On 1 May 1989 Barbara paid £3000 into a business bank account as capital for her new business which she called Barbies Bikes. The transactions during July were as follows.

May 3 6

8 14 16 18 21 23 24 30 31 Bought van for £800 cash.

Bought goods on credit from Drake for £700.

Paid rent of £120 for the quarter.

Bought goods on credit from Gander for £300.

Made cash sales of £200.

Made credit sales of £400 to Bills Bikes.

Paid the garage account of £20 for petrol and oil.

Sold more goods on credit to Swans for £600.

Paid Drake £682 after taking advantage of a 2.5% discount for prompt payment.

Received £360 from the liquidator of Bills Bikes and was advised that no more would be forthcoming.

Paid monthly salary to shop assistant of £400.

Received back from Swans goods with an invoice price of £80 which they had not ordered.

Other information: No stock count was done at the end of the month but all goods were sold at a price based on the cost price plus one-third.

(a) Discuss how each transaction should be treated.

(b) Discuss what if any accruals and prepayments are or should he involved.

(c) Draw up a worksheet, balance sheet and profit and loss account.