Name: ……………………………. ( ) Class: …………… Date: ………............

2023 Papers Topical Revision:

Trade Payables set 1
Q1
YUYING

Hazel is a retailer who purchases goods on credit from Marcos.

The following transactions took place in the month of July 2023.

July
1 Balance due to Marcos was $700

7 Bought goods costing $12 000, less 8% trade discount

9 Returned goods purchased on 7 July, costing $600

12 Paid Marcos a cheque for amount owing on 1 July and

received a cash discount of 10%

REQUIRED

(a) State one difference between a cash discount and a trade discount.
[2]

(b) Prepare the account of Marcos in Hazel’s books for the month of July
2023. [6]

(c) Name the source document used for the transactions on the following
dates.

(i) 7 July 2023

(ii) 9 July 2023
[2]

(d) Using a suitable accounting theory, explain why source documents

are
important.
[2]

RSS 4E MYE 2021

The following transactions took place during April with a credit customer, Julie.

2020
April
13 Sold goods on credit to Julie at a list price of $1 500, less 20% trade
discount.

18 Julie returned defective goods at a list price of $200. The goods were
previously bought on 13 April.

24 Julie paid Mandy the amount owing on her account by cheque, less 5%
discount for prompt payment.

29 The bank returned Julie’s cheque due to insufficient funds.

The balance on Julie’s account was still outstanding at the end of Mandy’s business
financial year on 31 March 2021. Mandy decided to write this balance off in full.

REQUIRED

(a) Prepare Julie’s account in Mandy’s books for the month of April. [6]

(b) State a reason why Mandy gave Julie a trade discount. [1]

(c) Prepare the journal entry to write off the outstanding balance at 31 March 2021.
Narration is not required. [2]

(d) Name one accounting theory which is applied when making an allowance for
impairment of trade receivables. [1]
 Q2
YUAN CHING

Pretty Cakes is a bakery with outlets in many shopping malls.

The business buys from a main supplier, Phoon Supplies, on credit terms. Phoon
Supplies offers Pretty Cakes 10% trade discount for purchases above $3 000 and
5% cash discount if settlement is within 14 days of the invoice.

Pretty Cakes had no outstanding balance with Phoon Supplies as at 1 September

2022.

The business had the following transactions with Phoon Supplies in September
2022:
Sep 5 Bought goods worth $3 700 at list price.
Sep 8 Returned goods worth $450 at list price bought on Sep 5 as they were
discovered to be mouldy.
Sep 16 Purchased $2 600 of goods at list price.
Sep 25 Settled the owing amount with Phoon Supplies in full by cheque.

REQUIRED

(a) Suggest a reason why Phoon Supplies offers Pretty Cakes cash discount.
[1]

(b) Prepare the ledger account of trade payable — Phoon Supplies as it would
appear in Pretty Cakes’ books.
[5]