Refer to Information A - NSC Accounting - Question 6 - 2019 - Paper 1

To calculate:

(i) Rent income, June 2019: Using the formula, $Rent ext{ income} = \frac{9 180}{108} \times 100 = 8 500$

(ii) Fixed deposit: Protea Bank, July 2019: Using the formula, $Fixed ext{ deposit} = \frac{400}{100} \times 6 \times 12 = 80 000$

(iii) Cash purchases of trading stock, July 2019: Using the formula, $Cash ext{ purchases} = 760 000 \times 60\% = 456 000$

The total purchases for April 2019 can be calculated as follows: Given that 40% of trading stock is bought on credit, the formula is: $Total ext{ purchases} = \frac{192 000}{40\%} = 480 000$

The Debtors' Collection Schedule for July will be completed as follows:

• May: 533 430
• June: 606 375
• July: 362 700, calculated as: $855 000 \times 30\% = 243 675$
• Total will be calculated by summing the above.

The effect of advertising on sales indicates that, while advertising helped influence sales, it was over budget by R28 800. There was an increase in sales, but it did not meet the initial expectations. This suggests that although it is necessary for visibility, the effectiveness was limited. On the other hand, payment to creditors shows that creditors were under a burden of R75 000. This might affect cash flow since they will likely restrict credit limits if conditions persist.

The two strategies used by the business included:

1. Increased credit sales, totaling R36 000.
2. Introducing delivery service, costing R19 000. These strategies aimed to enhance customer accessibility and convenience.

While increasing credit sales was effective with an increase of R36 000 in sales due to an increase in customers, the delivery service impacted cash flow negatively at R19 000. Therefore, the effectiveness is mixed; the former was beneficial, but the latter posed a challenge.