Stevenson Traders, a wholesaler in East London, sells television sets to retailers and members of the public in the Eastern Cape. Stevenson Traders is a registered VAT vendor, as are all its suppliers and customers. All amounts include VAT at $15\%,$ unless stated otherwise. Stevenson Traders uses the perpetual inventory system to account for inventory and FIFO method to value inventory. The following information$/$transactions were extracted from the entity$$s records during the month ended January $2024.$

I. On $01$ January $2024,$ opening inventory in the warehouse consisted of $250$ television sets, all purchased at R$5000$ each, $($excluding VAT$).$

II$.$ On $01$ January $2024,$ sold $20$ television sets to a customer for cash, and received R$189750.$

III. Purchased $250$ television sets $($on $02$ January $2024)$ for R$5750$ each, from Brentwood Rocker, a Cape Town Manufacturer. Paid for the television sets by cheque, after deducting $20\%$ trade discount, and $5\%$ cash discount.

IV$.$ Charged R$143750$ on account by Road Transport $($on $04$ January $2024)$ for transporting the inventory bought $(250$ television sets$)$ from Brentwood Rocker.

V$.$ On $07$ January $2024,150$ television sets were sold to Amakhaya Retailers on credit, for a selling price of R$8625$ each. Stevenson Traders allows $5\%$ settlement discount if payment is received within $20$ days.

VI$.$ On $10$ January $2024,$ returned $10$ of the $250$ television sets previously bought from Brentwood Rocker as they were faulty.

VII. On $30$ January $2024,$ received a cheque from Amakhaya Retailers, in settlement of the amount owing, $($refer to the $07/01/17).$

VIII. Stevenson, the owner, took $1$ television set for his daughter from the television sets bought on $2$ January $2024.$

QUESTION $1$ REQUIRED Marks

Sub$-$total Total

$($a$)$ Mention four enhancing qualitative characteristics, and briefly explain how they are intended to enhance both relevant and faithfully represented financial information.

$4$

$4$

$($b$)$ Advise the bookkeeper on the account debited $($ignore Value Added Tax implications$)$ when responding to this question. Focus on transition $($iii$)$ above. Advise him, with specific reference to conceptual framework, whether the item under consideration should be treated as an asset or a liability. Consider the definition and recognition criteria in your discussion.

$11$

$11$

$($c$)$ Prepare the following general ledger accounts, using all transactions listed from $($I$)$ to $($VIII$)$ above, as they would appear in the books of Stevenson Traders.

$$ Inventory

$$ Sales

$$ VAT Input

$$ VAT Output

$$ Drawings

NB: Do not close off the above general ledger accounts.

Ignore opening balances for accounts not provided.

$15$

$6$

$5$

$5$

$4$

$35$