Omer is a trader. The following transactions took place in April 2023. April 3 Paid $1000 into the bank from his own personal money 7 Paid $360 to a supplier, Alexander, by telephone transfer 10 Cash sales, $695, were paid directly into the bank account 12 Purchased goods, $340, on credit from Alexander 15 Paid $68 cash for petrol 16 Paid rent, $400, by standing order 23 Received a cheque, $384, from a credit customer, Esme, in full settlement of an invoice for $400 27 Paid $323 by cheque to Alexander, having deducted $17 cash discount 28 Purchased goods, $235, on credit from Alexander

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [1] Apr 3 Capital 1000 (Bank)
2. [1] Apr 10 Sales 695 (Bank)
3. [1] Apr 23 Esme 16 (Discount Allowed)
4. [1] Apr 23 Esme 384 (Bank)
5. [1] Apr 7 Alexander 360 (Bank)
6. [1] Apr 15 Motor expenses 68 (Cash)
7. [1] Apr 16 Rent payable 400 (Bank)
8. [1] Apr 27 Alexander 17 (Discount Received)
9. [1] Apr 27 Alexander 323 (Bank)
10. [1] Correct totals for Discount Allowed (16) and Discount Received (17)
11. [1] Apr 30 Balance c/d Cash 52 (OF)
12. [1] Apr 30 Balance c/d Bank 519 (OF)
13. [1] May 1 Balance b/d Cash 52 (OF)
14. [1] May 1 Balance b/d Bank 519 (OF)
15. [1] Apr 7 Bank 360 (Debit)
16. [1] Apr 27 Bank 323 (Debit)
17. [1] Apr 27 Discount received 17 (Debit)
18. [1] Apr 12 Purchases 340 (Credit)
19. [1] Apr 28 Purchases 235 (Credit)
20. [1] Apr 30 Balance c/d 235 (Debit) (OF)
21. [1] May 1 Balance b/d 235 (Credit) (OF)
22. [1] Option 1 – buy from Alexander only - Advantages: A offers cash discount but T does not
23. [1] Option 1 – buy from Alexander only - Advantages: A offers 5% cash discount
24. [1] Option 1 – buy from Alexander only - Advantages: A's cash discount is a higher % than T's trade discount
25. [1] Option 1 – buy from Alexander only - Advantages: Maintain good relationship with A
26. [1] Option 1 – buy from Alexander only - Advantages: Familiar with A's quality/reliability (Max 3)
27. [1] Option 1 – buy from Alexander only - Disadvantages: T offers trade discount but A does not
28. [1] Option 1 – buy from Alexander only - Disadvantages: May lose cash discount by not paying on time
29. [1] Option 1 – buy from Alexander only - Disadvantages: Depending on one supplier only
30. [1] Option 1 – buy from Alexander only - Disadvantages: A has no incentive to offer more competitive terms (Max 1)
31. [1] Option 2 – buy from both Alexander and Tahir - Advantages: T offers trade discount but A does not
32. [1] Option 2 – buy from both Alexander and Tahir - Advantages: Trade discount is deducted from invoice and does not depend on when payment is made
33. [1] Option 2 – buy from both Alexander and Tahir - Advantages: Cost of buying goods from T is reduced
34. [1] Option 2 – buy from both Alexander and Tahir - Advantages: Not dependent on one supplier
35. [1] Option 2 – buy from both Alexander and Tahir - Advantages: A may offer more competitive terms to compete with other supplier (Max 3)
36. [1] Option 2 – buy from both Alexander and Tahir - Disadvantages: A offers cash discount but T does not
37. [1] Option 2 – buy from both Alexander and Tahir - Disadvantages: T's trade discount is a lower % than A's cash discount
38. [1] Option 2 – buy from both Alexander and Tahir - Disadvantages: May damage relationship with A
39. [1] Option 2 – buy from both Alexander and Tahir - Disadvantages: Not familiar with T's quality/reliability (Max 1)
40. [1] Recommendation