GHB Limited maintains a full set of accounting records and prepares monthly control accounts.
The following information was provided for November 2019.
$
Purchases ledger control account balance at 1 November ?
Totals for November:
Purchases journal 24200
Purchases returns journal 1260
Cash purchases 4390
Commission receivable 3110
Cash discount received 550
Cash discount allowed 710
Cheques paid to trade payables 12420
Sales ledger contras 250
Interest charged by trade payables 97
Cheque refunds from trade payables 320
Purchases ledger control account balance at 30 November 12195
REQUIRED
(a) Prepare the purchases ledger control account for GHB Limited for November 2019.

(b) State two reasons why the purchase of the delivery vehicle was not recorded in the purchases ledger control account.

The directors of GHB Limited are planning to finance a major expansion of the fleet of delivery vehicles. $250000 will be required for this expansion. The directors are considering whether to issue additional ordinary shares or to obtain a long-term bank loan. REQUIRED

(d) Advise the directors which of these two methods of finance is more appropriate. Justify your answer with one advantage and one disadvantage of each option.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a Purchases Ledger Control Account for GHB Limited for November 2019 Debit Credit Explana... View the full answer