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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:

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

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

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

   

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