Question

2 Statement of Account (11 Marks) Study the following account that Rebecca received from "The Fab Store" for March 2019, and then answer the questions that follow: "THE FAB STORE” R. Bloom Account No: 645145-9 101 High Tower Road Date: March 2019 New York Credit Limit: $2 500 30 Days (less 5%) DR CR March 19 Balance $1 720 $1 840 A $100 $650 1 Balance 3 Invoice no 1129 10 Receipt no 520 13 Invoice no 1 456 18 Invoice no 1 560 19 Credit note no 1005 22 Interest 25 Invoice no. 1 723 30 Receipt no. 1 853 C $450 $17 $125 ID $2 390 $2 690 $2 240 $2 257 $2 382 $2 182 2.2.1 Complete the missing amounts labelled A to D 2/4 2.2.2 Rebecca does not understand the words "30 Days (less 5%)" that are printed on her account. Write one sentence to explain the meaning of these words to her. (1) 2.2.3 Write a sentence to fully explain the selected transactions to Rebecca according to the dates provided below. Remember to include amounts: (3) 22 2.2.4 Is "The FAB Store" adequately controlling the amount that they allow Rebecca Bloom to purchase on credit? Give a reason, stating amounts, for your answer. (3)

Answer 1

2)

2.2.1:

A = 1840-1720 = 120

B = 1840 - 100 = 1740

C = 2690 - 2390 = 300

D = 2382 - 2182 = 200

2.2.2:

The words "30 Days (less 5%)" means that if payment

is made within 30 days of purchase, a discount of 5%

is allowed on the invoice amount.

2.2.3:

Date 10th = receipt of payment of $100 against miscel. Purchases.

Date 19th = credit note of $450 ie. reduction in account, on account of goods return or trade discount.

Date 22nd = Interest of $17 was charged to Rebecca's account of credit stands to her account.

2.2.4:

Yes, "The FAB Store" is adequately controlling the amount of credit

provided to Rebecca because (a) regularly getting payments (b) interest

is being charged for the credit provided ('c) trade discount is given on

account through credit note.