Ria began trading on 1 August 2024.
The balances in Ria’s purchases ledger on 1 January 2025 were:
Darena $465
Jadu $170
Ottie $275
Nakir $600
Total $1510
Ottie gives Ria trade discount of 5%.
These transactions occurred in January 2025.
Jan 2 Paid Darena $300 by bank transfer
8 Sold goods for $520 cash
13 Bought goods, list price $180, on credit from Ottie
17 Paid Nakir the amount owing on 1 January 2025, after allowing 3% cash discount
18 Bought goods, $528, on credit from Nakir
20 Bought goods, $73, paying immediately by bank transfer
23 Bought goods, $310, on credit from Darena
29 Sold goods for cash, $640
30 Returned goods, $24, to Darena
(a)[3]
Prepare the purchases journal for January 2025. Add up the journal and state the ledger account to which the total should be posted.
(b)[2]
Prepare the purchases returns journal for January 2025. Add up the journal and state the ledger account to which the total should be posted.
(c)[4]
Prepare Ria’s purchases account for January 2025. Balance the account and carry the balance down to 1 February 2025.
(d)[6]
Prepare Ria’s purchases ledger control account for January 2025. Balance the account and carry the balance down to 1 February 2025.
(e)[5]
Advise Ria whether or not she should lengthen her trade payables payment period so that she has enough cash for an advertising campaign. Justify your answer by giving two advantages and two disadvantages of your advice.
Worked solution & mark scheme
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