You have been asked for an opinion on the accounting system that would be most suited to the needs of this company. Give your response to the following queries:

A. Should the company use a sales journal? Why or why not? If a sales journal is used, what procedures would you recommend to record entries in it and to send invoices to customers as soon as possible after deliveries?

B. Is a purchases journal needed, or can all purchases be recorded in the general journal? Explain.

C. Should the company use a cash receipts journal, considering that some 30 to 50 cheques are received by mail each week? If so, what special columns would you use?

D. Should the company use a cash payments journal? Explain.

Silvertail Petroleum Ltd is a distributor of a range of petroleum products including petrol, oils and grease in a rural area of Australia from its depot based at Gubbo. Petrol is stored in bulk storage tanks at the depot and these tanks are refilled twice weekly by bulk tankers from the refinery. At each refuelling, a receiving report is prepared and sent to the accounting department. Other bulk supplies are replenished as required. The refinery sells on the basis of net 30 days and does not allow discount.

Silvertail Petroleum Ltd operates several delivery trucks that travel to customers in the surrounding district to deliver supplies of fuel and other products. For each delivery a sales docket is prepared on which is recorded the number of litres delivered at each drop. These sales dockets are returned to the accounting department at the end of each day, invoices are prepared by pricing quantities shown on the dockets, and these are mailed to customers. Customers are allowed a discount for payment within 10 days.

The business has twelve employees who are paid on the fifteenth and the last day of each month. Supplies and other expenses are charged to Silvertail Petroleum Ltd as they are incurred.