Jasmine Traders is a home and nursery centre located in Johannesburg. Jasmine Traders is having trouble working out how much they owe Plant World, one of their suppliers as at the end of April. You have been provided with the following information: Available in attached images. Additional information: • The balance on Plant World’s account in the Trade Payables subsidiary ledger of Jasmine Traders on 1st March was R3 690. The difference between the statement balance and the Trade Payables subsidiary ledger balance was a result of an EFT payment made on 28 February that was not reflected by Plant World.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Jasmine Traders is a home and nursery centre located in Johannesburg.
Jasmine Traders is having trouble working out how much they owe Plant World, one of their
suppliers as at the end of April.
You have been provided with the following information: Available in attached images.
Additional information:
• The balance on Plant World’s account in the Trade Payables subsidiary ledger of Jasmine
Traders on 1st March was R3 690. The difference between the statement
Trade
February that was not reflected by Plant World.
• Invoice 1009 reflected on the April statement had not yet been received by Jasmine Traders.
• Jasmine Traders sent a debit note to Plant World in March for R500, representing the
difference between the price they had verbally agreed on some items purchased and the
price that appeared on the invoice. They still have not negotiated a compromise.
• A credit note for goods returned in April for R910 appears on the April statement as R190.
The credit note has been correctly recorded by Jasmine Traders in April. This is the only
entry in the creditor’s allowances journal for April.
• Invoice 1005 on the April statement is for Jas Traders, not Jasmine Traders.
• An invoice for R658 shown on the April statement was for flowers ordered by the owner Mr.
Willow for his wedding anniversary. The bookkeeper had not recorded this transaction at
all, as the owner had ordered the goods in his own name and not for the business.
• IGNORE VAT.
Required:
Q.3.1 Prepare the Plant World account in the Trade Payables ledger of Jasmine Traders,
showing all the transactions for March and April.
A folio column is required as marks will be allocated.
(26)
Q.3.2 Prepare a Trade Payables
Q.3.3 Should Plant World agree to deduct R500 from the invoice amount, how will this
be reflected by Plant World.
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