1
Mudgee Ltd issued the following invoices to customers in respect of credit sales made
during the last week of May 2007. The amounts stated are all net of Value Added Tax. All sales
made by Mudgee Ltd are subject to VAT at 15%.
On 29 May Laira Brand returned half the goods (in value) purchased on 25 May. An allowance was
made the same day to this customer for the appropriate amount.
On 1 May 2007 Laira Brand owed Mudgee Ltd £2,100.47. Other than the purchases detailed
above Laira Brand made credit purchases (including VAT) of £680.23 from Mudgee Ltd on 15 May.
On 21 May Mudgee Ltd received a cheque for £2,500 from Laira Brand.
Required:
(a) Show how the above transactions would be recorded in Mudgee Ltd’s sales day book for the
week ended 30 May 2007.
(b) Describe how the information in the sales day book would be incorporated into Mudgee Ltd’s
double entry system.
(c) Reconstruct the personal account of Laira Brand as it would appear in Mudgee Ltd’s ledger for
May 2007.
(Association of Accounting Technicians