On closer inspection of the statement, you discover the following: 1. On 31 October 20.19, an electronic funds transfer (EFT) for R23 940 was made in payment for all transactions up to 31 October with their receipt being dated 1 November. Flower Wholesalers neglected to recognize the 5% cash discount offered to Dahlia Distributors on all payments made on time by the end of a month.

The inventories purchased on 11 November (Invoice no. 113) are subject to a 10% trade discount. The gross amount of this invoice is shown on the supplier’s statement. 3. Invoice no. 98 had been overcast by R600. 4. Credit note no. 266 for R2 160 was in respect of inventories bought and paid for during September 20.19 and subsequently found unsuitable and returned in November 20.19. 5. Goods bought and received from Flower Wholesalers from 25 to 30 November and after allowing a trade discount of 10%, were as follows:  26 November 20.19 – Invoice no. 121 R- 2 050  28 November 20.19 – Invoice no. 123 - 440  30 November 20.19 – Invoice no. 124 - 2 700

Dahlia Distributors incorrectly entered Invoice no. 116 in their accounting records as R3 700. 7. A debit note for R3 640 had been correctly entered in the accounting records of Dahlia Distributors but is shown as Invoice no. 99 on the supplier’s statement. 8. Invoice no. 111 was entered twice on the supplier’s statement. 9. Flower Wholesalers owe Dahlia Distributors R5 000 in respect of goods purchased from Dahlia Distributors during November 20.19. The amount, less 2,5% cash discount, must be deducted from the amount owing to them which will be paid on 30 November 20.19.

Required

Prepare remittance advice showing Flower Wholesalers how you arrived at the amount to be paid by electronic funds transfer on 30 November 20.19. 

b) Recognise the information in 6. in the General Journal of Dahlia Distributors for November 20.19. Journal narrations are not required. 

c) Recognise the information in 4. in the General Journal of Flower Wholesalers for November 20.19 assuming that the cost price of these inventories was R1 320. Journal narrations are not required. 

d) Briefly state TWO reasons how a payable reconciliation can assist Dahlia Distributors in terms of their internal control measures. 

e) Dahlia Distributors is not satisfied with the level of service and quality of inventories received from Flower Wholesalers. Suggest TWO factors they should consider before changing suppliers.
 
 

Transcribed Image Text:

You have been appointed as the payables' clerk at Dahlia Distributors. Dahlia Distributors and all its suppliers and vendors are registered for VAT purposes at a rate of 15%. Dahlia Distributors makes use of the perpetual inventory system. Flower Wholesalers, one of their suppliers, allow Dahlia Distributors a 10% trade discount on all transactions. An additional 5% discount is allowed if payment is received within 7 days of the statement date. Dahlia Distributors received the following statement, dated 25 November 20.19, from Flower Wholesalers. You have been appointed as the payables' clerk at Dahlia Distributors. Dahlia Distributors and all its suppliers and vendors are registered for VAT purposes at a rate of 15%. Dahlia Distributors makes use of the perpetual inventory system. Flower Wholesalers, one of their suppliers, allow Dahlia Distributors a 10% trade discount on all transactions. An additional 5% discount is allowed if payment is received within 7 days of the statement date. Dahlia Distributors received the following statement, dated 25 November 20.19, from Flower Wholesalers.

Answer rating: 100% (QA)

a Remittance Advice Balance shown by Flower Wholesa6lers 16720 Cash discount not considered in recei... View the full answer