2020 SASS 3E POA EOY P2 Q2

2020 SASS 3E POA EOY P2 Q2

2 T’ Sam runs a food delivery business. The business rents out the space above the shop premises. T’ Sam provided the following information for the year ended 30 June 2020.

Account balances at 1 July 2019

$

    Rent received in advance

2 000

    Salaries payable

7 500

  

During the year ended 30 June 2020

 

    Rent received by cheque

40 000

    Salaries paid by cheque

35 900

  

Account balances at 30 June 2020

 

    Rent received in advance

3 500

    Salaries payable

4 800

 

REQUIRED

a. Calculate the amount (showing all workings) to be shown as rent income in the statement of financial performance of T’ Sam’s business for the year ended 30 June 2020.

[1]

b. Show the journal entries to record the salaries paid during the year ended 30 June 2020 and salaries payable at 30 June 2020.

[4]

c. Explain the accounting theory which is being applied when calculating the amounts for rent income and salaries expense for the year ended 30 June 2020.

[2]

The following ledger accounts are extracted from the books of T’ Sam for the month of July 2020.

Cash at bank account

Date 

Particulars 

Debit 

Credit

Balance 

2020

 

$

$

$

July 1

Balance b/d 

  

8 900 Dr

7

Trade receivable – Stefan 

1 170

  

12

Sales revenue 

3 895

  

20

Trade payable – Brandon

 

980 

 

24

Utilities expense

 

390

 

Discount allowed account 

Date 

Particulars 

Debit 

Credit

Balance 

2020

 

$

$

$

July 7

Trade receivable -Stefan

130

 

130 Dr

REQUIRED

d. Explain the following entries.

[4]

i. 7 July

ii. 20 July

iii. 24 July

e. Calculate the balance of cash at bank at 31 July 2020

[1]

[TOTAL 12]

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2000+40000-3500
$38,500

accrual basis of accounting theory- expenses and income are recognised
when they are incurred/earned regardless of whether cash has been paid /
received during the period
OR matching Theory- expenses incurred must be matched against income
earned in the same period to determine the profit for that period.

i) The business received $1170 by cheque from trade receivable- Stefan,
after cash discount of $130.


ii) The business paid trade payable- Brandon $980, by cheque


iii) The business paid for utilities expense $390 by cheque

$12 595

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