The owner of a small retail shop, Curators, based in Claremont is completing an internal reconciliation between the relevant ledger accounts and the separate debtors and creditors ledgers before the year end of 30 April 2016.

The following information has come to light:

1.On 15 March 2016 inventory costing R6 200 was purchased by Curators on credit, this was correctly recorded in the purchases journal. This amount was settled by cheque on 15 April 2016 and the bookkeeper entered the amount in the purchases column in the cash payments journal.

2.On 30 April 2016 the trade receivables column in the cash receipts journal amounted to R8 200. Unfortunately, the bookkeeper posted all the totals to the incorrect sides of the respective ledger accounts.

3.A credit customer, Naleward, owes R300 per the debtorsledger at 30 April 2016. In addition to being a customer, Naleward supplies cleaning materials to Curators on credit. As at 30 April 2016, Naleward had a debit balance of R2 400 in their account in the creditors ledger because of an overpayment. Curators has agreed to transfer this balance to the Naleward account in the debtors ledger.

4.During April 2016, Curators decided to write off an amount owing from a sale made to a credit customer in 2014. The original sale was for goods which had cost Curators R230 including VAT at 15%. VAT applies to this transaction only.

You have also been provided with the following information:

Extract of the Pre-Adjustment Trial Balance of Curators for the year ended 30 April 2016

Trade receivables64 400 Allowance for doubtful debts (1 May 2015)3 500 Trade payables46 700

Additional Information

Curators maintains an allowance for doubtful debts amounting to 5% of the balance on the Trade Receivables account at the year-end Curators uses a mark-up percentage on the cost price of goods of 50% Curators uses the periodic inventory recording system

You are required to: 1.Prepare any adjusting journal entries that would be required to update the trade receivables or trade payables accounts in the General Ledger of Curators for the year ended 30 April 2016. Dates and narrations are NOT required

You are NOT required to show the impact on the separate subsidiary debtors and creditors ledgers.8 marks

2.Calculate the closing balance that would appear in the allowance for doubtful debts ledger account for Curators as at 30 April2016. IGNORE no. 4 of the additional information when answering this question.2 marks