You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe 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: (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.

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

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

Question 6

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar. REQUIRED. 6.1 Calculate the expected monthly percentage of goods... show full transcript

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

Step 1

6.1 Calculate the expected monthly percentage of goods sold on credit

96%

114 rated

Answer

To calculate the expected monthly percentage of goods sold on credit, use the formula:

ext{Percentage of goods sold on credit} = \left( \frac{\text{Credit Sales}}{\text{Total Sales}} \right) \times 100

Given:

Credit Sales for the month = R70,000
Total Sales = R70,000 + R17,500 = R87,500

Thus,

\left( \frac{70,000}{87,500} \right) \times 100 = 80\%.

Step 2

6.2 Complete the Debtors’ Collection Schedule for March 2017

99%

104 rated

Answer

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	0
Cash from debtors		67,490	64,912

Step 3

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

96%

101 rated

Answer

The owner is concerned about the cash flow management of the debentures.

The actual amount collected from debtors in February (R67,490) was less than the budgeted amount (R74,000). This indicates that the business is not meeting its cash inflow targets.
Although credit terms are set at 30 days, records reveal that a significant percentage, around 48%, of debtors take longer than 30 days to pay their debts.

Step 4

6.3.2 Suggest ONE solution for this problem.

98%

120 rated

Answer

One potential solution is to implement discounts for early payments. This would incentivize customers to pay promptly, thereby improving cash inflow and reducing the number of overdue debts.

Step 5

6.4.1 Calculate (a) and (b) as provided in the budget.

97%

117 rated

Answer

(a) Payment to creditors for stock:

Using the budgeted figure:

(68000) \times \left( \frac{100}{95} \right) = 71,368.

(b) Salaries of sales assistants:

Using the budgeted figure:

(20,000) = 20,000.

Step 6

6.4.2 The percentage increase in rent on 1 March 2017.

97%

121 rated

Answer

To find the percentage increase in rent, use the formula:

\text{Percentage Increase} = \left( \frac{\text{New Rent} - \text{Old Rent}}{\text{Old Rent}} \right) \times 100

Given:

New Rent = 12,544
Old Rent = 11,200

Thus,

\left( \frac{12,544 - 11,200}{11,200} \right) \times 100 = 12.0 \%.

Step 7

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

96%

114 rated

Answer

Calculate the interest on the fixed deposit using the formula:

\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}

Given:

Principal = R16,830, Rate = 8% annually, Time = \frac{1}{4} \text{ year}

Thus,

\text{Interest} = 16,830 \times 8 \% \times \frac{1}{4} = R330.

Step 8

6.5 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.

99%

104 rated

Answer

Advertising:
- Advice: The business should make use of the budgeted amount for advertising to influence sales effectively.
Stationery:
- Advice: The business should minimize wastage of stationery to control costs better.

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

6.1 Calculate the expected monthly percentage of goods sold on credit

6.2 Complete the Debtors’ Collection Schedule for March 2017

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

6.3.2 Suggest ONE solution for this problem.

6.4.1 Calculate (a) and (b) as provided in the budget.

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 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.

Join the NSC students using SimpleStudy...