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

(i) Rent income for June 2019: Rent income is calculated as follows: $Rent ext{ }Income = 9,180 imes (100/108) = 8,500$

(ii) Fixed deposit: Protea Bank, July 2019: ext{Fixed Deposit} = rac{400}{100} imes 6 imes 12 = 80,000

(iii) Cash purchases of trading stock, July 2019: Cash ext{ }Purchases = 760,000 imes 60 ext{%} = 456,000

The total purchases for April 2019 are calculated as follows:

Using the formula that 40% of trading stock is bought on credit, we know that: $Total ext{ }Purchases ext{ } = 192,000 ext{ (given purchases for May)} = 480,000$

The Debtors' Collection Schedule for July is as follows:

• Credit sales for May: 576,000
• June: 558,000
• July: 855,000

Total collections can be calculated by applying the collection rates:

• May (30%): 30% of 576,000 = 172,800
• June (65%): 65% of 558,000 = 362,700
• July: 30% of 855,000 = 243,675

The complete table for July is: Credit Sales | 362,700

The effect of advertising on sales can be quantifiably represented:

• Advertising exceeded budget by R28,800, yet there was still an increase in credit sales only by 4%.
• This suggests that while the advertising was effective in raising awareness, it did not have the expected proportional increase in sales.

The two strategies identified are:

1. Increased credit sales: R36,000 (R412,000 more than cash sales)
2. Introduced delivery service: R19,000

These strategies were implemented to improve cash flow and increase customer satisfaction.

The strategies were mixed in effectiveness:

• The collection from debtors was poor with a R95,000 shortfall compared to budget, indicating cash challenges in managing credit.
• However, the increase in credit sales of R36,000 demonstrated customer responsiveness to the credit facility, suggesting potential for growth if effectively managed.