Below are the accounts and transaction details for the month of July from a Sweets & Snacks wholesaling company:

July 1      Balance brought forward: Cash € 3,100; Bank € 35,710

3     The following customers paid their account by cheque, all deducting a € 2,5% cash discount from the amount due: Lewis € 1,300, Gordon € 1,600, Pearson € 2,100

5    Paid € 2,150 rent by cheque

 7   Black lent us € 25,000, paying by cheque

9    The company paid the following accounts by cheque, in each case deducting a 3% cash discount of their dues: White € 3,600; Moore € 4,800; Prahalad € 8,000.

11    Paid vehicle expenses in cash € 405

12    Ricard paid the € 450 balance of his account by cheque, deducting a € 10 cash discount

16    Wages paid in cash € 2,900

19   The following customers paid their accounts by cheque, all deducting a 2.5% cash discount: Hu € 2,700; Limestone Inc. € 3,500; El Hamani € 2,600

 22   € 2,000 Cash withdrawal from the bank for business purposes

23    Cash drawing of € 1,000

26    Paid Pearson the € 800 balance of his account by cash, deducting € 25 cash discount

28     Bought fixtures paying by cheque for € 3,600

 31    Received € 600 commission by cheque a)

 

Required:

a)  Write up a three column cash book, balance it off, and show the relevant discount accounts in the general ledger

 b) Explain the role of a cash book in relation to the financial records of the company

c) How has the answer you have provided in (a) informed your conclusion about the financial health?

 d) Explain how you have treated discount allowed and discount received in answer (a). What are the reasons for your answer. Ensure to link your arguments to the concepts learned in class.