Refer to Information B - NSC Accounting - Question 3 - 2023 - Paper 2

The two items in the Cash Budget that would NOT appear in a projected Statement of Comprehensive Income are:

1. Cash from debtors
2. Payment to creditors

The Debtors' Collection Schedule for December 2023 is as follows:

The discount allowed in November 2023 can be calculated using the formula:

$ext{Discount Allowed} = 651,000 imes 0.05 = 32,550$

Thus, the discount allowed in November 2023 is R13,020.

The interest on the savings account in December 2023 can be calculated as:

ext{Interest} = 84,000 imes rac{4 ext{%}}{100} imes rac{1}{12} = 1,680

Therefore, the interest for December is R1,480.

To calculate payments to creditors in December 2023:

$ext{Payments to Creditors} = 610,470$

The payment to creditors is R610,470.

The rent expenses for November 2023 can be calculated using:

ext{Rent Expenses} = 31,640 imes rac{100}{113} = 28,000

Thus, the rent expenses for November 2023 are R28,000.

Adam introduced a commission structure for the sales staff, deciding on a smaller or reduced fixed salary. This is aimed at increasing motivation and overall sales performance.

Some salespeople regretted this decision due to:

1. The fixed salary plus commission of R161,050 is less than R165,000 which they earned previously.

2. Their contribution to total sales is R325,500 (30 ext{%}) above the budgeted sales (R410,500 - 8,000) while earning less overall.

For Adam:

• Total sales were above budget by R325,500 (R410,500 - R105,000) which shows improvement.

For Milly:

• Credit sales above budget by R417,700 (R620,000 - R661,000) showing concern in cash flow.

The net effect of the purchase on the receipts and payments in the Cash Budget is calculated as follows:

$ext{Effect} = (1,000,000 - 1,500,000) + 1,200,000 + 120,000 + 7,500 = -R750,000$

Adam has decided to proceed with this purchase because it offers a fixed asset that ensures long-term stability for the business, reducing future rental costs.