Csec: May 2018, Question #1

No. 1(a): Preparation of Cash Book for the month of 31st March 2018.
Workings:
1. 26th March 2018 the total of the cheque to Jeff’s Air-Con:
Cheque will equal $7,500 less a 5% discount.
The discount equals 5% x $7500 = $375.
Therefore the cheque total equals = $7,500 - $375 = $7,125.

2. 30th March 2018 the total of the cheque received from Layby Stores:
​Invoice total on the 13th March sent to Layby Stores equals $2,250 less 20% trade discount.
The discount equals 20% x $2,250 = $450.
Therefore the invoice total equals = $1,800.
19th March 2018 the total of the credit note sent to Layby Stores equals $200 less 20% trade discount.
The discount equals 20% x $200 = $40.
Therefore the credit note total equals $200 - $40 = $160.
This means that the total on Layby Store’s account on the 30th March 2018 = $1800 - $160 = $1640.
Layby Stores was given a cash discount of $150 therefore the cheque received from Layby will equal
$1640 - $150 = $1,490.

Now that the workings has been completed the Cash Book for the month ended 31st March, 2018 can be prepared.

No. 1(b): The significance of the balance brought down on the bank account at 31st March 2018:
The balance of the bank account at the 31st March 2018 is credit of $1,035. This means that Sanjeev's bank account is in overdraft. He owes the bank $1,035 as at the 31st March 2018.

No. 1(c): Preparation of DD Ltd’s account showing the balance outstanding at the end of March 2018:
5th March 2018 the total of the invoice received from DD Ltd:Invoice will equal $7,500 less a 25% discount.
​The discount equals 25% x $7500 = $1,875.
Therefore the invoice total equals = $7,500 - $1,875 = $5,625.
14th March 2018 the total of the credit note received from DD Ltd equals $800 less 25% trade discount The discount equals 20% x $800 = $200.
Therefore the credit note total equals = $800 - $200 = $600.
​This means that the total owed to DD Ltd 31st March 2018 = $5,625 - $600 = $5,025.

Now that the workings has been completed DD Ltd's account for the month of March 2018 can be prepared.

I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to make your comments below. Good Luck!