Chapter 3: Analysing and Designing Accounting Systems 47 Exercise 3.3: The manag

Question

Chapter 3: Analysing and Designing Accounting Systems 47 Exercise 3.3: The manager of Colin's Hardware had the following document in his possession. TOPLINE TIMBERYARD Geelong Road West Footscray 3012 Charge to: Colin's Hardware No. 24512 Date: 2/5/05 Terms: 30 days 5 Charles Street Laurensville 3999 Goods supplied: Value Total cost Quantity Description 10 20 1000 x 100 x 50 mm treated pine $8.25 $82.50 700 140.00 3 metre sleepers TOTAL OF THIS INVOICE $222.50 a What is the name of this document? b What is the nature of the transaction shown in this document? c Would Colin's Hardware have the original or a copy of this document? Explain your answer. d Explain what is meant by the note Terms: 30 days e State the twofold effect this document has on the statement of financial position of: i Colin's Hardware ii Topline Timberyard dor the following document:

Explanation / Answer

Answer =A Name of this Documents = Invoice Answer =B This is the sales invoice means the matrial is sold. Answer =C The Colin have the original copy of this documents because Colin is the buyer and buyer have always the original invoice. Answer =D Term 30 Days meand the amount mentioned in in the invoice ($ 220.50) will be payable in 30 Days Answer =E Colin's Hardware : Colin will be show this document in Liability side as Account Payable Topline Timberyard: Topline will show this document as Account Receivable.

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