Edith owns and manages a small business which sells organic fruit and vegetable boxes to high street cafs. Edith sells to the cafs on credit at 30 days credit terms. (Edith manages all aspects of the business, including ordering, delivery and managing the accounts.) The business accounts are balanced at the end of each month, and the transactions are posted daily.

On 1 September the balances on Ediths general ledger accounts were as follows:

Required:

a.Set out Ediths general ledger accounts and the receivables and payables ledger accounts at 1 September.

(8 marks)

b.Continuing on, post to the relevant accounts the eight transactions that took place in September. Remember that postings are made daily.

(12 marks)

c.Balance off the general ledger accounts and the receivables and payables ledger accounts. Demonstrate that the balance on the receivables control account agrees with the total of the balances on the personal accounts in the receivables ledger. Do the same for the payables control account and the personal accounts in the payables ledger. Show all relevant details for all T-accounts.

(10 marks)

d.Present the trial balance at 1 October.

(5 marks)

e.

i.Find reasons to comment favourably on Ediths cash management of her business in September. (5 marks)

ii.Comment critically on Ediths management of receivables, and give appropriate advice on how she might improve her credit control. (5 marks)

On 1 September, the debit balances on the receivables ledger accounts were as follows: On 1 September, the credit balances on the payables ledger accounts were as follows: During September, the following transactions took place