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Dabull Ltd is a retailer of furniture and fittings that allows customers to buy on credit. The pre-adjusted trial balance of Dabull Ltd as at

image text in transcribedimage text in transcribed Dabull Ltd is a retailer of furniture and fittings that allows customers to buy on credit. The pre-adjusted trial balance of Dabull Ltd as at 31 October 2022 showed a trade receivables balance of R1560000. It is Dabull Ltd's policy to reinstate debtors who were previously written off if they repay their debts thereafter. The following additional information relates to the trade receivable cycle that was not yet taken into account in the accounting records for the 2022 financial year: 1. A debtor, Mr X. Huang who had a debt of R6 700 was untraceable. It was thus decided to write off his debt as irrecoverable. 2. A credit note of R2500 for goods returned had been incorrectly entered in the records on 15 October 2022 as if it were an invoice. 3. A credit sale to debtor, Mr D. Barry amounting to R750 was recorded incorrectly to debtor, Mr P. Barnard in the Debtors' Ledger on 18 October 2022. 4. The October 2022 bank statement reflected a dishonoured (R/D) cheque for an amount of R35 400. This cheque had been received on 3 October 2022 from debtor Mrs L. Singh and had been deposited in the bank account on the same day and correctly recorded in the cash receipts journal on that day. 5. A settlement discount of R1 800 had been completely omitted from the records. 6. On 25 October 2022, an amount of R6 700 was received by Mr X. Huang. Mr X. Huang explained that he was visiting his remote hometown in Korea and had completely forgotten about his debt owed and remembered only once returned. 7. Debtor, Mrs. T. Zolani was declared insolvent during 2022. The total debt owed by her on 31 October 2022 was R38 600. Mrs. T. Zolani's lawyer confirmed that Dabull Ltd would receive 15c for each Rand owed. On 31 October 2022, a payment was received from Mrs. T. Zolani's lawyer. The remainder of Mrs. T. Zolani's debt was written off as irrecoverable. 8. A credit sale transaction of R43500 and a sales return transaction of R7900 that occurred on 31 October 2022 were omitted from the respective journals. 7 HFAC130-1-Jan-Jun2023-SuppSA1-GC-V3-03072023 REQUIRED: 4.1 Prepare the Trade Receivables account in the General Ledger of Dabull Ltd for the year ended 31 October 2022. Show all workings. Ignore VAT. (25 marks) 4.2 There are risks to investing in working capital. State what the consequences are of the risks mentioned below: 4.2.1 Where criteria for deciding whether to allow customers to purchase on credit are too strict. 4.2.2 Where levels of inventory are too high. 4.2.3 Where cash levels are too high

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