Refer to Information A - NSC Accounting - Question 6 - 2019 - Paper 1
Question 6
Refer to Information A.
Identify TWO items in the Cash Budget that will not appear in a Projected Income Statement.
Cash from debtors
Fixed deposit: Protea Bank
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Worked Solution & Example Answer:Refer to Information A - NSC Accounting - Question 6 - 2019 - Paper 1
Step 1
Identify TWO items in the Cash Budget that will not appear in a Projected Income Statement.
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Answer
The two items in the Cash Budget that will not appear in a Projected Income Statement are:
Cash from debtors
Fixed deposit: Protea Bank
Step 2
Calculate: Rent income, June 2019.
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Answer
Rent income for June 2019 can be calculated using the formula:
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Answer
Total purchases for April 2019 can be calculated using:
192ext000+480ext000=672ext000
Step 6
Complete the Debtors' Collection Schedule for July 2019.
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Answer
The Debtors' Collection Schedule for July 2019 can be completed as follows:
Credit sales for July = 362 700
30% of sales for July = 108 810
Additional calculations based on the provided data
Step 7
Comment on Effect of the advertising on sales.
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Answer
The advertising expenses were over budget by R28 800 (80%). Despite this increase, there was a large increase in credit sales, suggesting that the advertising was effective but did not yield the expected ROI.
Step 8
Comment on Payment to creditors.
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Creditor payments are under budget by R75 000. If this trend continues, creditors may decrease credit limits, which could limit future operations.
Step 9
Identify TWO strategies (except advertising) that the business used to achieve sales targets for May 2019.
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The two strategies are:
Increased the credit sales to R36 000.
Introduced delivery service, costing R19 000.
Step 10
Explain whether these were good strategies, or not. Provide ONE point with figures.
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These strategies were effective to some extent. The increase in credit sales by R36 000 resulted in an increase in customers; however, they also faced cash flow challenges due to excess credit sales.
