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

For Rent Income (i) in June 2019:

Using the formula: 9,180 = rac{X}{100} imes 6

Therefore, Rent Income = $9,180$.

For Fixed deposit: Protea Bank (ii) in July 2019:

Using the formula: X = rac{400}{100} imes 6 imes 12.

So, Fixed deposit (amount) = $80,000$.

For Cash purchases of trading stock (iii) in July 2019:

Using the formula: X = 456,000 imes 60rac{100}{40}.

Therefore, Cash purchases of trading stock = $456,000$.

Total purchases for April 2019 can be calculated using:

Total purchases = Cash purchases / Percentage bought on credit

Knowing that 40% is bought on credit, we find:

Total purchases = 192,000 = rac{480,000}{0.4} = 480,000.

To complete the schedule:

1. Total credit sales for July 2019 = $362,700$
2. For collections:
   • 30% in the month of sales = $362,700 imes 0.3 = 108,810$
   • 65% in the following month = $362,700 imes 0.65 = 235,755$
3. Total collections for debtors in July:
   • May collection: 30% of May sale = $202,800$

Total collections for July = $108,810 + 235,755 + 202,800 = 547,365$.

The effect of advertising on sales showed a substantial increase in credit sales post-campaign. However, discrepancies indicated that the advertising budget exceeded expectations by $28,800 and did not yield the desired effectiveness. Specifically, while advertising spend increased, it did not proportionally increase customer acquisition, indicating holes in strategy.

Payment to creditors revealed a shortfall, with creditors underpaid by $75,000 due to rising purchase costs. Continued underpayment may lead to strained supplier relationships and could adversely affect future credit limits.

The two strategies used include:

1. Increased credit sales by $36,000 (from$172,000 to $208,000).
2. Introduction of a delivery service, costing $19,000.

These strategies varied in effectiveness. While increased credit sales offered an immediate revenue boost, they also resulted in cash flow challenges, as seen by the $95,000 shortfall. Conversely, the delivery service generated additional customer engagement, leading to increased sales potential, justifying the$19,000 expense.