2020 JYSS 3N POA EOY P2 Q3

2020 JYSS 3N POA EOY P2 Q3

3  Angie is confused of some of the terms in her financial statements.

REQUIRED

a. Explain the difference between cash transaction and credit transaction.

[2]

b. Explain the term “asset”.

[2]

The following transactions took place in Angie’s business for the month of April 2020.

2020

 

Apr 1

Angie bought $2000 worth of goods from supplier Ben on credit. 

      10

Angie sold goods at a selling price of $800 to Mabel, a customer, for cash. The goods cost $500.  

      15

Angie returned $100 worth of goods to supplier Ben.

      18

Angie paid supplier Ben, $1900 by cheque. 

      20

Angie bought a motor vehicle $85 000 on credit from Sunny.

c. Prepare the journal entries to record the above transactions.

[12]

d. State the source document used to record each of the above transaction.

[5]

Transaction on 

Source document

Apr 1 

 

      10

 

      15

 

      18

 

      20

 

 

State one reason why Angie would return the goods to supplier Ben on 15 April 2020.

[1]

[TOTAL 22]

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Cash transaction occur when the business receives payment from customers immediately at the Point of sales whereas for credit transaction, payment from customers is delayed to a later date.

Assets are resources owned/controlled by the business that are expected to provide future benefits.

 

Transaction on 

Source document

Apr 1 

Invoice [1m]

Apr 10

Receipt [1m]

Apr 15

Credit note [1m]

Apr 18

Payment voucher/remittance advice [1m]

Apr 20

Invoice [1m]

Goods are damaged or of the wrong specifications.

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