NSC Accounting Analysis of cash budget: The financial year-end of Carpet

Question

The financial year-end of Carpets Galore (Pty) Ltd is 31 October 2019. Thembi Tsomi is the sole shareholder and director.

6.1 Indicate amounts in the appropriate blocks for the Cash Budget and Projected Income Statement for three months ending 31 January 2020.

- A printer costing R40 800 will be bought for cash on 30 November 2019. Depreciation will be R680 per month.
- On 1 January 2020, R48 000 will be paid for a 12-month insurance contract.
- A loan of R100 000 will be received from Viva Bank on 31 December 2019. This will be repaid in equal instalments over 20 months, commencing on 31 January 2020. Interest at 12% p.a. is paid monthly and is not capitalised.

6.2 Refer to Information A: Debtors' Collection Schedule.

Thembi is preparing projections for the period commencing 1 November 2019. Thembi does not grant discount for early payment.

Calculate the % of debtors:

- Who settle their accounts in the 2nd month following the credit sales transaction month.
- Written off as bad debts at the end of the 3rd month following the credit sales transaction month.

6.3 Refer to Information B: Projected Income Statement for September and October.

6.3.1 Office workers are unhappy with the increase that Thembi gave them on 1 October 2019. Explain what she should say to them. Provide TWO points. Quote figures or a calculation.

6.3.2 Thembi's part son, Jacob, to deliver and install carpets for customers. She budgets R2,80 per meter for this. Comment on performance in September / Figure/s.

6.3.3 A new competitor commenced trading in the area on 1 September 2019.

- Provide figures to illustrate the impact on sales in September.
- Explain THREE actions that Thembi took in October in response to the new competitor. Quote figures or a calculation.

The financial year-end of Carpets Galore (Pty) Ltd is 31 October 2019 - NSC Accounting - Question 6 - 2019 - Paper 1

Worked Solution & Example Answer:The financial year-end of Carpets Galore (Pty) Ltd is 31 October 2019 - NSC Accounting - Question 6 - 2019 - Paper 1

Indicate the amounts in the Cash Budget and Projected Income Statement

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