Illuminate Lighting’s chart of accounts includes the following selected accounts: 

On 1 April the accounts receivable ledger of Illuminate Lighting showed the following balances: Horn $3100, Harris $2400, North Ltd $5800, and Smith $3400. The April transactions involving the receipt of cash were as follows. 

Required

(a) Journalise the transactions provided in a six-column cash receipts journal with columns for Cash Dr, Discount Allowed Dr, Accounts Receivable Cr, Sales Cr, Other Accounts Cr, and Cost of Sales Dr/Inventory Cr. Total and cross-foot the journal.

(b) Enter the beginning balances in the Accounts Receivable Control and subsidiary accounts, and post the April transactions to these accounts.

(c) Check that the control account and subsidiary account balances agree.

(d) What are the advantages and disadvantages of settlement discounts?

Transcribed Image Text:

101 Cash 112 Accounts Receivable 120 Inventory 301 F. Francis, Capital 401 Sales 414 Discount Allowed 505 Cost of Sales