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Effective purchasing is very necessary for businesses - Junior Cycle Business Studies - Question 2 - 2011
Question 2
Effective purchasing is very necessary for businesses. Explain the term ‘effective purchasing’. On 4 April 2011, MURPHY Ltd, Main Street, Castleblaney, Co. Monaghan... show full transcript
Worked Solution & Example Answer:Effective purchasing is very necessary for businesses - Junior Cycle Business Studies - Question 2 - 2011
Step 1
Explain the term ‘effective purchasing’
Answer
Effective purchasing involves obtaining quotations from multiple suppliers to ensure that the business acquires the best quality of goods and services, at the correct price, when they are needed. This process not only ensures cost-efficiency but also guarantees timely delivery and adequate supply, allowing the business to operate smoothly without interruptions.
Step 2
Outline how MURPHY Ltd should process invoices received
Answer
- Check Creditor's Details: Verify that the name and address of EIRN FURNITURE Ltd are correctly listed on the invoice.
- Record the Invoice: Enter the details of the invoice in the Purchases Book to maintain accurate records of all purchases made.
- File the Invoice: Store the invoice in an organized manner for easy retrieval and future reference.
- Check Calculations: Ensure all calculations are correct, including the total amount due after applying any discounts and taxes.
- Verify Goods Received: Confirm that the goods received match those listed on the invoice in terms of type and quantity.
Step 3
Complete the Invoice No. 20 and the Receipt No. 11 on the sheet supplied with this paper
Answer
For Invoice No. 20:
- Date: 11/04/2011
- To: MURPHY Ltd, Main Street, Castleblaney, Co. Monaghan
- DESCRIPTION:
6 Oak Kitchen Tables @ €150 = €900
10 Pine Wardrobes @ €60 = €600 - Total (Excl. VAT): €1500
- Trade Discount (20%): €300
- Subtotal: €1200
- VAT (21%): €252
- Total (Incl. VAT): €1452
For Receipt No. 11:
- Date: 30/04/2011
- Received From: MURPHY Ltd, Main Street, Castleblaney, Co. Monaghan
- The Sum of: €1452
Step 4
Record the issue of the Invoice and Receipt in the Sales Book and Analysed Cash Book of EIRN FURNITURE Ltd
Answer
In the Sales Book of EIRN FURNITURE Ltd:
- Date: 11/04/2011
- Details: MURPHY Ltd
- Invoice No.: 20
- F: 1,200
- VAT: 252
- Total: 1,452
In the Analysed Cash Book of EIRN FURNITURE Ltd:
- Date: 30/04/2011
- Details: MURPHY Ltd
- Receipt No.: 11
- Bank: 1,452
- Debtor: 1,452