Reference no: EM132813974

Question - Recording transactions in the journals and preparation of a Schedule of Accounts Receivable.

In November, the Martin Ltd. was involved in the following transactions:

1. On 3 November, the business sold goods to P. Joker on credit. Invoice number PJ 42, price $2,000, GST $200, terms 1/10, n/60.

2. On 4 November, the business sold goods to B. Jake on credit. Invoice number BJ23 with amount of $1,980 (including GST $180), terms 1/20, n/30.

3. On 11 November, the business received a cheque from P. Joker for payment of the sale made on 3 November.

4. On 12 November, partial return of sales was made on 4 November (invoice number BJ 23) for $88 including GST $8. Prepared a credit adjustment note.

5. On 15 November, the business sold goods to P. Joker. Invoice number PJ43, price $300, GST $30. Cash payment was received.

Required -

1. Distinguish between a cash discount and a trade discount. Explain the benefits to the seller of allowing cash discounts.

2. Prepare journal entries for the above transactions in the general journal.

3. The Accounts Receivable general ledger has a debit balance of $4,050. P. Joker subsidiary ledger has a debit balance of $890 and B. Jake subsidiary ledger has a debit balance of $3,160 at the beginning of November. It is required to prepare a Schedule of Accounts Receivable on 30 November showing the reconciliation between the subsidiary ledgers and its control account.