Reference no: EM132581959

Shetland Ltd is a carpet retailing business. The business is registered for GST. Shetland Ltd uses a periodic inventory system. The transactions for January 2019 are provided below. All transactions are inclusive of GST. The relevant customer and supplier account balances at 31 December, 2018 were:

Accounts Receivable          Accounts Payable

S. Devine $6,050                 D. Harms $18,150

R. Burton 3,025

Jan 5 Sold inventory to B. Senton for $4,400, terms 2/7, n/30.

6 Purchased inventory from S. Warren for $2,750, terms 2/7, n/30.

7 Received a cheque from S. Devine for $3,850 as part payment of his account.

8 Returned inventory of $550 to S. Warren for credit.

11 Paid Brambles Ltd for freight inwards of $330.

12 Received payment from B. Senton for amount due.

13 Paid S. Warren the amount due.

14 Paid Ace Reality rent of $1,100 for January.

15 Issued a credit note for damaged inventory of $770 returned by R. Burton.

17 Sent a cheque to D. Harms for $17,968 in full settlement of the account.

18 Paid Telstra for a telephone bill of $616.

23 Cash sales totaled $9,460.

27 Sold inventory on account to B. Cole for $7,700, terms 1/7, n/30.

28 R. Burton paid his account in full.

29 Purchased inventory from R. Gibson for $1,760, terms 2/7, n/30.

31 Received payment from B. Cole for goods sold on 27 January.

Required:

Question a) Record the January transactions in the relevant journals (round amounts to the nearest $). Total all special journals. Ignore narrations in the general journal.

Question b) Post the journals to the Accounts Receivable Control Account only in the general ledger.

Question c) Identify and briefly explain 3 advantages control accounts and subsidiary ledgers provide to a business.