b)(i) Travel – general ledger (1) Hunter – purchases ledger (1) 2 1(b)(ii) Duality (1) 1 1(c) To remind Leo to pay the balance (1) To allow Leo to check his records (1) To provide a summary of the transactions for the month/period (1) Accept other valid points Max (2) 2 1(d) Advantages Do not need to keep as much cash on the premises (1) Less risk of theft or fraud (1) Do not have to have face to face meeting to pay/save time (1) Or other relevant advantages Max (2) Disadvantages No source document immediately available (1) Still have to pay amounts below $50 by other methods (1) May be easier / more suitable to use cheques (1) May Increase bank charges (1) Or other relevant disadvantages Max (2) Recommendation (1) 5

This question in 0985/22 May/June 2021

1 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]

20 marks

Mark scheme: 1(a) Ayesha 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 14 Question Answer Marks 1(b) 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) 4 1(c) Overpayment by credit customer (1) 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) 2

This question in 0985/22 Oct/Nov 2021

1 Nakul is a trader. He buys and sells goods on credit. He buys most of his supplies from one supplier, Nadia, who allows Nakul a trade discount of 20%. The following transactions took place in January 2022. Jan 2 Paid $441 by cheque to Nadia, in full settlement of $450 owed to her at 1 January 2022. 12 Bought goods on credit from Nadia, list price $350 14 Returned faulty goods to Nadia, list price $80 18 Bought goods on credit from Nadia, list price $400 23 Sold goods on credit, $800 29 Bought goods on credit, $60, from Sophie 30 Returned goods to Sophie, $9 REQUIRED (a) Prepare the purchases journal for January 2022. Total the journal and indicate the ledger account to which the total would be posted. Nakul Purchases journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … … … … … [4] (b) Prepare the purchases returns journal for January 2022. Total the journal and indicate the ledger account to which the total would be posted. Nakul Purchases returns journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … [3] (c) Prepare the account for Nadia, for January 2022, as it would appear in the books of Nakul. Balance the account and bring down the balance on 1 February 2022. Nakul Nadia account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6] (d) Complete the table by placing a tick (3) to show where each item is shown on the statement of financial position. Current liabilities Non-current liabilities Trade payables Bank overdraft [2] Nakul has a bank overdraft and would like to reduce it. He is considering paying his suppliers later than he currently does in order to help him reduce his bank overdraft. REQUIRED (e) Advise Nakul whether or not he should take longer to pay his suppliers. Justify your answer by providing two advantages and two disadvantages. … … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Nakul Purchases journal Date Details $ 2022 Jan 12 18 29 31 Nadia (350 – 70) Nadia (400 – 80) Sophie Transfer to purchases account 280 320 60 660 (1) (1) (1) (1)OF 4 1(b) Nakul Purchases returns journal Date Details $ 2022 Jan 14 30 31 Nadia (80 – 16) Sophie Transfer to purchases returns account 64 9 73 (1) (1) (1)OF 3 1(c) Nakul Nadia account Date 2022 Jan 2 14 31 Details Bank (1) Discount (1) Purchases returns (1) Balance c/d $ 441 9 64 536 1050 Date 2022 Jan 1 12 18 Feb 1 Details Balance b/d (1) Purchases } (1) Purchases } Balance b/d (1)OF $ 450 280 320 ____ 1050 536 6 Question Answer Marks 1(d) Current liabilities Non-current liabilities Trade payables (1) Bank overdraft (1) 2 1(e) Advantages Would delay the outflow of cash/will reduce bank overdraft (1) May reduce bank overdraft charges/interest (1) Overdraft charges may be higher than cash discount offered by suppliers (1) May currently be paying Nadia/suppliers quicker than is necessary (1) Max (2) Disadvantages May lose the cash discount allowed by Nadia/suppliers (1) Nadia/suppliers may charge interest on late payment (1) Nadia/suppliers may stop supplying or reduce the amount they supply/may damage relationship with suppliers (1) There may be better methods of improving cash flow (e.g. selling on cash terms) (1) Max (2) Accept other valid points (1) for recommendation 5

This question in 0985/21 May/June 2022

3 Jules is a hairdresser. He bought some new energy-saving hairdrying equipment, $1900, on credit from YZH Limited on 30 April 2022. REQUIRED (a) Prepare the journal entry to record the purchase of these hairdryers. A narrative is required. Jules Journal Date Details Debit Credit $ $ … … … … … … … … … … … … … … … … [3] The new hairdryers will use less electricity than his old ones. There will be an additional insurance charge for the new hairdryers. The old hairdryers had been fully depreciated so that their net book value was nil. REQUIRED (b) Complete the table by placing a tick (3) to show whether these changes in expenses increase or decrease the profit. Expense Increase Decrease in profit in profit Heat and light Depreciation Insurance [3] Jules has discovered the following five errors in his accounting records for the year ended 30 April 2022. 1 The total for general expenses, $28, in the petty cash book for April 2022 has not been posted to the general ledger. 2 A direct debit to Isaac, a supplier, $195 had been recorded as $159 in the account for Isaac. 3 A payment by credit transfer for wages, $144, has not been recorded in the accounting records.

6 marks

Mark scheme: 3(a) Jules Journal Date Details Debit $ Credit $ 2022 April 30 Equipment YZH Limited Purchase of hairdressing equipment on credit from YZH Limited (1) 1900 1900 (1) (1) 3 Question Answer Marks 3(b) Increase in profit Decrease in profit Heat and light (1) Depreciation (1) Insurance (1) 3 3(c) Jules Journal Error number Details Debit $ Credit $ 1 General expenses Suspense 28 28 (1) (1) 2 Isaac Suspense 36 36 (1) (1) 3 Wages Bank 144 144 (1) (1) 4 Suspense Discount received 76 76 (1) (1) 5 Commission receivable Rent 200 200 (1) (1) 10 Question Answer Marks 3(d) Jules Suspense account Date 2022 April 30 Details Discount received (1) $ 76 __ 76 Date 2022 April 30 Details Difference on trial balance (1)OF General expenses (1) Isaac (1) $ 12 28 36 76 4

This question in 0985/21 May/June 2022

1 Peter is a trader. The following transactions took place in April 2022. April 2 Cash sales, $410, were paid directly into the bank account 3 Paid $798 to Rahat, by cheque, in full settlement of a debt of $840 8 Paid $42 cash for a motor vehicle repair 15 Purchased goods, list price $320, on credit subject to a trade discount of 10%, from Rahat 18 Cash sales, $460 20 Paid $392 to Samir by telephone transfer, having deducted 2% cash discount from the amount due 25 A cheque for commission receivable, $115, was paid into the bank account 29 Paid $285 to Rafael by cash, in full settlement of a debt of $300 REQUIRED (a) Prepare Peter’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 May 2022. [11] $ Bank … … … … … … … … … … … … … … … … $ Cash … … … … … … … … … … … … … … … … $ Discountreceived … … … … … … … … … … … … … … … … Details … … … … … … … … … … … … Date 2022 … … … … … … … … … … … … Book Peter Cash $ 920 Bank … … … … … … … … … … … … … … … … … … … … … … $ 135 Cash … … … … … … … … … … … … … … … … … … … … … … $ Discountallowed … … … … … … … … … … … … … … … … … … … … … … Details b/d Balance … … … … … … … … … … … Peter has received a bank statement for April. He is using it to prepare a bank reconciliation statement and to update his cash book. REQUIRED (b) Place a tick (✓) to show how each item in the table below would be used to prepare the bank reconciliation statement or to update the cash book. Prepare bank reconciliation Update cash book statement Added Deducted Items to be adjusted to bank from bank Debited to Credited to statement statement cash book cash book balance balance Bank charges Direct debit for rent Cheque paid to a supplier but not yet cashed Cheque for commission received dishonoured Dividend received [5] REQUIRED (c) Prepare the account for Rahat as it would appear in the ledger of Peter. Balance the account and bring down the balance on 1 May 2022. Peter Rahat account Date Details $ Date Details $ 2022 2022 … … … Apr 1 Balance b/d 840 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] [Total: 20]

20 marks

Mark scheme: 1(a) Peter Cash Book Date Details Disc Alld Cash Bank Date Details Disc Rec Cash Bank 2022 $ $ $ 2022 $ $ $ Apr 1 Balance b/d 135 920 Apr 3 Rahat (1) 42 798 2 Sales (1) 410 8 Motor expenses (1) 42 18 Sales (1) 460 20 Samir (1) 8 392 25 Commission 29 Rafael (1) 15 285 received (1) 115 30 Balance c/d 268 255 595 1445 65 595 1445 May 1 Balance b/d 268 255 (1)OF (1)OF (1)OF +(1) dates Question Answer Marks 1(b) Prepare reconciliation statement Update cash book Items to be adjusted Added to bank statement balance Deducted from bank statement balance Debited to cash book Credited to cash book Bank charges (1) Direct debit for rent  (1) Cheque paid to a supplier but not yet cashed (1) Cheque for commission received dishonoured  (1) Dividend received (1) 5 1(c) Peter Rahat account Date Details $ Date Details $ 2022 2022 Apr 3 Bank (1) 798 Apr 1 Balance b/d 840 3 Discount (1) 42 15 Purchases (1) 288 30 Balance c/d 288 1 128 1 128 May 1 Balance b/d (1)OF 288 4

This question in 0985/22 May/June 2022

2 MC is a trader who maintains a full set of accounting records and prepares control accounts at the end of each month. REQUIRED (a) Complete the table to name the book of prime entry which MC would use to obtain information when preparing control accounts. Item Book of prime entry Discount received from credit suppliers Purchases returns Contra entries Interest charged by credit suppliers [4] (b) Explain how a contra entry is treated in the ledger accounts. … … … … [2] MC has provided the following information for the month of July 2022. $ On 1 July 2022 Purchases ledger control account credit balance b/d 21 400 Purchases ledger control account debit balance b/d 130 Totals for the month Credit purchases 259 600 Credit purchases returns 9 800 Cash purchases 240 Cheques paid to credit suppliers 228 200 Discount received 12 900 Cash paid to credit suppliers 500 Interest charges by credit suppliers 150 Contra sales ledger 2 260 At 31 July 2022 the purchases ledger control account had a credit balance c/d of $180. REQUIRED (c) Prepare the purchases ledger control account for the month of July 2022. Balance the account and bring down the balances on 1 August 2022. MC Purchases ledger control account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [9] Currently MC purchases all goods from a local supplier. He has been offered a monthly price reduction of $2000 if he changes to an annual contract purchasing all goods from a new overseas supplier. REQUIRED (d) Advise MC whether he should change to the new overseas supplier. Justify your answer. … … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 2(a) 4 Item Book of prime entry Discount received from credit suppliers Cash book (1) Purchases returns Purchase returns journal (1) Contra entries General journal (1) Interest charged by credit suppliers General journal (1) 2(b) A balance on a purchase ledger account is transferred to an account for the same business in the sales ledger (1) 2 Purchase ledger account is debited, and the sales ledger is credited (1) 2(c) MC 9 Purchase ledger control account Date Date 2022 Details $ 2022 Details $ Jul 1 Balance b/d 130 * Jul 1 Balance b/d 21 400 (1)* both 31 Purchase returns 9 800 (1) 31 Purchases 259 600 (1) Bank 228 200 (1) Interest charges 150 (1) Discount received 12 900 (1) Balance c/d 180 Cash 500 (1) Contra 2 260 (1) Balance c/d 27 540 _______ 281 330 281 330 Aug 1 Balance b/d 180 ** Aug 1 Balance b/d 27 540 (1) OF** both 2(d) Reduce cost of goods/increase gross profit/lower selling price (1) 5 Reliability of new supplier/guaranteed supplier (1) Must consider whether low price will be maintained/currency fluctuations (1) Must consider whether goods will be of an acceptable quality (1) Possible language differences/difficulty of communications (1) May be more difficult in case of problems/disputes (1) May experience delivery problems (1) Contract is binding for one year (1) Accept other valid points Max (4) Recommendation (1)

This question in 0985/22 Oct/Nov 2022

1 Shvan maintains a petty cash book using the imprest system. The imprest amount, which is $200, is restored every Wednesday. All payments of less than $75 are made from petty cash. All cash receipts of less than $75 are paid into petty cash. On 1 March 2023 Shvan had $61 in his petty cash box. He provided the following information for the first week in March 2023. March 1 Restored petty cash imprest from the business bank account 2 Paid $55 to Giles, a trade payable 3 Paid taxi fare, $21 6 Paid $18 for notepads and pens 6 Received cash, $25, from Mitchell, a trade receivable 7 Paid $30 for office cleaning REQUIRED (a) Prepare Shvan’s petty cash book for the first week of March 2023, on the page opposite. Balance the petty cash book at 7 March 2023 and bring down the balance at 8 March 2023. [10] $ Ledger accounts … … … … … … … … … … … … $ Travel … … … … … … … … … … … … $ Office expenses … … … … … … … … … … … … $ Totalpaid Book … … … … … … … … … … … … ShvanCash Petty Details … … … … … … … … … … … … Date … … … … … … … … … … … … $ Total received … … … … … … … … … … … … Shvan makes payments to Giles from his bank account as well as by cash. He provided the following information. March 1 Owed Giles, $165, from February 13 Paid Giles the amount outstanding on his account, by cheque 22 Purchased goods on credit from Giles, list price $150, subject to a trade discount of 4% (b) Prepare the account for Giles as it would appear in the books of Shvan. Balance the account at 31 March 2023 and bring down the balance at 1 April 2023. Shvan Giles account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] Shvan is considering whether to stop keeping cash at his business premises. He would require all customers to transfer payment directly into his bank account and he would make all business payments from his bank account. REQUIRED (c) (i) State one way Shvan could pay his suppliers, from his bank account, other than by cheque. … … [1] (ii) Advise Shvan whether he should stop using cash. Justify your answer by providing two advantages and two disadvantages of stopping using cash. … … … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Shvan Petty Cash Book Total received $ Date Details Total paid $ Office expenses $ Travel $ Ledger accounts $ 2023 61 Mar 1 Balance b/d (1) 139 Bank (1) 2 Giles (1) 55 55 3 Taxi fare (1) 21 21 6 Notepads and pens (1) 18 18 25 6 Mitchell (1) 7 Office cleaning (1) 30 30 (1)OF 124 48 21 55 101 225 7 Balance c/d 225 101 Mar 8 Balance b/d (1)OF + (1) dates 10 Question Answer Marks 1(b) Shvan Giles account Date Details $ Date Details $ 2023 2023 Mar 2 Petty cash (1) 55 Mar 1 Balance b/d 165 13 Bank (1) 110 22 Purchases (1) 144 31 Balance c/d 144 309 309 Apr 1 Balance b/d (1)OF 144 4 1(c)(i) Direct debit (1) Internet transfer (1) Telephone transfer (1) Credit transfer (1) Debit/credit card (1) Max (1) 1 Question Answer Marks 1(c)(ii) Advantages of stopping using cash Safer – no cash on premises/no transporting cash to/from bank (1) May reduce fraud (1) A petty cash book would not be required (1) Time saving - no cash-handling or journeys to/from bank/ need to be physically present to exchange cash (1) Bank transactions can be quicker (1) Accept other valid points Max (2) Disadvantages of stopping using cash Some customers/suppliers/service providers may prefer to use cash (1) May take longer to receive funds via the banking system/ OR using cash may be quicker (1) It may be useful to keep some cash on the premises for emergency use/small expenses (1) May incur extra bank charges (1) Bank reconciliation may take longer/is more complex (1) Accept other valid points Max (2) (1) for recommendation 5

This question in 0985/21 May/June 2023

1 Omer is a trader. The following transactions took place in April 2023. April 3 Paid $1000 into the bank from his own personal money 7 Paid $360 to a supplier, Alexander, by telephone transfer 10 Cash sales, $695, were paid directly into the bank account 12 Purchased goods, $340, on credit from Alexander 15 Paid $68 cash for petrol 16 Paid rent, $400, by standing order 23 Received a cheque, $384, from a credit customer, Esme, in full settlement of an invoice for $400 27 Paid $323 by cheque to Alexander, having deducted $17 cash discount 28 Purchased goods, $235, on credit from Alexander REQUIRED (a) Complete Omer’s cash book on the page opposite. Balance the cash book and bring down the balances on 1 May 2023. [11] $ 477 Bank … … … … … … … … … … … … … … … … $ Cash … … … … … … … … … … … … … … … … … … $ Discountreceived … … … … … … … … … … … … … … … … … … Details b/d Balance … … … … … … … … … … … … Date 2023 1Apr … … … … … … … … … … … … Book Omer Cash $ Bank … … … … … … … … … … … … … … … … … … … … … … … … $ 120 Cash … … … … … … … … … … … … … … … … … … … … … … … … $ Discountallowed … … … … … … … … … … … … … … … … … … … … … … … … Details b/d Balance … … … … … … … … … … … … (b) Prepare the account for Alexander for April 2023. Balance the account and bring down the balance at 1 May 2023. Omer Alexander account Date Details $ Date Details $ 2023 … … … Apr 1 Balance b/d 360 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] Omer buys all his supplies from Alexander who does not allow Omer any trade discount. Omer is now considering also purchasing supplies from Tahir who would offer him 3% trade discount but no cash discount. REQUIRED (c) Advise Omer whether he should choose: Option 1 – purchase supplies from Alexander only, or Option 2 – purchase supplies from both Alexander and Tahir Justify your answer by providing three advantages and one disadvantage of the option you have chosen. … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Omer Cash Book Date Details Disc. Cash Bank Date Details Disc. Cash Bank 2023 $ $ $ 2023 $ $ $ Apr 1 Balance b/d 120 Apr 1 Balance b/d 477 3 Capital (1) 1 000 7 Alexander (1) 360 10 Sales (1) 695 15 Motor expenses (1) 68 23 Esme (1) 16 384 16 Rent payable (1) 400 27 Alexander (1) 17 323 30 Balance c/d 52 519 16* 120 2079 17 (1)* 120 2079 May 1 Balance b/d 52 519 (1)OF (1)OF *both discount totals +(1) dates Question Answer Marks 1(b) Omer Alexander account Date Details $ Date Details $ 2023 2023 Apr 7 Bank (1) 360 Apr 1 Balance b/d 360 27 Bank } 323 12 Purchases } 340 Discount received } (1) 17 28 Purchases } (1) 235 30 Balance c/d 235 935 935 May 1 Balance b/d (1)OF 235 4 1(c) Option 1 – buy from Alexander only Advantages A offers cash discount but T does not (1) A offers 5% cash discount (1) A’s cash discount is a higher % than T’s trade discount (1) Maintain good relationship with A (1) Familiar with A’s quality/reliability (1) (Max 3) Disadvantages T offers trade discount but A does not (1) May lose cash discount by not paying on time (1) Depending on one supplier only (1) A has no incentive to offer more competitive terms (1) (Max 1) Accept other valid points 5 Question Answer Marks Option 2 – buy from both Alexander and Tahir Advantages T offers trade discount but A does not (1) Trade discount is deducted from invoice and does not depend on when payment is made (1) Cost of buying goods from T is reduced (1) Not dependent on one supplier (1) A may offer more competitive terms to compete with other supplier (1) (Max 3) Disadvantages A offers cash discount but T does not(1) T’s trade discount is a lower % than A’s cash discount (1) May damage relationship with A (1) Not familiar with T’s quality/reliability (1) (Max 1) Accept other valid points Recommendation (1)

This question in 0985/22 May/June 2023

1 Seok buys and sells goods on credit. He has three credit customers and allows one of them, Naomi, trade discount of 10%. All customers pay Seok by bank transfer. The following balances were extracted from Seok’s sales ledger at 1 August 2023. $ Naomi 450 Siena 155 Bwana 386 991 The following transactions took place in August 2023. Aug 3 Sold goods on credit, to Naomi, list price $410 5 Sold goods on credit, $89, to Bwana 10 Naomi returned goods, list price $20 11 Naomi paid $423 in full settlement of the amount she owed at 1 August 19 Sold goods on credit, $180, to Bwana 22 Sold goods on credit, to Naomi, list price $230 27 Bwana returned goods, $19 29 Bwana paid $400 REQUIRED (a) Prepare the sales journal for August 2023. Total the journal and indicate the ledger account where the total would be posted. Seok Sales journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] (b) Prepare the sales returns journal for August 2023. Total the journal and indicate the ledger account where the total would be posted. Seok Sales returns journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … [3] (c) Prepare the account for Naomi for August 2023 as it would appear in the books of Seok. Balance the account and bring down the balance at 1 September 2023. Seok Naomi account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6] On 31 August Seok decided to write off the amount owing by Siena as an irrecoverable debt. REQUIRED (d) Prepare Seok’s sales ledger control account for August 2023. Balance the account and bring down the balance at 1 September 2023. Seok Sales ledger control account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [7] [Total: 20]

20 marks

Mark scheme: Question Answer Marks 1(a) Seok 4 Sales journal Date Details $ 2023 Aug 3 Naomi (410 – 41) 369 (1) 5 Bwana 89} 19 Bwana 180} (1) 22 Naomi (230 – 23) 207 (1) ___ 31 Transfer to sales account 845 (1)OF 1(b) Seok 3 Sales returns journal Date Details $ 2023 Aug 10 Naomi (20 – 2) 18 (1) 27 Bwana 19 (1) 31 Transfer to sales returns account 37 (1)OF 1(c) Seok 6 Naomi account Date Details $ Date Details $ 2023 2023 Aug 1 Balance b/d (1) 450 Aug 10 Sales returns (1) OF 18 3 Sales } 369 11 Bank (1) 423 22 Sales } (1)OF 207 Discount allowed (1) 27 31 Balance c/d 558 ____ 1026 1026 Sept 1 Balance b/d (1)OF 558 1(d) Seok 7 Sales ledger control account Date Details $ Date Details $ 2023 2023 Aug 1 Balance b/d (1) 991 Aug 31 Sales returns (1)OF 37 31 Sales (1)OF 845 Bank (423 + 400) (1) 823 Discount allowed (1) 27 Irrecoverable debts (1) 155 ____ Balance c/d 794 1836 1836 Sept 1 Balance b/d (1)OF 794

This question in 0985/22 Oct/Nov 2023

1 Addo is a trader who only sells on credit. His trade receivables at 1 April 2024 were as follows: $ Nuru 920 Mahia 1145 Ava 1378 Rachel 215 3658 During April 2024, the following transactions took place: April 2 Sold goods to Ava, list price $150, less 6% trade discount 9 Received telephone transfer from Ava, $689 12 Sold goods to Nuru, $165 13 Received cheque, $627, from Mahia, in full settlement of an invoice for $660 19 Received $760 from Nuru by electronic transfer. Nuru had deducted 5% cash discount 20 Nuru returned goods $30 21 Sold goods to Mahia, list price $480, trade discount 5%, cash discount 5% if invoice paid within 30 days 30 Rachel has become bankrupt and Addo decides to write off the amount owing from her, as irrecoverable REQUIRED (a) Prepare the sales journal for April 2024. Total the sales journal and indicate the ledger account to which the total would be posted. Addo Sales journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … [3] (b) Prepare the journal entry to write off the amount owing by Rachel. A narrative is required. Addo Journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … [3] (c) Calculate: (i) the total amount of money which Addo received from trade receivables during April 2024. … … … … [1] (ii) the total amount of cash discount which Addo allowed in April 2024. … … … … [2] (d) Prepare Addo’s sales ledger control account for April 2024. Addo Sales ledger control account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [6] Addo is considering changing his credit terms. He would introduce more credit checks on new customers and would increase cash discount to 7½% for payment within 30 days. REQUIRED (e) Advise Addo whether or not he should make these changes to his credit terms. Justify your answer by providing two advantages and two disadvantages of changing his credit terms. … … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: 1(a) Addo Sales journal Date Details $ 2024 Apr 2 12 21 30 Ava (150 – 9) Nuru Mahia (480 – 24) Transfer to sales account 141 165 456 ___ 762 (1) (1) (1)OF 3 1(b) Addo Journal Date Details Debit $ Credit $ 2024 April 30 Irrecoverable debts (1) Rachel (1) Amount due from Rachel written off as irrecoverable (1) 215 215 3 1(c)(i) Total amount received = $689 +$627 + $760 = $2 076 (1) 1 1(c)(ii) Total cash discount = $40(1) + $33 = $73 (1)OF 2 Question Answer Marks 1(d) Addo Sales ledger control account Date 2024 April 1 30 May 1 Details Balance b/d Sales (1)OF Balance b/d (1)OF $ 3 658 762 ____ 4 420 2 026 Date 2024 April 30 Details Sales returns (1) Bank (1)OF Discount allowed (1)OF Irrecoverable debts (1) Balance c/d $ 30 2 076 73 215 2 026 4 420 6 1(e) Advantages Increased cash discount may encourage new customers/existing customers to buy more/increase sales (1) More customers may pay early because of extra discount/improve liquidity (1) Irrecoverable debts may be reduced (1) Increased credit check indicates ability to pay (1) Accept other valid points Max (2) Disadvantages More credit checks would take more time/cost more money (1) Less money coming in from sales (1) No guarantee that customers will pay early (1) Less profit on each sale/profit for the year will be reduced/expenses increased if give cash discount (1) No guarantee that there will not be any irrecoverable debts (1) Accept other valid points Max (2) Recommendation (1) 5

This question in 0985/21 May/June 2024

1 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]

20 marks

Mark scheme: 1(a) ($21 +$47 + $44) (1) – $15(1) = $97 (1)OF 3 1(b)(i) cash book (1) sales journal (1) sales returns journal (1) purchases journal (1) purchases returns journal (1) journal / general journal (1) Max (1) 1 1(b)(ii) Useful for preparing control accounts (1) 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) 2 1(c)(i) Depreciation for the year ended 30 April 2022 12 000  25% 3 000 } 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 2 1(c)(ii) Lottie Disposal of motor vehicle account Date 2024 Apr 30 Details Motor vehicles (1) $ 12 000 _____ 12 000 Date 2024 Apr 30 Details Provision for depreciation (1)OF Y Limited (1) Income statement (1)OF $ 5 250 6 000 750 12 000 Ignore dates 4 Question Answer Marks 1(d) Item Valuation per unit $ Number of items Total valuation $ A (14 + 1 = ) 15 60 900 (1) B 17 85 1 445 (1) C 22 30 660 (1) 3 005 (1)OF 4 1(e) Lottie Insurance account Date 2023 May 1 Aug 1 2024 May 1 Details Balance b/d } Bank } (1) Balance b/d (1)OF $ 60 360 420 60 Date 2024 Apr 30 Details Income statement (1) Balance c/d $ 360 60 420 (1) dates 4

This question in 0985/22 May/June 2024

1 Kalima is a trader. At the start of September 2024, Kalima had a cash balance of $240, a bank balance of $890 credit and a credit customer, Elizah, owed Kalima $520. The following transactions took place during the month: September 2 Paid stationery in cash, $82 3 Cash sales, $478 A cheque for $30 received at the end of August from Badr, a credit customer, was dishonoured 5 Paid wages by credit transfer, $1390 7 Bought goods from Gulnar on credit, $200 10 Kalima withdrew $150 from the business bank account for personal use 14 Received a cheque from Elizah in full settlement of the amount owed less 2.5% cash discount 16 Paid $120 cash into the business bank account 21 Paid Gulnar the full amount due by credit transfer less a cash discount of 2% 23 Sold goods to Elizah on credit, $1450 29 A credit note totalling $325 was issued to Elizah for goods returned REQUIRED: (a) Prepare Kalima’s cash book on the page opposite, for September 2024. Balance the account and bring down the balances on 1 October 2024. … … … … … … … … … (b) What does the credit balance in the bank on 1 September 2024 represent? … … [1] (c) Prepare the account of Elizah as it would appear in Kalima’s books. Balance the account and bring down any balances on 1 October 2024. Kalima Elizah Account Date Details Amount Date Details Amount 2024 $ 2024 $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [5] (d) Name the section heading in Kalima’s statement of financial position where the balance on Elizah’s account would appear. … … [1] [Total: 20]

20 marks

Mark scheme: Question Answer Marks 1(a) 13 Kalima Cash book Date Details Discoun Cash Bank Date Details Discount Cash Bank t Receive allowed d 2024 $ $ $ 2024 $ $ $ Sept 1 Balance b/d 240 Sept 1 Balance b/d 890 3 Sales 478 (1) 2 Stationery 82 (1) 14 Elizah 13 507 (1) 3 Badr 30 (1) 16 Cash 120 (1) 5 Wages 1 390 (1) 10 Drawings 150 (1) 16 Bank 120 (1) 21 Gulnar 4 196 (1) 30 Balance c/d 2 029 30 Balance c/d 516 13 718 2 656 4 718 2 656 (1)OF* Oct 1 Balance b/d 516 (1)OF Oct 1 Balance b/d 2 029 (1)OF (1) for dates *For totalling dr and cr columns 1(b) Bank overdraft 1 1(c) Kalima 5 Elizah Account Date Details Amount Date Details Amount 2024 $ 2024 $ Sept 1 Balance b/d 520 Sept 14 Bank 507 (1)OF 23 Sales 1 450 (1) Discount allowed 13 (1)OF 29 Sales returns 325 (1) 30 Balance c/d 1 125 1 970 1 970 Oct 1 Balance b/d 1 125 (1)OF 1(d) Current Assets 1

This question in 0985/22 Oct/Nov 2024

1 Anika started in business on 1 March 2024, but she did not start to keep full book-keeping records until 1 March 2025. Anika’s assets and liabilities at 1 March 2025 were: $ Premises 90 000 Motor vehicle 14 500 Inventory 3 625 Trade receivables: Kofi 3 000 Davia 2 140 Petty cash 86 Bank overdraft 1 080 Trade payables: Ado 1 925 Sam 210 REQUIRED (a) Prepare the opening journal entry at 1 March 2025. A narrative is required. Anika Journal Date Details $ $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [4] Question 1 continues on page 4. Anika decided to maintain a petty cash book using the imprest system. The imprest amount is $150. On 1 March 2025, Anika drew the amount required for petty cash from the bank account. During March 2025, Anika made the following payments from petty cash. March 6 Paid for petrol, $30 10 Paid for computer paper, $12 17 Paid Sam, $48, on account 21 Paid for postage, $6 28 Paid for car cleaning, $8 REQUIRED (b) Prepare Anika’s petty cash book on page 5 for the month of March 2025. Balance the petty cash book, bring down the balance on 1 April 2025 and restore the imprest. [11] $ Ledger accounts … … … … … … … … … … … … $ Office expenses … … … … … … … … … … … … $ Motor expenses … … … … … … … … … … … … $ Total paid … … … … … … … … … … … … Book Anika Cash Petty Details … … … … … … … … … … … … Date 2025 … … … … … … … … … … … … On 21 March 2025, Anika purchased goods on credit from Sam, list price $120, subject to a trade discount of 5%. On 25 March 2025, Anika returned half of these goods. REQUIRED (c) Prepare the account for Sam in the books of Anika for March 2025. Balance the account and bring down the balance at 1 April 2025. Anika Sam account Date Details $ Date Details $ … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [5] [Total: 20]

20 marks

Mark scheme: Question Answer Marks 1(a) Anika 4 Journal Date Details Debit Credit $ $ 2025 March 1 Premises 90 000} Motor vehicles 14 500} Inventory 3 625} Trade receivables – Kofi 3 000} (1) Davia 2 140} Petty cash 86} Bank 1 080} Trade payables – Ado 1 925} (1) Sam 210} Capital 110 136 (1) ______ ______ Assets, liabilities and capital at this date (1) 113 351 113 351 1(b) Anika 11 Petty Cash Book Total Date Details Total Motor Office Ledger received paid expenses expenses accounts $ 2025 $ $ $ $ 86 Mar 1 Balance b/d (1) 64 Bank (1) 6 Petrol (1) 30 30 10 Computer paper (1) 12 12 17 Sam (1) 48 48 21 Postage (1) 6 6 28 Car cleaning (1) 8 8 104 38 18 48 46 31 Balance c/d 150 150 46 Apr 1 Balance b/d (1)OF 104 Bank (1)OF (1) dates (1) OF totalling analysis columns 1(c) Anika 5 Sam account Date Details $ Date Details $ 2025 2025 Mar 17 Petty cash (1) 48 Mar 1 Balance b/d (1) 210 25 Purchases returns (1)OF 57 21 Purchases (1) 114 31 Balance c/d 219 324 324 Apr 1 Balance b/d (1)OF 219

This question in 0985/21 May/June 2025

1 Kadima is a trader. He sells on credit only. During March 2025, the following transactions took place. March 4 Paid Lee, $196, by bank transfer in full settlement of an invoice for $200 6 Received payment by cheque, $291, from Sophiah who had deducted 3% cash discount 14 Paid motor expenses, $26, by cash 19 Received payment by bank transfer, $375, from Merve, a customer 22 Paid Mark, $240, by online transfer, having deducted 4% cash discount 28 Withdrew $400 cash from the bank for business use 29 Paid wages, $362, in cash 30 Paid motor expenses, $91, by cheque REQUIRED (a) Complete Kadima’s cash book on page 3. Balance the cash book and bring down the balances at 1 April 2025. [12] $ Bank … … … … … … … … … … … … $ Cash … … … … … … … … … … … … $ Discount received … … … … … … … … … … … … Details … … … … … … … … … … … … Date 2025 … … … … … … … … … … … … Book Kadima Cash $ 840 Bank … … … … … … … … … … … … $ 50 Cash … … … … … … … … … … … … $ Discount allowed … … … … … … … … … … … … Details b/d Balance … … … … … … … … … … … … Kadima has received a bank statement dated 31 March 2025. The bank statement shows: 1 The cheque for motor expenses had not yet been presented to the bank.

12 marks

Mark scheme: Question Answer Marks 1(a) Kadima 12 Cash Book Date Details Disc Cash Bank Date Details Disc Cash Bank Allowed Rece 2025 $ $ $ 2025 $ $ $ Mar 1 Balance b/d 50 840 Mar 4 Lee (1) 4 196 6 Sophiah (1) 9 291 14 Motor expenses (1) 26 19 Merve (1) 375 22 Mark (1) 10 240 28 Bank* 400 28 Cash (1)* 400 29 Wages (1) 362 30 Motor expenses (1) 91 31 Balance c/d 62 579 9** 450 1506 (1)OF 14** 450 1506 Apr 1 Balance b/d 62 579 (1)OF (1)OF (1)* for both entries of transfer of cash to bank ** for both totals +(1) for dates 1(b) $ 3 Cash book balance 579 (1)OF Cash book error (357 – 375) (18 (1) Revised cash book balance 561 (1)OF 1(c) For requiring bank transfers and increased cash discount 5 Record keeping would be easier (1) Increase in cash discount may attract more customers / increase sales (1) Most businesses use bank transfers (1) Money is usually safer in the bank, than being held in cash / reduces risk of theft / fraud (1) No need to visit the bank to pay in cheques (1) Cheques may be returned unpaid (1) Cheques take time to clear (1) Accept other valid points Max (3) Against requiring bank transfers and increased cash discount Increased cash discount allowed would reduce profitability (1) Bank charges may increase (1) Some customers/suppliers may prefer to deal in cash/cheques (1) Not all customers may have a bank account (1) Employees may prefer to continue to be paid in cash (1) Accept other valid points Max (3) Overall For and Against: Max (4) Recommendation (1)

This question in 0985/22 May/June 2025