Warren owns and manages a small business, which sells pet supplies to high street shops and market traders. Warren sells to customers on credit at 30 days credit terms. (Warren manages all aspects of the business, including delivery and collection of the pet supplies.) The business accounts are balanced at the end of each month, and the transactions are posted daily.

On 1 March the balances on his accounts were as follows:

Account name	Debit ()	Credit ()
Capital		88,000
Van	30,000
Van accumulated depreciation		6,000
Bank	17,280
Receivables control	55,850
Payables control		9,130
	103,130	103,130

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

Receivables ledger accounts
Adam	12,000
Mercy	27,930
Sherwood	15,920

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

Payables ledger accounts
Bran	4,000
Gary	2,350
Wendela	2,780

During March, the following transactions took place:

No.	Date	Amount ()	Transaction
1	2 March	6,000	Receives payment from customer Adam in part settlement of amounts outstanding
2	3 March	2,500	Warren sells goods to customer Adam on 30 days credit terms
3	6 March	2,000	Warren pays by bank transfer part of the amount outstanding on the account of supplier Gary
4	7 March	1,800	Warren pays the business rent from his personal bank account
5	10 March	27,930	Warren receives payment from customer Mercy in full settlement of the amount outstanding
6	15 March	1,500	Warren purchases goods from supplier Bran on 30 days credit terms
7	17 March	11,000	Warren sells goods to customer Mercy on 30 days credit terms
8	18 March	500	Warren buys a laptop computer for use in the business paying from the business bank account
9	25 March	2,780	Warren pays by bank transfer the full amount outstanding on the account of supplier Wendela
10	30 March	2,000	Warren pays supplier Bran in part settlement of amounts outstanding

Required:

• a.Set out Warrens general ledger accounts and the receivables and payables ledger accounts at 1 March.

  (10 marks)

• b.Continuing on, post to the relevant accounts the 10 transactions that took place in March. Remember that postings are made daily. (No entries are required for any new depreciation for the period.)

  (14 marks)

• c.Balance off the general ledger accounts and the receivables and payables ledger accounts. Make sure 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 April.

  (6 marks)

• e.What do you notice about Warrens management of receivables and payables? What advice would you give him regarding his receivables? What question might you ask him in respect of payables? (The limit for your answer to (e) is 150 words.)

  (5 marks)