Dev operates a furniture-selling business.
These transactions happened during August 2020.
Transaction 1 Date August 9 Details Goods were sold on credit to Petra $675
Transaction 2 Date August 14 Details Petra sent damaged goods back to Dev $120
Transaction 3 Date August 23 Details Cash sales were banked $412
Transaction 4 Date August 29 Details Petra paid the amount still owing from 1 August by credit transfer after receiving a cash discount of 5%.
On 1 August 2020, Petra’s sales ledger account had a debit balance of $940.
(a)[6]
Complete the table by giving the name of each business document and the book of prime entry for the transactions in Dev’s accounting records.
(b)[6]
Prepare Petra’s account for August 2020 exactly as it would be shown in Dev’s sales ledger. Balance the account and carry the balance down on 1 September 2020.
(c)[1]
State which section of Dev’s statement of financial position at 31 August 2020 would include the balance on Petra’s account.
(d)[2]
State one advantage and one disadvantage of this proposal for Dev.
(e)[5]
Advise Dev whether he should form a limited company or not. Support your answer with two advantages and two disadvantages of forming a limited company.
Worked solution & mark scheme
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