Faara had the following assets and liabilities on 1 May 2015. $ Inventory 2850 Trade receivable - Jaafar 600 Other payables – Electricity 200 Bank 450 Credit 5% Bank loan (30 September 2020) 5000 Motor vehicle 4500 REQUIRED The following transactions related to the account of Jaafar for the month ended 31 May 2015. May 4 Sold goods to Jaafar, list price $1500, allowed 15% trade discount. 5 Jaafar returned goods purchased on 4 May, list price $120. 16 Jaafar paid the amount owing on 1 May by cheque and was allowed 2% cash discount. REQUIRED The following information related to the electricity account for the month ended 31 May 2015. May 17 Paid for electricity by cheque $440. 31 Prepared the income statement. It was estimated that $55 was owed for electricity at that date.

1. (a)Calculate Faara's capital.[1]
2. (b)Prepare the ledger account of Jaafar for the month of May 2015. Balance the account and bring down the balance on 1 June 2015.[5]
3. (c)State two possible reasons why Faara allowed trade discount to Jaafar. 1 2[2]
4. (d)Prepare the electricity account for the month of May 2015. Balance the account and bring down the balance on 1 June 2015.[5]
5. (e)Name the accounting concept applied to the calculation of electricity expense when preparing the income statement at 31 May 2015.[1]
6. (f)Complete the following table for the transactions shown. Name the source document prepared by Faara and the book of prime entry used, and state the effect of the transaction on her capital. The first item has been completed as an example. May 9 Sold goods on credit for $900, (cost $600). Source document Sales invoice Book of prime entry Sales journal Effect on owner's capital ($) +300 14 Customer returned goods, bought by him on 9 May for $300. 21 Paid wages in cash $150.[6]