Part B [Marks: 15│27 Minutes]
Saudi Traders (ST) is a sole trader that sells wedding gifts and is presently not registered for VAT. The business premises are in Tzaneen and have a financial year-end of 31 July, and the general ledger is updated irregularly. ST’s owner-manager has prepared notes regarding business transactions. The 31 July 2023 statement of the financial position of ST, prepared by an external accountant, showed accounts receivable of R500 000 and a credit balance in allowance for expected credit losses of R20 000. During the financial year that ended 31 July 2024, the following transactions occurred but have not been incorporated in the ledger account:
(i) Sales on credit and as per sales journal on 30 July 2024, R1 345 000.
(ii) sales returns and allowances from customers and as per notes shared on 31 March 2024, R48,000;
(iii) customer cash collections, as shown in the cash receipts journal’s column, totals on 31 July 2024, R1 215 000.
(iv) customer accounts are written off on 31 March 2024 as uncollectible, given notes from the owner-manager, R25 000;
(v) Recovered previously written-off accounts R5 000 on 31 May 2024.
Based on experience, the ST’s management calculates, and records credit loss expenses, which should leave the balance on the allowance for expected credit losses account at 4 per cent of the confirmed accounts receivable balance.
You are required to: Marks
(i) Prepare general journal entries to record transactions for the financial year ending on 31 July 2024.
Effective communication: journal entry narrations provided and numbering of each entry [12]
[3]
(ii) Prepare, in T-ledger account format, Accounts Receivable and Allowance for Estimated Credit losses Account as they would appear after posting the journal entries in Part B(ii)
[15]
Total marks for Part B [30]