Addo is a trader who sells only on credit.
His trade receivables on 1 April 2024 were:
Nuru $920
Mahia $1145
Ava $1378
Rachel $215
Total $3658
The following transactions occurred during April 2024:
April 2 Goods were sold to Ava at a list price of $150$, with 6% trade discount deducted
April 9 Ava sent a telephone transfer of $689$
April 12 Goods were sold to Nuru, $165$
April 13 A cheque for $627$ was received from Mahia, settling an invoice of $660$ in full
April 19 $760$ was received from Nuru by electronic transfer. Nuru had taken off 5% cash discount
April 20 Nuru returned goods worth $30$
April 21 Goods were sold to Mahia, list price $480$, trade discount 5%, cash discount 5% if the invoice is paid within 30 days
April 30 Rachel has gone bankrupt and Addo chooses to write off the amount owed by her as irrecoverable
(a)[3]
Prepare the sales journal for April 2024. Work out the total for the sales journal and state the ledger account that the total would be posted to.
(b)[3]
Prepare the journal entry for writing off the amount owed by Rachel. Include a narrative.
(c(i))[1]
Calculate the total amount of money that Addo collected from trade receivables during April 2024.
(c(ii))[2]
Calculate the total amount of cash discount that Addo allowed in April 2024.
(d)[6]
Prepare Addo’s sales ledger control account covering April 2024.
(e)[5]
Advise Addo whether he ought to make these changes to his credit terms. Justify your answer by giving two advantages and two disadvantages of changing his credit terms.
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