4.4. Irrecoverable debts and provision for doubtful debts
A subsection of Accounting, 7707, through 4. Accounting procedures
Listing 10 of 34 questions
Addo is a trader who only sells on credit. His trade receivables at 1 April 2024 were as follows: $ Nuru Mahia Ava Rachel During April 2024, the following transactions took place: April Sold goods to Ava, list price $150, less 6% trade discount Received telephone transfer from Ava, $689 Sold goods to Nuru, $165 Received cheque, $627, from Mahia, in full settlement of an invoice for $660 Received $760 from Nuru by electronic transfer. Nuru had deducted 5% cash discount Nuru returned goods $30 Sold goods to Mahia, list price $480, trade discount 5%, cash discount 5% if invoice paid within 30 days Rachel has become bankrupt and Addo decides to write off the amount owing from her, as irrecoverable REQUIRED Prepare the sales journal for April 2024. Total the sales journal and indicate the ledger account to which the total would be posted. Addo Sales journal Date Details $ $ Prepare the journal entry to write off the amount owing by Rachel. A narrative is required. Addo Journal Date Details $ $ Calculate: the total amount of money which Addo received from trade receivables during April 2024. the total amount of cash discount which Addo allowed in April 2024. Prepare Addo’s sales ledger control account for April 2024. Addo Sales ledger control account Date Details $ Date Details $ Addo is considering changing his credit terms. He would introduce more credit checks on new customers and would increase cash discount to 7½% for payment within 30 days. REQUIRED Advise Addo whether or not he should make these changes to his credit terms. Justify your answer by providing two advantages and two disadvantages of changing his credit terms.
7707_s24_qp_21
THEORY
2024
Paper 2, Variant 1
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Questions Discovered
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