Bush Basher Bikes sells off road motorbikes on both a credit and cash basis. They stock a full range of spare parts and accessories. The business also employs a full-time mechanic who carries out servicing and repairs on motorbikes — those sold by Bush Basher Bikes as well as those purchased from other suppliers.
Prenumbered invoices are issued for all sales and services provided. Terms are strictly n/30 and no discounts are offered. Total revenues last financial year amounted to $820 000 — $680 000 from the sale of motorbikes, $42 000 for parts and accessories, and $98 000 for servicing and repairs. All receipts are banked daily, and a petty cash system is in operation. Cash discounts are offered by all suppliers, and the business ensures that all discounts on offer are taken. All payments are made by online bank transfers with frequent payments made to suppliers, transport companies for delivery costs on purchases, sponsorships and advertising. The mechanic is paid on every second Friday. The office manager is paid an annual salary for managing the office, and for performing the manual accounting duties.
The business currently has a manual system of accounting using special journals and subsidiary ledgers. Rev Head, the owner of Bush Basher Bikes, is considering implementing a tried and tested integrated accounting package.
Required
A. Identify the subsidiary ledger or ledgers that would be used in the current system.
B. Identify the special journals that would be appropriate in the current system, and suggest appropriate columns that would be used in each of them.
C. Should a computer-based accounting system be implemented? Explain the reasons for your decision.
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