2014-DSE

BAFS

PAPER 2A

HONG KONG EXAMINATIONS AND ASSESSMENT AUTHORITY

HONG KONG DIPLOMA OF SECONDARY EDUCATION EXAMINATION 2014

BUSINESS, ACCOUNTING AND FINANCIAL STUDIES PAPER 2A

10.30 am - 12.45 pm (2 hours 15 minutes)

INSTRUCTIONS

(1) There are three sections in this paper.

(2) All questions in Sections A and B are compulsory. You are required to answer
one of the two questions in Section C.

(3) Write your answers in the answer book. Start EACH question (not part of a
question) on a NEW page.

Not to be taken away before the

2014-DSE-BAFS 2A-I 14
更多試卷歡迎瀏覽 http://dsepp.com
SECTION A (24 marks)

Answer ALL questions in this section.

1. The trade receivables of A&B Company as at 1 December 2013 amounted to $399 700. The following
information relates to the month ended 31 December 2013:

＄
Cash sales 217 600
Credit sales 4 392 400
Returns outwards 373 200
Returns inwards 23 280
Allowance to customers for defective goods 3 I 120
Collections from credit customers 4 137 400
Payments to suppliers 2 050 200
Bad debts written off 36 000

REQUIRED:

(a) Write up the sales ledger control account for the month ended 31 December 2013. (4 marks)

(b) The opening balance of the allowance for doubtful debts account as at 1 January 2013 amounted to
$38 000. Suppose the company estimated that 6% of the trade receivables as at 31 December 2013 was
doubtful. Prepare the journal entry for adjusting the allowance for doubtful debts as at 31 December
2013. (3 marks)
{Total: 7 marks)

2. Angel Company has its financial yea1 a machine for $240 000 on
1 」anuary 2011. The machine has be :thod based on an estimated
useful life of l O years and residual valu、 alculated on a monthly b宓is,
'(

On l January 2012, an amount of $180 000 was spent on the machme to mcrease its productivity. It was
expected that after the improvement, the annual repair costs would be reduced by $13 500, with no change i11
the remaining useful life and residual value.

Unfortunately, the machine was totally destroyed in an accident on 30 June 2013. On 15 October 2013, the
insurance company agreed to pay compensation of $210 000 in」anuary 2014.

REQUIRED:

(a) Compute the depreciation expense for the machine for each of the three years of 2011, 2012 and 2013.
(4 marks)

(b) Prepare the journal entries for recording the disposal of the machine in 2013. Narration is not required.
(3 marks)
(Total: 7 marks)

2014-DSE-BAFS 2A-2 15

更多試卷歡迎瀏覽 http://dsepp.com
3. A company uses a machine for production. For each of the descriptions in (a) to (d) below, indicate which of
the following cost classifications is most suitable:
＊ fixed cost
＊ variable cost
＊ semi-variable cost
＊ step cost
＊ sunk cost
＊ incremental cost
＊ opportunity cost

(a) A worker is employed to operate the machine for a monthly wage of $6000 plus $0.3 per unit
produced. The total cost of hiring the worker is a/ an .

(b) The machine has a net book value of $52 000. In evaluating whether to sell the machine, the net book
value is a/ an

(c) The machine can now be sold for $5000. If the company decides to retain and use it, the saleable
value is a/ an

(d) If the machine is sold, the company will rent a new machine for $20 000 per annum. Under marginal
costing, the annual rental charge for the new machine is a/ an
(4 marks)

4. Beauty Sports Company produces and sells two types of aerobic-training products: instructional DVDs and
dancer kits. Information on the two products in 2014 is as follows:
罰aD0 0

Dancer Kit
Unit selling price $600
Unit variable cost $125

The annual total fixed cost is $860 000.

REQUIRED:

(a) In 2013, Beauty Sports Company sold 25 000 DVDs and 5000 dancer kits. Assuming that the ratio of
the sales quantity of the two products will be maintained, calculate the sales quantity of each product in
2014 at the breakeven point. (3 marks)

From 2015 onwards, Beauty Sports Company will produce and sell dancer kits only. Improvements will be
made to the dancer kits and it is estimated that the unit variable cost will increase by $75 while the projected
sales quantity is 6250 with no change in the selling price. The annual total fixed cost will be reduced by
$160 000.

REQUIRED:

(b) Calculate the margin of safety in sales dollars for Beauty Sports Company in 2015. (3 marks)
(Total: 6 marks)

2014-DSE-BAFS 2A-3 16
更多試卷歡迎瀏覽 http://dsepp.com
更多試卷歡迎瀏覽 http://dsepp.com
更多試卷歡迎瀏覽 http://dsepp.com
更多試卷歡迎瀏覽 http://dsepp.com
SECTION C (20 marks)

Answer ONE question in this section.

8. After preparing the necessary entries to calculate the cost of goods sold, the bookkeeper of Windy Company
Limited prepared the trial balance as at 31 December 2013 as follows:
Dr Cr
＄ ＄
$5 Ordinary shares, fully paid 1 500 000
Accumulated depreciation - equipment, I January 2013 630 000
Administrative expenses 276 000
Cash at bank 5 126 400
Cost of goods sold I 220 000
Equipment 3 769 000
Finance cost 24 000
Inventory, 31 December 2013 253 200
Retained profits, 1 January 2013 566 000
Sales l 950 000
Selling and distribution expenses 168 400
Share issue 6 000 000
Share premium 209 500
Trade receivables and trade payables 381 600 363 100
11 218 600 11 218 600

Additional information:

(i) On 1 July 2013, a rubbish bin costing $60 was bought for office use. The estimated useful life is 5
years. The amount had been included in the administrative expenses.

(ii) Depreciation expenses of $182 000 for 2013 had been omitted. It is the company's practice to classify
depreciation expenses as administrative expenses.

(iii) Goods invoiced at $38 000 were returned by a credit customer but this had been recorded as returns
outwards to a supplier at the purchase cost of $23 600. The goods had been included in the closing
inventory at cost.

(iv) Part of the closing inventory costing $53 240 was slightly damaged and could only be sold for $33 440.

(v) On 21 December 2013, 600 000 ordinary shares of $5 each were issued at $8 each. The subscription
monies for 750 000 shares were received and recorded in the cash at bank and share issue accounts.
Shares were allotted and the unsuccessful applicants refunded on 30 December 2013 but no entries had
been made in the books.

(vi) On 31 December 2013, the board of directors resolved to transfer $500 000 to general reserve.

REQUIRED:

(a) With reference to a relevant accounting principle, explain whether the accounting treatment for the
rubbish bin in (i) is proper. . (3 marks)

(b) Prepare for Windy Company Limited the income statement for the year ended 31 December 2013 and
the statement of financial position as at that date. (13 marks)

(c) If Windy Company Limited issued debentures instead of ordinary shares in December 2013, explain
how the pr函tability and solvency of the company will be affected in the coming years. (4 marks)
( Total: 20 marks)

2014-DSE-BAFS 2A-7 20
更多試卷歡迎瀏覽 http://dsepp.com
更多試卷歡迎瀏覽 http://dsepp.com
Subsequent to the preparation of the financial statements for the year ended 31 December 2013, the owner of
Nice Company was surprised to find that the bank balance had decreased even though the net profit had
increased.

REQUIRED:

(e) Briefly describe two transactions that will result in increases in a company's net profit but will not
cause corresponding mcreases m its cash and bank balances. (3 marks)
(Total: 20 marks)

END OF PAPER

更多試卷歡迎瀏覽 http://dsepp.com