O-LevelAccountingSources and recording of data7707/22 · May/June 2017 · Q120 Marks

Chung is a trader who buys and sells on cash and credit terms. He provided the following information for April 2017. April 1 Chung owed Delun, a credit supplier, $1500. 10 Chung purchased goods on credit from Delun, list price $1400, less 20% trade discount. 15 Chung returned to Delun some of the goods purchased on 10 April, list price $200. 23 Chung paid the balance owed to Delun at 1 April by cheque and was allowed 2% cash discount. REQUIRED

(a)Prepare the account of Delun in the ledger of Chung for April 2017. Balance the account and bring down the balance on 1 May 2017.[5]
(b)State the sub-division of Chung's ledger which would contain the account of Delun.[1]
(c)Name the document that was issued by Delun to Chung on the following dates. April 10 Chung purchased goods on credit from Delun. Document April 15 Chung returned to Delun some of the goods purchased on 10 April. Document[2]
(d)Name the document which Delun may issue to Chung on 30 April 2017.[1]
(e)Complete the table to state the effect of each of the following transactions made by Chung in April 2017. Where there is no effect write ‘No effect'. The first transaction has been completed as an example. Transaction Assets $ Liabilities $ Capital $ Purchased goods on credit at a cost of $500 +500 +500 No effect Sold goods on credit for $700 (cost $400) Paid Yang, a credit supplier, $2050 in full settlement of a debt of $2200 Purchased goods, $130, and paid in cash[9]
(f)State two reasons why book-keeping records are maintained.[2]

Mark scheme

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

[1] April 15 Purchases returns 160
[1] April 1 Balance b/d 1500
[1] April 10 Purchases 1120
[1] Bank 1470
[1] Discount 30
[1] Balance c/d 960
[1] Balance b/d 960
[1] Purchases ledger
[1] April 10 Sales invoice
[1] April 15 Credit note
[1] Statement of account
[1] Sold goods on credit for $700 (cost $400): Assets +300
[1] Sold goods on credit for $700 (cost $400): Liabilities No effect
[1] Sold goods on credit for $700 (cost $400): Capital +300
[1] Paid Yang, a credit supplier, $2050 in full settlement of a debt of $2200: Assets -2050
[1] Paid Yang, a credit supplier, $2050 in full settlement of a debt of $2200: Liabilities -2200
[1] Paid Yang, a credit supplier, $2050 in full settlement of a debt of $2200: Capital +150
[1] Purchase goods, $130, and paid in cash: Assets No effect
[1] Purchase goods, $130, and paid in cash: Liabilities No effect
[1] Purchase goods, $130, and paid in cash: Capital No effect
[1] A record of all transactions
[1] Detailed record of each customer, supplier, expense or income.
[1] Reference can easily be made to the detail in each account.
[1] Financial statements can be prepared at regular intervals.
[1] The profit can be ascertained.
[1] Aid management and decisions can be made.

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