Aron Distributors is a wholesaler who supplies to several retailers, including Ruba Enterprises. Aron Distributors has sent the document shown in Fig. 2 to Ruba Enterprises. [Figure 2 - Table showing Aron Distributors statement of account to Ruba Enterprises with Date, Transaction, Debit, Credit, and Balance columns. Data points include: 1 October Previous Balance $250; 8 October Invoice 648 Debit $150 Balance $400; 16 October Invoice 715 Debit $55 Balance $455; 20 October Payment Credit $250 Balance $205; 26 October Credit Note 28 Credit $10 Balance $195; 31 October Invoice 820 Debit $580 Balance $775] Use the document shown in Fig. 2 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2012). The mark or mark type is shown in brackets.

1. [1] (a)(i) Statement/statement of account
2. [2] (a)(ii) Any two points x 1 mark each:
3. • to show the transactions for a trading period/month (2)
4. • to enable the buyer to check the transactions/check for mistakes
5. • to request payment of the balance
6. • to inform the buyer of what is owed
7. • to keep as a record.
8. [1] (a)(iii) $775
9. [2] (a)(iv) Any two points x 1 mark each:
10. • Ruba Enterprises has returned goods/crates/boxes worth $10
11. • so the account has been credited with $10
12. • reducing the balance owed by $10
13. • correcting an overcharge
14. • goods may have been wrongly ordered.
15. [3] (a)(v) Any one method of payment x 1 mark + 2 marks for description:
16. • credit transfer – transfer made through the bank so saving paperwork
17. • cheque – order to pay, for any amount, can be sent by post
18. • direct debit - computerised transfer, with permission of debtor, creditor requests payment.
19. Allow other methods of payment such as cash (but unlikely).
20. Credit card = 0 marks.
21. [2] (b)(i) Any two points x 1 mark each:
22. • amount or percentage added to the cost price of goods
23. • to give the selling price of the goods
24. • profit margin on goods offered for sale
25. • profit margin added to cost price.
26. [3] (b)(ii) Invoice 648 is for $150 x 20 = $30 (1 mark) / 100
27. $150 + $30 (1 mark) = $180 (1 mark)
28. OFR applies. If the correct answer is given without working, award full marks.
29. [6] (c) Level 2 (4-6 marks) Has discussed whether or not setting up a cash and carry warehouse service is a good idea and has given a reasoned opinion. (If a candidate has discussed only side of the argument, award 4 marks max.)
30. Cash and carry is self-service warehousing. The retail customers would serve themselves and be responsible for taking away their own goods. This would save AD money in the long run but it would need to spend money refitting its warehouse so that goods could be displayed to the retail customers. It would probably save on labour costs but would need check outs to take payments. If AD's customers are small-scale retailers, setting up the cash and carry warehouse might suit them as they need to buy in small quantities, use the cash and carry warehouse as their main storage and visit as often as they like. By cutting costs AD may also be able to lower prices. AD may also issue cards to other types of customer e.g. some consumers, people owning restaurants.
31. If, however, the wholesaler's customers are medium to large-scale retailers whose shops are at some distance from the cash and carry warehouse, it is possible that AD will lose customers who may be reliant on deliveries of large quantities of goods. It is important that AD offers a wide variety of goods, sufficient car parking, special offers as well as breaking bulk and preparing goods for sale. Then it would be advisable for AD to change its business to a cash and carry warehouse, but it could always do both.
32. Level 1 (1-3 marks) Has commented on setting up a cash and carry warehouse with/without an opinion.
33. A cash and carry warehouse is a warehouse where no credit is given to customers. There is also no delivery of goods. It would save AD some money. It would not have to wait for its money. This would appeal to small-scale retailers. AD would be able to lower its prices.