CSEC Principles of Accounts Paper 3 May/June 2015 - Free CXC Past Paper with Answers

With terms of trade of $5/10, n/30, both amounts owed to Sunny Plants Inc. were paid in full on 25 January. Using all information provided, prepare the Ledger Account of Sunny Plants Inc. Balance the account at 31 January 2013. (Show working clearly in the space below.)

On 31 December 2013, M. L. Summer Flowers had Accounts Receivable of $6 500. She decided to provide for bad debts at the rate of 5% of outstanding debtors. Prepare the Journal entry to create the Provision for Bad Debts Account as at 31 December 2013.

On 31 December 2014, M. L. Summer Flowers recorded Accounts Receivable of $8 000. Using the same rate as in the previous year, draw up M. L. Summer Flowers' Provision for Bad Debts Account for the year 01 January to 31 December 2014.

Describe the effect of the Provision for Bad Debts Account balance on 31 December 2014 on the (a) Income Statement (b) Balance Sheet.

Questions 8 and 9 are based on the following comparative figures which were made available at the end of the first year of operation for M. L. Summer Flowers.

COMPARATIVE FIGURES FOR 2013

Comparing Businesses of Similar Size And Type

(a) State the meaning of M. L. Summer's 'gross profit margin' for 2013.

Using the ratio given in the table above: (b) Comment on the business' gross profit margin in relation to the industry average. (c) Make ONE recommendation to M. L. Summer based on your analysis of her business' performance.

(a) Explain the meaning of 'net profit percentage' to M. L. Summer.

Using the ratio given in the table on page 8: (b) Comment on the business' net profit percentage in relation to the industry average. (c) Make ONE recommendation to M. L. Summer based on your analysis of her business' performance.

The rate of turnover for M. L. Summer Flowers is 10 times per year. Calculate, to the nearest whole number, the number of days M. L. Summer Flowers' average inventory remains on hand before being sold.

The industry average for rate of inventory turnover in terms of days is 30 days. Using your answer from Question 10 above, comment on M. L. Summer Flowers' performance.