Refer to Information G. 6.1.1 Identify TWO items that the bookkeeper recorded incorrectly in the Cash Budget. 6.1.2 Identify TWO items in the Cash Budget that would NOT appear in a Projected Income Statement. 6.2 Complete the Debtors' Collection Schedule for October 2016. 6.3 Calculate the missing amounts indicated by (a) to (d) in the Cash Budget. 6.4 The directors compared the budgeted figures to the actual figures for September 2016. 6.4.1 The directors changed the method of payment to the salespersons. Explain how this has benefitted the salespersons and the business. Quote figures. 6.4.2 The directors are not concerned about the overspending on packing material. Explain why this is so. Quote figures or calculations.

NSC Accounting Analysis of cash budget: Refer to Information G. 6.1.1 I

Refer to Information G - NSC Accounting - Question 6 - 2016 - Paper 1

Question 6

Refer to Information G. 6.1.1 Identify TWO items that the bookkeeper recorded incorrectly in the Cash Budget. 6.1.2 Identify TWO items in the Cash Budget that woul... show full transcript

Worked Solution & Example Answer:Refer to Information G - NSC Accounting - Question 6 - 2016 - Paper 1

Step 1

Identify TWO items that the bookkeeper recorded incorrectly in the Cash Budget.

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Answer

Discount received: The amount of discount received is often miscalculated or not recorded accurately.
Depreciation: This is typically not included in cash budgets, leading to errors in reporting cash flows.

Step 2

Identify TWO items in the Cash Budget that would NOT appear in a Projected Income Statement.

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Answer

Cash from debtors: This indicates cash inflows from debtor payments, which do not appear as revenue in the income statement.
Repayment of loan: Loan repayments are cash outflows that are not reported as expenses in the income statement.

Step 3

Complete the Debtors' Collection Schedule for October 2016.

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Answer

For October, based on the given credit sales data, calculate as follows:

Credit sales: R198,720
Assuming 50% collection, expected collection for October would be R99,360.

Step 4

Calculate the missing amounts indicated by (a) to (d) in the Cash Budget.

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Answer

a) Cash sales for September: Calculated as $288,000 imes 40 rac{ ext{%}}{100} = R115,200$ .

b) Payments to creditors for October: Calculated as $252,000 imes 2/3 = R168,000 ext{ (for October)}$ .

c) Directors' fees for October: Calculated as $216,000 imes rac{1}{3} = R72,000$ .

For amount (d), the loan repayment can be calculated using a formula based on the figures provided.

Step 5

The directors changed the method of payment to the salespersons. Explain how this has benefitted the salespersons.

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Answer

The change in payment method has benefitted salespersons as follows:

Though the salaries decreased from R40,000 to R12,000, they now receive a commission totalling R66,150. This better aligns their earnings with sales performance, incentivizing higher sales.
This new structure allows them to potentially earn more than their previous fixed salary arrangement.

Step 6

The directors are not concerned about the overspending on packing material. Explain why this is so.

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Answer

The directors' lack of concern can be explained by the performance metrics:

Although packing materials were 20% over budget, total sales exceeded budgeted figures by 3.5%.
A direct comparison of these two items indicates that the increase in sales more than offsets the overspend on packing material.

Refer to Information G - NSC Accounting - Question 6 - 2016 - Paper 1

Worked Solution & Example Answer:Refer to Information G - NSC Accounting - Question 6 - 2016 - Paper 1

Identify TWO items that the bookkeeper recorded incorrectly in the Cash Budget.

Identify TWO items in the Cash Budget that would NOT appear in a Projected Income Statement.

Complete the Debtors' Collection Schedule for October 2016.

Calculate the missing amounts indicated by (a) to (d) in the Cash Budget.

The directors changed the method of payment to the salespersons. Explain how this has benefitted the salespersons.

The directors are not concerned about the overspending on packing material. Explain why this is so.

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