1. The following information relates to the accounts of Golf Direct, a golfing supplies
business owned by Paul Tay.
Ledger balances as at 1 April Year 3
Equipment £1,200
Bank Overpublish £450
Sales Revenue (Sales) £920
Purchases £520
2 April J Young purchased goods on credit costing £265·50 plus VAT.
5 April J Young returned damaged goods worth £49·50 plus VAT.
7 April Bought a new cash register on credit from Shop Supplies worth £405
plus VAT.
10 April J Young paid £275 on account by cheque.
14 April Received a letter from the accountant of J Young informing that he has
been declared bankrupt and can only pay 25p in the £. This amount
was received by cheque with the letter and the remainder is to be
written off.
Note: VAT is to be applied at 20% where appropriate.
(a) Using the information above, enter the transactions into the ledger accounts of
Golf Direct on Page 2–4 of your Workbook (J Young’s opening ledger balance has
already been entered).
Answer questions (b)-(d) on Page 5 of your Workbook.
(b) Outline two roles of a Financial Accountant.
(c) State a reason as to why businesses may give each other:
(i) Trade Discount.
(ii) Cash Discount.
(d) Describe how Rent Received would be dealt with in the Income Statement
(Trading, Profit & Loss Account).