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Shetland Ltd is a carpet retailing business. The business is registered for GST. Shetland Ltd uses...

Shetland Ltd is a carpet retailing business. The business is registered for GST. Shetland Ltd uses a periodic inventory system. The transactions for January 2019 are provided below. All transactions are inclusive of GST. The relevant customer and supplier account balances at 31 December, 2018 were:

Accounts Receivable Accounts Payable

S. Devine $6,050 D. Harms $18,150

R. Burton 3,025

Jan 5 Sold inventory to B. Senton for $4,400, terms 2/7, n/30.

6 Purchased inventory from S. Warren for $2,750, terms 2/7, n/30.

7 Received a cheque from S. Devine for $3,850 as part payment of his account.

8 Returned inventory of $550 to S. Warren for credit.

11 Paid Brambles Ltd for freight inwards of $330.

12 Received payment from B. Senton for amount due.

13 Paid S. Warren the amount due.

14 Paid Ace Reality rent of $1,100 for January.

15 Issued a credit note for damaged inventory of $770 returned by R. Burton.

17 Sent a cheque to D. Harms for $17,968 in full settlement of the account.

18 Paid Telstra for a telephone bill of $616.

23 Cash sales totaled $9,460.

27 Sold inventory on account to B. Cole for $7,700, terms 1/7, n/30.

28 R. Burton paid his account in full.

29 Purchased inventory from R. Gibson for $1,760, terms 2/7, n/30.

31 Received payment from B. Cole for goods sold on 27 January.

Required:

Record the January transactions in the relevant journals (round amounts to the nearest $). Total all special journals. Ignore narrations in the general journal.

Post the journals to the Accounts Receivable Control Account only in the general ledger.

Identify and briefly explain 3 advantages control accounts and subsidiary ledgers provide to a business.

Expert Solution

ekkarill92 answered 1 year ago

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