Question $4($Marks: $30)$

Riley$$s Traders is a registered VAT vendor, and all transactions include $15\%$ VAT unless otherwise

specified. The accountant of Riley Traders is in the process of reconciling the Debtors Control

account balance with the Debtors List as at $30$ June $2024.$ The balance of the Debtors Control

account at $30$ June $2024$ is R$125435$ before any adjustments.

The business has prepared the following Age Analysis at the end of June $2024$:

Debtors Age Analysis of Riley$$s Traders as at $30$ June $2024$

Terms $90$ days$+60$ Days $30$ days Current Total

Atlas Group $30$ days $161074751431023395$

Benji Traders Current $0(1610)287501265$

Dawson CC $30$ days $0239055201460022510$

Ferndale Traders $30$ days $00517523007475$

Magnolia Traders $30$ days $1840000018400$

Rawson Stores $30$ days $016507800540014850$

Rivers Wholesalers $30$ days $5602601543016250$

TOTALS $1840046002910552040104145$

$\%$ of total debt $18\%4\%28\%50\%$

The accountant has discovered the following adjustments that still need to be processed:

$1.$ The total of the Debtors Control column in the Debtors Journal $($R$345000)$ has been

totalled incorrectly and understated by R $2000.$

$2.$ A deposit of R$2390$ was received from Dawson CC but was recorded in the Cash

book receipts as being received from Rawson Stores. It was subsequently then

posted to Rawson Stores$$ account in the Debtors Ledger and has been aged as a

payment of a current invoice.

$3.$ Rivers Wholesalers returned goods during the month and was issued Credit Note

CN$3256$ to the value of R$644.$ The credit note was captured in error in the Debtors

Journal and posted as a duplicate credit invoice.

$242024$

$$ The Independent Institute of Education $($Pty$)$ Ltd $2024$

Page $9$ of $13$

$4.$ The accountant queried the $60$ days balance outstanding in Atlas Group$$s account.

She discovered that this related to a query from Atlas Group where they disputed

receiving the goods. She investigated further and discovered that the goods were

for the account of Benji Traders and that the invoice had been posted to the

incorrect account in the Debtors Ledger.

$5.$ Riley Traders also makes credit purchases from Ferndale Traders. The balance of

Ferndale Traders account in the Creditors Ledger at $30$ June $2024$ was R$8500.$

Ferndale Traders has agreed that the balances in the Creditors and Debtors ledger

can be set off. This entry must still be recorded.

$6.$ Riley Traders was informed at the end of June $2024$ that Magnolia Traders has gone

into liquidation and only $20$ cents in the rand of the debt outstanding will be

recoverable once the liquidation is finalised. The accountant has decided to

therefore write off the irrecoverable portion at $30$ June $2024.$ This entry must still

be processed.

$7.$ The total of the Debtors Control column of R$15295($before adjustments$)$ in the

Debtors Allowance Journal was posted to the incorrect side of the Debtors

Control.

$8.$ A deposit of R$8395$ relating to a cash sale was recorded in error in the Debtors

Control column instead of the Sales column in the Cash book Receipts. VAT for the

transaction was recorded correctly.

Required:

Q$\mathrm{.}4\mathrm{.}1$ Riley Trader$$s normal terms are $30$ days. Looking at the Debtors Age Analysis,

calculate how much Rawson Stores should pay by early July $2024$ in order to bring

their account back in line with normal terms of $30$ days.

$(2)$

Q$\mathrm{.}4\mathrm{.}2$ Riley Trader has a large percentage of their total debtors$$ balance which is

overdue. How can Riley Traders encourage their debtors to settle their overdue

balances?

$(3)$

$242024$

$$ The Independent Institute of Education $($Pty$)$ Ltd $2024$

Page $10$ of $13$

Q$\mathrm{.}4\mathrm{.}3$ Using the information above, calculate the correct closing balance for the Debtors

Control account in the general ledger at $30$ June $2024.$ Your answer should be in

the table format below. If the adjustment has no impact on the Debtors Control

balance, insert a $0$ in one of the debit or credit columns.

Note: Amounts in the $$Balance$$ column are only required for the $$Balance as at

$30$ June $2024$ and the $$Corrected balance as at $30$ June $2024$ lines.

$(12(1)/(2))$

Debtors Control

Adjustment No and workings

Debit

$($R$)$

Credit

$($R$)$

Balance$($R$)$

Balance as at $30$ June $2024$

$1$

$2$

$3$

$4$

$5$

$6$

$7$

Corrected balance as at $30$ June $2024$

Q$\mathrm{.}4\mathrm{.}4$ Prepare the corrected Debtors List as at $30$ June $2024,$ showing all adjustments.

Total the list. You should set out your answer as below.

Debtor

Unadjusted

balance

Adjustments Adjusted

Balance

Debit Credit

Remember to Show all your workings and round all answers to the nearest rand.