Michael owns and manages a small business which sells organic beauty products to high street shops. Michael sells to the shops on credit at $30$ days credit terms. $($Michael 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 $1$ July, the balances on Michael$$s general ledger accounts were as follows:

Account name Debit $()$ Credit $()$

Capital $63,000$

Van $($at net book value$)30,000$

Bank $1,500$

Receivables control $62,000$

Payables control $30,500$

$93,50093,500$

On $1$ July, the debit balances on the receivables ledger accounts were as follows:

Receivables ledger accounts $$

Shampoo $5,910$

Soap $23,520$

Shower Gel $32,570$

Total $62,000$

On $1$ July, the credit balances on the payables ledger accounts were as follows:

Payables ledger accounts $$

Lemon $4,601$

Rose $25,899$

Total $30,500$

During July, the following transactions took place:

No$.$ Date Amount $()$ Transaction

$12$ July $5,200$ Michael pays the business rent from his personal bank account

$24$ July $2,800$ Michael receives payment from shop Shampoo in part settlement of amounts outstanding

$38$ July $9,000$ Michael sells goods to shop Soap on $30$ days credit terms

$49$ July $32,570$ Michael receives payment from shop Shower Gel in full settlement of the amount outstanding

$511$ July $10,900$ Michael purchases goods from supplier Lemon on $30$ days credit terms

$617$ July $11,200$ Michael pays to supplier Lemon by bank transfer in part settlement of amounts outstanding

$722$ July $25,899$ Michael pays by bank transfer the full amount outstanding on the account of supplier Rose

$828$ July $11,000$ Michael sells goods to shop Shampoo on $30$ days credit terms

Required:

$$ Set out Michael$$s general ledger accounts and the receivables and payables ledger accounts on $1$ July.

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

$$ 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.

$$ Present the trial balance at $1$ August.

$$ Comment critically on Michael$$s management of cash.

$$ Advise Michael on how he can better manage his receivables.

$$ Advise Michael on how he can better manage his payables.