2020 SACSS 3N POA EOY P2 Q4

4 Keerthana Store buys electronic goods from Yubo Trading on credit.  On 1 August 2020, the ledger account of Yubo Trading in the books of Keerthana Store showed a credit balance of $2300. The following transactions took place in the month of August.

2020

 

Aug 3

Purchased goods  from Yubo Trading on credit for $12 000.

        6

Returned $300 of goods to Yubo Trading.

      18        

Paid Yubo Trading by cheque for amount owing on 1 August 2020.

REQUIRED

a. Define credit transactions.

[1]

b. Prepare Trade payable – Yubo Trading account as it would appear in Keerthana Store’s books.  Bring the balance down to the next month.

[5]

c. State the source document used to record the transactions on:

[3]

i. August 3

ii. August 6

iii. August 18

d. Give two reasons why goods were returned on August 6.

[2]

[TOTAL 11]

SOLUTION

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a)

Credit transactions are transactions where payment is postponed to a future date.

b)

c)

(i) August 3  – Invoice

(ii) August 6  – Credit Note

(iii) August 18- Receipt / Bank Statement / Payment Voucher

d)

Goods were returned on 6 August as they were

               –   damaged or defective √

              

               –   of the wrong specifications: √

                   (eg  wrong brand, wrong size or wrong colour)

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