1.1 Choose the correct answer from the words provided within brackets - NSC Accounting - Question 1 - 2017 - Paper 1

The correct answer is: Debit.

The correct answer is: Credit note.

The correct answer is: Cash discount.

To calculate the correct Debtors Control balance, we start with R74,600 and adjust for the errors:

• The Debtors Journal was overcast by R3,500, so we subtract this amount:

  $74,600 - 3,500 = 71,100$

• Next, we account for the allowance of R800 for Pillai:

  $71,100 - 800 = 70,300$

• Finally, we adjust for the cheque of R230 returned from Pillai:

  $70,300 + 230 = 70,530$

In total, the correct Debtors Control balance is R75,600.

The correct balances for the debtors are as follows:

• Pillai:
  R21,600 - R3,500 (overcast error) - R800 (allowance) + R3,600 (goods sold in error) = R24,500.

• Tele:
  R24,900 - R2,500 (overstate) = R22,400.

• Botha:
  R11,100 + R800 (correct allowance) + R700 = R13,800.

To calculate the percentage of debtors not complying with the 30-day credit terms:

• We find the total amount that is overdue:

  $R36,400 + R28,000 + R8,400 = R72,800$

• Next, we divide by the total debtors' balance:

  $\frac{R36,400 + R28,000 + R8,400}{R70,000} \times 100 = 52\%$

So, 52% of debtors are not complying with the 30 days credit terms.

Here are two internal control measures that JT Traders can implement:

1. Perform credit checks:
   Conduct thorough references and credit background checks before extending credit to clients to ensure they have a good credit history and are financially stable.

2. Verify employment and salary details:
   Ensure that a client’s employment status and salary are verified, allowing the business to assess their ability to pay on credit.

To reconcile:

1. Start with the opening balance of R35,000.
2. List all transactions from the creditors ledger and statement:
   • Add all debits and subtract all credits.
3. Check that the end balance matches with the statement balance:
   • The calculated balance should equal R38,420 when accurately reconciled.
4. Adjust any discrepancies noted in the statement and maintain proper records for future reference.