Nakul is a trader. He buys and sells goods on credit. He buys most of his supplies from one supplier, Nadia, who allows Nakul a trade discount of 20%. The following transactions took place in January 2022. Jan 2 Paid $441 by cheque to Nadia, in full settlement of $450 owed to her at 1 January 2022. 12 Bought goods on credit from Nadia, list price $350 14 Returned faulty goods to Nadia, list price $80 18 Bought goods on credit from Nadia, list price $400 23 Sold goods on credit, $800 29 Bought goods on credit, $60, from Sophie 30 Returned goods to Sophie, $9 REQUIRED

1. (a)Prepare the purchases journal for January 2022. Total the journal and indicate the ledger account to which the total would be posted. Nakul Purchases journal Date Details $ $[4]
2. (b)Prepare the purchases returns journal for January 2022. Total the journal and indicate the ledger account to which the total would be posted. Nakul Purchases returns journal Date Details $ $[3]
3. (c)Prepare the account for Nadia, for January 2022, as it would appear in the books of Nakul. Balance the account and bring down the balance on 1 February 2022. Nakul Nadia account Date Details $ Date Details $[6]
4. (d)Complete the table by placing a tick (✔) to show where each item is shown on the statement of financial position. Current liabilities Non-current liabilities Trade payables Bank overdraft[2]
5. (e)Nakul has a bank overdraft and would like to reduce it. He is considering paying his suppliers later than he currently does in order to help him reduce his bank overdraft. REQUIRED Advise Nakul whether or not he should take longer to pay his suppliers. Justify your answer by providing two advantages and two disadvantages.[5]