NSC Accounting Analysis of cash budget: You are provided with the incomp

Question

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppé Bazaar.

REQUIRED.

6.1 Calculate the expected monthly percentage of goods sold on credit.

6.2 Complete the Debtors’ Collection Schedule for March 2017.

6.3 The owner wants to improve the control over debtors. Credit terms are 30 days.

6.3.1 Explain why the owner is concerned. Give TWO reasons with supporting figures.

6.3.2 Suggest ONE solution for this problem.

6.4 Calculate the following:

6.4.1 (a) and (b) as provided in the budget. Use budgeted figures in your calculations.

6.4.2 The percentage increase in rent on 1 March 2017.

6.4.3 The amount of the interest on the investment expected to be received in March 2017.

6.5 Refer to Information H. Identify TWO payments that you consider to be poorly managed in February 2017. In EACH case, give a suggestion to improve the internal control of the items identified.

INFORMATION.

All goods are sold at a profit mark-up of 25% on cost.

Stock sold is replaced in the month of sale (a stock base is maintained).

All stock is purchased on credit. Creditors are paid in the month following the month of purchase to receive a 5% early settlement discount.

The business employs four sales assistants on the same salary scale. They will receive an inflation increase of 7.5%, effective from 1 March 2017. An additional sales assistant will be employed on 1 March 2017, but she will not receive the increase.

A fixed deposit matures on 31 March 2017. This will be received together with interest at 8% p.a. for the last quarter of its term.

H. EXTRACT FROM BUDGET FOR FEBRUARY AND MARCH 2017

Receipts
Cash sales	17 500	16 000
Cash from debtors	67 490	26 640
Rent income	11 200	12 544
Fixed deposit (including interest)		
Payments
Payments to creditors (for stock)	68 000	(a)
Salaries: office staff	20 000	19 000
Salaries: sales assistants	37 600	20 560
Municipal services	3 000	3 000
Drawings	3 000	3 000
Stationery	1 500	2 000
Loan instalment	5 000	5 000
Maintenance of office equipment	2 000	1 500
Advertising	1 600	1 000

MONTH	CREDIT SALE	FEBRUARY	MARCH
December 2016	74,000	16,280	0
January 2017	68,000	27,200	146,960
February 2017	70,000	0	64,912
March 2017	64,000	0	67,490
Cash from debtors		67,490	64,912

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppé Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1

Worked Solution & Example Answer:You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppé Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1