The following accounting records show information regarding the debtors of funky tunes; Cash receipt Journal for the month ended 31 January 2020. Date (January) Receipts Details Total VAT Debtors Cash sales Other 5 712 H Stoop 1 035 135 900 8 714 - 718 Cash 27 600 3 600 24 000 12 457 M Lubbe 1 150 1 150 21 923 B Zaba 575 515 27 418 S Nintendo 2 300 2 300 31 Interest received 150 150 Total 32 810 3 735 4 865 24 000 150 Sales Journal for the month ended 31 January 2020. Date (January) Invoice Details Total VAT Sales 5 582 S Nintendo 966 126 840 6 583 M Lubbe 456 56 400 12 586 B Fouche 920 120 800 14 587 B Riley 1 000 1 000 22 590 S Nintendo 345 45 345 Total 3 687 347 3 385 The accountant prepared the following debtor's control account in the general ledger: Debtors Control A/C Date Details Amount Date Details Amount 1 Jan 2020 Balance 14 800 31 Jan 2020 Sales (SJ) 3 340 31 Jan 2020 Bank (CRJ) VAT (SJ) 347 31 Jan 2020 Balance 13 622 Total 18 487 Total 18 487 1 Feb 2020 Balance 13 622 Additional information; 1. Assume there are no adding errors in the information provided 2. According to the agreement with debtors, the interest of 2% per month is levied on all the outstanding debt at the beginning of each month, irrespective of when the sale took place or when the balance was settled, interest for January 2020 must still be recorded. 3. According to the duplicate deposit slip (receipt no; 923), the amount deposited was $575. 4. It was discovered that the accountant recorded sales transactions with Mr. M Lubbe on 6 January 2020 at a Vat rate of 14% in the sales journal. the correct vat rate was however used on the invoice. the correct amount was $400 excluding vat. 5. A trade discount of 10% was granted on the sales transaction with Mr.s B Fouche on 12 January 2020, however, the accountant forgot to take it into account when he recorded it in the sales journal. 6. The sales transaction of $1 150 on 14 January 2020 was made to Mr.s B Riley, who is not registered for VAT. 7. Included in the debtor's control account opening balance of $14 800, is an amount of $2 140 due by Mr. S Ntondo REQUIRED: a) Prepare the supplementary debtor's control account in the general ledger of funky tunes for the month ended 31 January 2020. b) Calculate the balance for Mr. S Ntondo as it would appear in the debtor's list on 31 January 2020.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The following accounting records show information regarding the debtors of funky tunes;
Cash receipt Journal for the month ended 31 January 2020.
| Date (January) | Receipts | Details | Total | VAT | Debtors | Cash sales | Other |
| 5 | 712 | H Stoop | 1 035 | 135 | 900 | ||
| 8 | 714 - 718 | Cash | 27 600 | 3 600 | 24 000 | ||
| 12 | 457 | M Lubbe | 1 150 | 1 150 | |||
| 21 | 923 | B Zaba | 575 | 515 | |||
| 27 | 418 | S Nintendo | 2 300 | 2 300 | |||
| 31 | Interest received | 150 | 150 | ||||
| Total | 32 810 | 3 735 | 4 865 | 24 000 | 150 |
Sales Journal for the month ended 31 January 2020.
| Date (January) | Invoice | Details | Total | VAT | Sales |
| 5 | 582 | S Nintendo | 966 | 126 | 840 |
| 6 | 583 | M Lubbe | 456 | 56 | 400 |
| 12 | 586 | B Fouche | 920 | 120 | 800 |
| 14 | 587 | B Riley | 1 000 | 1 000 | |
| 22 | 590 | S Nintendo | 345 | 45 | 345 |
| Total | 3 687 | 347 | 3 385 |
The accountant prepared the following debtor's control account in the general ledger:
Debtors Control A/C
| Date | Details | Amount | Date | Details | Amount |
| 1 Jan 2020 | Balance | 14 800 | |||
| 31 Jan 2020 | Sales (SJ) | 3 340 | 31 Jan 2020 | Bank (CRJ) | |
| VAT (SJ) | 347 | ||||
| 31 Jan 2020 | Balance | 13 622 | |||
| Total | 18 487 | Total | 18 487 | ||
| 1 Feb 2020 | Balance | 13 622 |
Additional information;
1. Assume there are no adding errors in the information provided
2. According to the agreement with debtors, the interest of 2% per month is levied on all the outstanding debt at the beginning of each month, irrespective of when the sale took place or when the balance was settled, interest for January 2020 must still be recorded.
3. According to the duplicate deposit slip (receipt no; 923), the amount deposited was $575.
4. It was discovered that the accountant recorded sales transactions with Mr. M Lubbe on 6 January 2020 at a Vat rate of 14% in the sales journal. the correct vat rate was however used on the invoice. the correct amount was $400 excluding vat.
5. A trade discount of 10% was granted on the sales transaction with Mr.s B Fouche on 12 January 2020, however, the accountant forgot to take it into account when he recorded it in the sales journal.
6. The sales transaction of $1 150 on 14 January 2020 was made to Mr.s B Riley, who is not registered for VAT.
7. Included in the debtor's control account opening balance of $14 800, is an amount of $2 140 due by Mr. S Ntondo
REQUIRED:
a) Prepare the supplementary debtor's control account in the general ledger of funky tunes for the month ended 31 January 2020.
b) Calculate the balance for Mr. S Ntondo as it would appear in the debtor's list on 31 January 2020.
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