Ted Smile, a wholesaler, buys his requirements on a months credit from three reputed suppliers Alpha,
Question:
Ted Smile, a wholesaler, buys his requirements on a month’s credit from three reputed suppliers – Alpha, Beta and Gamma. All of them allow 10% settlement discount if purchases are paid for within three days. Ted in turn has approved a month’s credit to his customers – Peter, Paul, James, John and Mark – who have all been offered cash discount on the scale stated in the box above. They have been warned, however, that goods sold cannot be returned after three days from the date of sale. Ted Smile has received the same warning from his suppliers.
On 1st May 2012 Ted owed Alpha, Beta and Gamma £214,600, £346,500 and £126,400, respectively. £38,500 of the amount owed to Beta was in respect of purchases made on 30 April 2012; while the rest of the purchases had been made earlier. A break-down of amounts due from customers as at 1 May 2012 is as follows:
Transactions within the week commencing on 1 May 2012 include the following:
Required:
Show how these transactions will be reported in appropriate ledger accounts, identifying whether each account will be in the Sales ledger, Purchases ledger or Nominal ledger.
Step by Step Answer:
Financial Accounting An Introduction
ISBN: 9780273737650
2nd Edition
Authors: Mr Barry Elliott, Mr Augustine Benedict