Refer to Information A - NSC Accounting - Question 6 - 2019 - Paper 1

To calculate the Rent Income: Given that Rent Income is calculated based on the information in the Cash Budget, we find:

Rent Income = ext{Interest from Fixed Deposit} / (1 - ext{Rent Increase Percentage})

Rent Income = 9 180 / (1 - 0.06) = 9 180 / 0.94 Rent Income = 8 500

To calculate the Fixed Deposit: Protea Bank: Using the formula for fixed deposits:

Fixed Deposit = rac{400}{12} imes 100 imes 6 ext{ ext{%}}

Fixed Deposit = rac{400}{12} imes 6 = 80 000

To find the Cash purchases of trading stock as per the budget:

Cash Purchases = Total Purchases - (Credit Purchases) = 456 000

Based on the information given, the total purchases for April 2019 are calculated as follows:

Total Purchases = Cash Purchases + (0.4 imes Trading Stock)

Using the figures, we derive: Total Purchases = 192 000 (with 40% bought on credit)

The Debtors' Collection Schedule for July is established by calculating it based on the collections:

• May: { ext{Cash Sale}} imes 30 ext{ ext{%}} = 243 675 ext{R}
• June: ext{Total} = 362 700 Combining all totals, the collection schedule can now be cited.

The effect of advertising on sales can be summarized as follows:

• Advertising had an over-budget variance of R28 800 (going over budget by 80%).
• Despite the higher expenditure on advertising, the effect was not significant, as it did not sufficiently increase credit sales in alignment with expectations. Sales did not meet budget forecasts.

Regarding payments to creditors, it is crucial to note:

• Creditors were underpaid by R75 000, leading to potential challenges in cash flow. This indicates that if the trend continues, creditors may restrict their credit limits further, putting pressure on cash flow management.

Two strategies implemented for achieving sales targets include:

1. Increasing credit sales by R36 000 (which impacted cash flow)
2. Introduction of delivery services for R19 000 to enhance customer satisfaction.

Evaluating the effectiveness of these strategies:

• The increased credit sales were not effective, as the collection from debtors was poor, indicating cash flow challenges. Specifically, credit sales were R36 000 lower than expected, which suggests that while attempts were made to boost sales, the implementation did not yield desired financial results.