O-LevelAccountingSources and recording of data7707/21 · May/June 2017 · Q120 Marks

Nor purchases goods from Adam. On 1 April Nor owed Adam $1500. The following transactions occurred in April 2017. April 9 Adam sold goods to Nor on credit, list price $1200, less 20% trade discount. 11 Nor returned goods purchased on 9 April, list price $100. 28 Nor paid by cheque the balance on her account at 1 April and was allowed 3% cash discount. REQUIRED

(a)Prepare the account of Adam in the ledger of Nor for April 2017. Balance the account and bring down the balance on 1 May 2017.[5]
(b)(i)book of prime (original) entry in which the transaction on 9 April would be recorded by Nor.[1]
(b)(ii)document that Adam would send to Nor on 11 April.[1]
(b)(iii)division of Nor's ledger in which the account of Adam would be kept.[1]
(c)(i)trade discount[1]
(c)(ii)cash discount[1]
(d)Bring the cash book (bank columns) of Nor up to date. Balance the cash book and bring down the balance on 1 May 2017.[4]
(e)Prepare the bank reconciliation statement at 30 April 2017.[4]
(f)Explain the abbreviation DD as used in the United utilities payment on 25 April.[2]

Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

[1] April 11 Purchase returns 80
[1] April 28 Bank 1455
[1] April 30 Discount received 45
[1] April 9 Purchases 960
[1] May 1 Balance b/d 880 (1)of
[1] Purchases journal / daybook (1)
[1] Credit note (1)
[1] Purchases (1)
[1] Encourage purchases in bulk / To encourage regular custom / Allowed to businesses in same trade / To enable another trader to make a profit
[1] Encourage swift payment / Encourage payment within the specified period of credit / To encourage payment by the due date
[1] April 30 Commission 250 (1)
[1] April 30 Dividend 15 (1)
[1] April 30 United utilities 150 (1)
[1] May 1 Balance b/d 540 (1 o/f))
[1] Cash sales banked but not recorded 510 (1)
[1] Unpresented cheque: West Electricity 325 (1)
[1] Unpresented cheque: Adam 1455 (1)
[1] Balance as per cash book 540 Credit (1)of
[1] Direct debit (1) is an arrangement which instructs the bank to transfer money from a person's account on agreed dates. (1)

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