Sarah started a new business on 1 January 2023. She provided the following information for January 2023. 1. Paid $50 000 into the bank account as capital. 2. Paid rent of $1 000 by cheque. 3. Purchased goods on credit from P Ltd $8 000. 4. Sold goods on credit to K Khan $6 000. 5. Purchased equipment on credit from E Ltd $12 000. 6. Received payment from K Khan by cheque, less 5% cash discount. 7. Paid P Ltd by cheque, less 10% cash discount. 8. Paid wages $2 000 in cash. 9. Owner took cash $500 for personal use.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. 23(a)(i) Cash Account:
2. Date | Details | $ | Date | Details | $
3. --- | --- | --- | --- | --- | ---
4. Jan 1 | Capital (B/F) | 50000 (1) | Jan 28 | Wages | 2000 (1)
5. Jan 31 | Balance c/d | 47500 (1) | Jan 31 | Drawings | 500 (1)
6. Total | | 50000 | Total | | 50000
7. Feb 1 | Balance b/d | 47500 (1)
8. 23(a)(ii) Bank Account:
9. Date | Details | $ | Date | Details | $
10. --- | --- | --- | --- | --- | ---
11. Jan 1 | Capital | 50000 (1) | Jan 2 | Rent | 1000 (1)
12. Jan 31 | Cash | 50000 (1) | Jan 27 | K Khan | 5700 (1)
13. Jan 31 | Balance c/d | 85000 (1) | Jan 31 | P Ltd | 7200 (1)
14. Total | | 100000 | Total | | 100000
15. Feb 1 | Balance b/d | 85000 (1)
16. 23(a)(iii) K Khan Account:
17. Date | Details | $ | Date | Details | $
18. --- | --- | --- | --- | --- | ---
19. Jan 4 | Sales | 6000 (1) | Jan 27 | Bank | 5700 (1)
20. Total | | 6000 | Jan 27 | Discount allowed | 300 (1)
21. Total | | 6000 | Jan 31 | Balance c/d | 0 (1)
22. Feb 1 | Balance b/d | 0
23. 23(a)(iv) P Ltd Account:
24. Date | Details | $ | Date | Details | $ |
25. --- | --- | --- | --- | --- | --- | ---
26. Jan 27 | Bank | 7200 (1) | Jan 3 | Purchases | 8000 (1)
27. Jan 27 | Discount received | 800 (1) | Jan 31 | Balance c/d | 0 (1)
28. Total | | 8000 | Total | | 8000
29. Feb 1 | Balance b/d | 0
30. 23(b) Award up to 3 marks for identification and explanation. Maximum of 6 marks.
31. • To keep track of cash payments made (1) which are not bank transactions (1) thus ensuring accuracy of accounting records (1).
32. • To keep track of cash received (1) which are not bank transactions (1) thus ensuring accuracy of accounting records (1).
33. • To identify cash and bank balances (1) to show what is readily available for payments (1) to prevent overspending (1).
34. • For reconciliation purposes (1) to check records against bank statement (1) to ensure accuracy (1).
35. • To prevent fraud (1) for internal control (1) by monitoring cash (1).