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Zephyr Traders opened on 1 January 2024 and sells portable power systems (PPS) that are used by the public to cope with load-shedding - NSC Accounting - Question 4 - 2024 - Paper 2
Question 4
Zephyr Traders opened on 1 January 2024 and sells portable power systems (PPS) that are used by the public to cope with load-shedding. This business is owned by Dan ... show full transcript
Worked Solution & Example Answer:Zephyr Traders opened on 1 January 2024 and sells portable power systems (PPS) that are used by the public to cope with load-shedding - NSC Accounting - Question 4 - 2024 - Paper 2
Step 1
Complete the Debtors' Collection Schedule for June 2024
Answer
To complete the Debtors' Collection Schedule for June 2024, follow these calculations based on the previous months' credit sales:
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Determine June’s cash from debtors:
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From the information, we know cash from debtors consists of 25% from sales in April, 45% from May, 24% from June, and 6% written off in the third month.
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Calculating cash from debtors for June:
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Simplifying the numbers will yield:
- April: R 237 600
- May: R 392 040
- June: R 225 720
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Find the total cash from debtors in June:
- Total cash = R 734 382
Step 2
Calculate the amounts indicated by (i) to (iii) in the extract from the Cash Budget
Answer
(i) Cash sales for June 2024
Cash sales can be calculated by finding 55% of the total sales in June 2024:
(ii) Payments to creditors in June 2024
Payments to creditors can be calculated:
(iii) Hire of delivery vehicle expense for May 2024
This expense is calculated with the increase:
Step 3
Calculate the % increase in salaries of office workers from 1 June 2024
Answer
To find the percentage increase in salaries, use the formula:
ext{% Increase} = rac{ ext{New Salary} - ext{Old Salary}}{ ext{Old Salary}} imes 100
Substituting the values:
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Old Salary = R 62 000
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New Salary = R 64 480
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Calculation:
rac{64 480 - 62 000}{62 000} imes 100 = 4%
Step 4
Explain how the competitor affected the sales and cash flow of the business in April 2024
Answer
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Reduction in Sales Units: The new competitor entered the market and Dan anticipated sales of 200 units, but actual sales were only 148 units due to the competition, which is a decrease of 26%.
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Financial Impact on Total Sales: Actual total sales in April were less than the budgeted forecast, totaling R 577 280 instead of the planned R 968 000. This difference of R 390 720 represents a substantial drop in expected cash flow.
Step 5
Give ONE reason to support John's opinion and ONE reason to support Sally's opinion
Answer
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Reason to Support John's Opinion: John was satisfied because he received a commission that increased from R 1 320 to R 1 485 per unit. This commission structure incentivized his performance and income growth.
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Reason to Support Sally's Opinion: Sally felt disadvantaged because her commission changed from 15% to a fixed salary due to resignation from a previous job. This cut her potential earnings significantly, making her financially insecure.
Step 6
Calculate the total loan amount, including interest
Answer
The total loan amount can be calculated based on the deposit and monthly installment:
- Monthly installments start at R 13 800. After calculating for 12 months:
The total loan amount including interest is therefore:
- Total loan = R 1 656 000 (including any deposit paid of R 220 000)
Step 7
Explain ONE point in favour of purchasing the property and ONE point against this proposal
Answer
In Favour of Purchasing the Property: Ownership allows Dan full control over the property, helping to avoid rent increases and build equity over time.
Against Purchasing the Property: However, purchasing may strain cash flow initially due to upfront costs, leading to potential liquidity issues.