CSEC Principles of Accounts Paper 2 May/June 2024 - Free CXC Past Paper with Answers

Free CXC Principles of Accounts Paper 2 May/June 2024 past paper from 2024. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.

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CSEC Principles of Accounts Paper 2 May/June 2024 Questions

Every question from this paper as text. See the answers and worked solutions. Questions are the property of the Caribbean Examinations Council; Caribbean AI is not affiliated with CXC.

Question 1 (20 marks)

(a)

On 1 November 2023, Jon Jon Enterprises had cash in hand of $1 475. The business also had a bank overdraft of $1 125 on its bank account. During November, the following transactions occurred.

Date	Transactions
2023 Nov
4	Sales by cheque totalled $2 635.
10	Paid the following accounts less a 5% discount by cheque: L. Smith, $840 and K. Peters, $920.
13	B. French paid $1 900 in cash in full settlement of his account of $2 000.
16	Cash sales paid directly into the bank totalled $1 125.
19	Mr Jon Jon, the owner, gave the business $3 000 by cheque, which must be repaid in one year's time.
27	The owner took $800 of the cash in hand to deposit into the business' bank account.
30	Rent paid in cash totalled $1 540.

Required

Using the form provided on page 5, prepare the three-column cash book.
Balance the cash book at month end and bring down the balances into the next period.
Total the discount columns.

Question 2 (20 marks)

(a)

State ONE advantage of a limited liability company.

[1 mark]

(a)(i)

State ONE advantage of a limited liability company.

[1 mark]

(a)(ii)

State ONE disadvantage of a limited liability company.

[1 mark]

(b)

In May 2023, Rosedale Company Limited sold the following shares and debentures to increase its liquidity.


May 5	180 000 $1 ordinary shares at par
May 10	100 000 8% $4 preference shares at par
May 17	$150 000 5% debentures (2023–2025)

Using the form provided below, prepare journal entries to record the issue of shares and debentures for Rosedale Company Limited. Narratives are required.

JOURNAL

Date	Details	Debit	Credit

[8 marks]

(c)

State ONE ratio that can be used to calculate the liquidity position of the company.

[1 mark]

(d)

Calculate the total annual dividend payable at the end of the financial year for the transaction on 10 May 2023 listed on page 8. Show ALL working clearly.

[2 marks]

(e)

Calculate the total annual amount payable for debenture interest expense at the end of one year. Show ALL working clearly.

[2 marks]

(f)

At the end of the year's operations, Rosedale Company Limited calculated a net profit of $48 500 before debenture interest payments.

[5 marks]

(f)(i)

At the end of the year’s operations, Rosedale Company Limited calculated a net profit of $48 500 before debenture interest payments.

Calculate the total amount available for paying dividends to ordinary shareholders. Show ALL working clearly.

[3 marks]

(f)(ii)

Calculate the percentage return on investment for ordinary shareholders. Show ALL working clearly.

[2 marks]

Question 3 (20 marks)

Ban and Jay are partners sharing profits and losses in the ratio of 3:2 respectively. At the end of the financial year, 31 December 2023, the following balances were extracted from the books of the partnership after calculation of the gross profit.

	$
Gross profit	284 000
Operating expenses	107 000
Non-current assets @ cost price	695 000
Acc. provision for depreciation on non-current assets @ 1 January 2023	215 000

	Ban	Jay
Current accounts	$11 000 Dr	$7 300 Cr
Drawings	$37 000	$26 000
Interest on drawings	$3 200	$2 700
Partnership salary	—	$36 000
Capital accounts	$280 000	$260 000
Interest on capital	3%
Loan to the partnership	$25 000	—
Interest on loan	8%	—

Additional information

Closing inventory at 31 December 2023 had been understated by $3 500.
Non-current assets are to be depreciated by 20% per annum, using the reducing balance method.

[20 marks]

(a)

Prepare the income statement for the partnership for the year ended 31 December 2023, using the balances and the additional information provided.

[9 marks]

(b)

Prepare the appropriation account for the partnership for the year ended 31 December 2023.

[6 marks]

(c)

Prepare Jay's current account for the year ended 31 December 2023.

[5 marks]

Question 4 (17 marks)

Arianna manufactures a component which is used in the production of cellphones. Sales of the component for each of the first three quarters of 2023 are forecast as follows.

Quarter	Units
1: January–March	5 100
2: April–June	6 300
3: July–September	6 760

Arianna has been operating with a policy whereby she maintains a closing inventory sufficient to cover 5% of the next quarter's sales. Arianna forecasts that sales in the last quarter of 2023 will be 8 880 units.

Required

(a)

Prepare a production budget for EACH of Quarters 1 to 3 of 2023.

[7 marks]

(b)

The selling price per unit during the budget period will be $8 per unit. How many units should Arianna plan to sell if she wishes to achieve a sales revenue target of $45 000 in a quarter?

[3 marks]

(c)

Arianna employed Salina Smith, as a production worker. Salina is required to work a 40-hour week and is paid at the rate of $200 per hour. Hours worked in excess of 40 hours are overtime and are paid at the rate of time and a half. During the second week of April, Salina worked a total of 44 hours.

(c)(i)

Calculate Miss Smith's gross pay for the week.

[4 marks]

(c)(ii)

For the month of April, Salina Smith earned a gross pay of $33 200. The following data is to be applied to gross pay.

National Insurance (Social Security) deduction	5%
Income tax deduction	10%
Monthly credit union contribution	$300

Calculate Miss Smith's net pay for the month.

[3 marks]

CSEC Principles of Accounts Paper 2 May/June 2024 - Free CXC Past Paper with Answers