QUESTION 3 (25 marks)Raw (Pty) Ltd, “Raw”, is a company that sells organic nuts to the public. The company is a registered VAT vendor and has a 30 June financial year-end.The following transactions occurred during the year ended 30 June 2024 and have not been recorded yet: When posting the totals from the sales journal to the general ledger at the end of August 2023, the sales column was posted as R258 000 instead of R285 000. All amounts, including VAT. Total credit sales for the year amounted to R1 450 000 (including VAT).Total cash sales for the year amounted to R987 000 (including VAT).On 1 August 2024 a trade receivable, Nature Den Ltd paid their debt of R7 450 (including VAT). This amount has been written off as irrecoverable in the year 2023.One trade receivable, White Cat Ltd, was declared insolvent in 2024. The total debt owed by White Cat Ltd amounted to R152 000 (including VAT). White Cat Ltd’s lawyers confirmed that White Cat Ltd’s creditors would receive 55c for each Rand owed to the business. Raw received the settlement in June 2024 and decided to write the remainder of White Cat Ltd.’s debt off as irrecoverable.During the year, Raw received R2 000 000 (including VAT) from trade receivables towards their accounts.On 30 June 2024, a trade receivable amounting to R8 750 (including VAT) was considered to be irrecoverable, and Raw decided to write the debt off as irrecoverable.Raw reliably estimated that it was unlikely that 5% of outstanding trade receivables on 30 June 2024 would be collected. Additional information: Trade receivables has an opening balance of R1 258 000 on 1 July 2023. Allowance for doubtful debts has an opening balance of R50 320 on 1 July 2023.REQUIRED:3.1 Prepare the general journal entries to account for transaction 3 for the year ended 30 June 2024 of Raw (Pty) Ltd.Remember to show your workings.Round up to the nearest rand where applicable.(4 marks)3.2 Prepare the Trade Receivables general ledger account to account for the transactions for the year ended 30 June 2024 of Raw (Pty) Ltd.Dates are not required. The account must be closed-off at the end of the month.Remember to show your workings.(17 marks)3.3 Explain two advantages of allowing customers to purchase on credit. Give a brief explanation of each advantage.(4 marks)
