QUESTION 4: DEBTORS RECONCILIATION, AGE ANALYSIS AND VAT (43…
QUESTION 4: DEBTORS RECONCILIATION, AGE ANALYSIS AND VAT (43 marks; 26 minutes) 4.1 Choose the correct answer from the words provided within brackets. Write only the answer, next to each number (4.1.1 – 4.1.3) in the ANSWER BOOK. 4.1.1 A (debit/credit) balance on the bank account indicates a positive balance. 4.1.2 A (debit note/credit note) is the source document for goods returned to a creditor. 4.1.3 A (cash discount/discount allowed) is offered when accounts are settled within a certain time. (3) 4.2 DEBTORS RECONCILIATION AND AGE ANALYSIS Stonehaven Traders, owned by Manie McDonald, sells products for cash and on credit. Their credit terms are 30 days, but they are budgeting that 80% of their debtors will adhere to the credit terms. REQUIRED: 4.2.1 Briefly explain why the balance of the debtors control account should correspond with the total of the list of debtors. (4) 4.2.2 Calculate the correct closing balance of the debtors control account on 30 June 2020. (6) 4.2.3 Prepare a correct list of debtors of Stonehaven Traders on 30 June 2020. Show all calculations. (14) 4.2.4 Study information A and C below then answer the following questions: · Stonehaven Traders don’t have effective control over their Debtors. Quote two figures to motivate this statement. (4) · State TWO actions that Stonehaven Traders could take in order to encourage debtors to settle their accounts according to the credit terms. (4) INFORMATION: A. Debtors age analysis schedule for June 2020: TOTAL CURRENT 30 DAYS 60 DAYS 90 DAYS R177 100 R33 700 R26 300 R72 600 R44 500