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QUESTION 1 [25 MARKS] Shetland Ltd is a carpet retailing business. The business is registered for GST. Shetland Ltd uses a periodic inventory system. The
QUESTION 1 [25 MARKS] Shetland Ltd is a carpet retailing business. The business is registered for GST. Shetland Ltd uses a periodic inventory system. The transactions for January 2019 are provided below. All transactions are inclusive of CST. The relevant customer and supplier account balances at 31 December, 2018 were: Accounts Receivable Accounts Payable S. Devine $6,050 D. Harms $18,150 R. Burton 3,025 Jan 5 Sold inventory to B. Senton for $4,400, terms 2:7, 11/ 30. 6 Purchased inventory from S. Warren for $2,750, terms 2'7, 117 30. 7 Received a cheque from S. Devine for $3,850 as part payment of his account. 8 Returned inventory of $550 to S. Warren for credit. 11 Paid Brambles Ltd for freight inwards of $330. 12 Received payment from B. Senton for amount due. 13 Paid S. Warren the amount due. 14 Paid Ace Reality rent of $1,100 for January. 15 Issued a credit note for damaged inventory of $770 returned by R. Burton. 17 Sent a cheque to D. Harms for $17,968 in full settlement of the account. 18 Paid Telstra for a telephone bill of $616. 23 Cash sales totaled $9,460. 27 Sold inventory on account to B. Cole for $7,700, terms 1/7, nf30. 28 R. Burton paid his account in full. 29 Purchased inventory from R. Gibson for $1,760, terms 2/ 7, nfBO. 31 Received payment from B. Cole for goods sold on 27 January. Required: a) Record the January transactions in the relevant journals (round amounts to the nearest $). Total all special journals. Ignore narrations in the general journal. [19 Marks] b) Post the journals to the Accounts Receivable Control Account only in the general ledger. [3 Marks] c) Identify and briey explain 3 advantages control accounts and subsidiary ledgers provide to a business. [3 Marks]
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