The data below pertains to the financial statements for Paul Tay’s golf supply company, Golf Direct.
Account amounts as of 1 April 2013 Equipment £1,200
Bank Overpublish 450 Pounds
Sales (Sales) Revenue of £920 Purchases of $520
2 April J. Young made a credit-based purchase of goods totaling £265.50 + VAT.
J Young returned defective products on April 5 for a total of £49–50, including VAT.
7 April: purchased a new cash register for £405, including VAT on credit from Shop Supplies.
On April 10, J. Young paid £275 via check to the account.
14 April I got a letter from J. Young’s accountant advising me that he has been declared bankrupt and can only pay 25p in the pound. The cheque for this amount was included with the letter, and the remaining amount will be written off.
Note: Where applicable, 20% VAT must be charged.
(a) Using the previously mentioned data, input the transactions into Golf Direct’s ledger accounts on Pages 2-4 of your workbook (J Young’s opening ledger balance has already been entered).
On Page 5 of your workbook, respond to questions (b) through (d).
(a) Describe the two responsibilities of a financial accountant.
(c) Give an explanation for why businesses might provide one another with:
Trade Discount (i).
Cash Discount (ii).
(d) Describe how the Income Statement’s Trading, Profit & Loss Account would treat the rent received.
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