Below are the accounts and transaction details for the month of July from a Sweets & Snacks wholesaling company: July 1 Balance brought forward: Cash € 3,100; Bank € 35,710 3 The following customers paid their account by cheque, all deducting a € 2,5% cash discount from the amount due: Lewis € 1,300, Gordon € 1,600, Pearson € 2,100 Paid € 2,150 rent by cheque Black lent us € 25,000, paying by cheque The company paid the following accounts by cheque, in each case deducting a 5 7 9. 3% cash discount of their dues: White € 3,600; Moore € 4,800; Prahalad € 8,000. Paid vehicle expenses in cash € 405 Ricard paid the € 450 balance of his account by cheque, deducting a € 10 cash 11 12 discount Wages paid in cash € 2,900 The following customers paid their accounts by cheque, all deducting a 2.5% cash discount: Hu € 2,700; Limestone Inc. € 3,500; El Hamani € 2,600 € 2,000 Cash withdrawal from the bank for business purposes Cash drawing of € 1,000 Paid Pearson the € 800 balance of his account by cash, deducting € 25 cash discount 16 19 22 23 26 28 31 Bought fixtures paying by cheque for € 3,600 Received € 600 commission by cheque a) Required: Write up a three column cash book, balance it off, and show the relevant discount accounts in the general ledger b) Explain the role of a cash book in relation to the financial records of the company c) How has the answer you have provided in (a) informed your conclusion about the financial health? d) Explain how you have treated discount allowed and discount received in answer (a). What are the reasons for your answer. Ensure to link your arguments to the concepts learned in class.
Below are the accounts and transaction details for the month of July from a Sweets & Snacks wholesaling company: July 1 Balance brought forward: Cash € 3,100; Bank € 35,710 3 The following customers paid their account by cheque, all deducting a € 2,5% cash discount from the amount due: Lewis € 1,300, Gordon € 1,600, Pearson € 2,100 Paid € 2,150 rent by cheque Black lent us € 25,000, paying by cheque The company paid the following accounts by cheque, in each case deducting a 5 7 9. 3% cash discount of their dues: White € 3,600; Moore € 4,800; Prahalad € 8,000. Paid vehicle expenses in cash € 405 Ricard paid the € 450 balance of his account by cheque, deducting a € 10 cash 11 12 discount Wages paid in cash € 2,900 The following customers paid their accounts by cheque, all deducting a 2.5% cash discount: Hu € 2,700; Limestone Inc. € 3,500; El Hamani € 2,600 € 2,000 Cash withdrawal from the bank for business purposes Cash drawing of € 1,000 Paid Pearson the € 800 balance of his account by cash, deducting € 25 cash discount 16 19 22 23 26 28 31 Bought fixtures paying by cheque for € 3,600 Received € 600 commission by cheque a) Required: Write up a three column cash book, balance it off, and show the relevant discount accounts in the general ledger b) Explain the role of a cash book in relation to the financial records of the company c) How has the answer you have provided in (a) informed your conclusion about the financial health? d) Explain how you have treated discount allowed and discount received in answer (a). What are the reasons for your answer. Ensure to link your arguments to the concepts learned in class.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Below are the accounts and transaction details for the month of July from a Sweets &
Snacks wholesaling company:
July 1 Balance brought forward: Cash € 3,100; Bank € 35,710
3
The following customers paid their account by cheque, all deducting a € 2,5%
cash
discount from the amount due: Lewis € 1,300, Gordon € 1,600, Pearson € 2,100
Paid € 2,150 rent by cheque
Black lent us € 25,000, paying by cheque
The company paid the following accounts by cheque, in each case deducting a
5
7
3% cash
discount of their dues: White € 3,600; Moore € 4,800; Prahalad € 8,000.
Paid vehicle expenses in cash € 405
Ricard paid the € 450 balance of his account by cheque, deducting a € 10 cash
11
12
discount
Wages paid in cash € 2,900
The following customers paid their accounts by cheque, all deducting a 2.5%
cash discount: Hu € 2,700; Limestone Inc. € 3,500; El Hamani € 2,600
€ 2,000 Cash withdrawal from the bank for business purposes
Cash drawing of € 1,000
Paid Pearson the € 800 balance of his account by cash, deducting € 25 cash
discount
16
19
22
23
26
Bought fixtures paying by cheque for € 3,600
Received € 600 commission by cheque
28
31
a) Required:
Write up a three column cash book, balance it off, and show the relevant discount
accounts in the general ledger
b) Explain the role of a cash book in relation to the financial records of the company
c) How has the answer you have provided in (a) informed your conclusion about the
financial health?
d) Explain how you have treated discount allowed and discount received in answer
(a). What are the reasons for your answer. Ensure to link your arguments to the
concepts learned in class.
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