3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021 - NSC Accounting - Question 3 - 2021 - Paper 2
Question 3
3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021.... show full transcript
Worked Solution & Example Answer:3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021 - NSC Accounting - Question 3 - 2021 - Paper 2
Step 1
3.1.1 A three-month advertising contract for R6 000 will be paid on 1 July 2021. R2 000 of this amount relates to the next financial year.
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Answer
1
6 000
R2 000
Step 2
3.1.2 On 1 July 2021, R45 000 will be invested in a fixed deposit at 8% interest p.a. Interest is not capitalised and is received at the end of each month.
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Answer
3
R23 200
Step 4
3.2.1 Complete the Creditors' Payment Schedule for the budget period ending 31 July 2021.
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Answer
MONTH
BUDGETED
ACTUAL
March
164 500
16 450
April
171 500
17 800
May
171 500
16 800
June
178 500
67 300
July
182 000
Step 5
3.2.2 Calculate the amounts for (a) to (d) in the Cash Budget.
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Answer
(a) Rent income in July 2021
Calculation:
Rent income = 15 500 x 1.09 = R16 895.
(b) Amount of the loan
Calculation:
Loan amount = 280 000 correct; per working note.
(c) Salaries of sales assistants
Calculation:
Salaries = 63 550 --- per workings.
(d) Directors’ fees
Calculation:
Directors' fees = 96 000.
Step 6
3.2.3 Comment on the effectiveness of the advertising.
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Answer
Although the same amount (Nil change / R 35 280) as budgeted was used, actual sales was less than budgeted by 20% or by R176 400 or R882 000 - R705 600; advertising was therefore not effective.
Step 7
Comment on the control over delivery expenses.
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Answer
Delivery expenses are lower than budgeted by R130 (R57 330 - R51 200) or by 10.7%, while sales were less than budgeted by 20% or by R176 400 or R882 000 – R705 600; delivery expenses therefore not well controlled.
