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KOBUS HARDWARE You are provided with information relating to Kobus Hardware, owned by Kobus Groenewald - NSC Accounting - Question 6 - 2016 - Paper 1
Question 6
KOBUS HARDWARE You are provided with information relating to Kobus Hardware, owned by Kobus Groenewald. REQUIRED: Calculate the missing amounts indicated by (a) t... show full transcript
Worked Solution & Example Answer:KOBUS HARDWARE You are provided with information relating to Kobus Hardware, owned by Kobus Groenewald - NSC Accounting - Question 6 - 2016 - Paper 1
Step 1
Calculate the missing amounts indicated by (a) to (e) in the Cash Budget for March and April 2016.
Answer
To calculate the missing amounts in the Cash Budget:
(a) For March 2016, the calculation is:
28,000 + (79\ imes 24) = 240,000
(b) For April 2016, the calculation is:
28,250 + (90\ imes 17) = 254,250
(c) For March 2016, the calculation is:
6000 + (3,000 \ imes 105.5\) = 6,330
(d) For March 2016, add:
180,000 + 24 = R7,500
(e) For April 2016, the calculation is:
180,000 + (10.5\ imes 1/12) = R1,575
Step 2
Complete the Debtors' Collection Schedule for April 2016.
Answer
The Debtors' Collection Schedule is as follows:
- For March:
- Credit Sales: 76,000 (total credit sales)
- For April:
- Credit Sales: 68,400
- For Debtors:
- Total Amount to be collected: 76,716
- Total Amount to be collected in April: 147,147
Thus, the collection for each month will be completed using these figures.
Step 3
Calculate the percentage increase in sundry expenses.
Answer
To find the percentage increase in sundry expenses:
- Previous sundry expenses: 87,600
- Current sundry expenses: 89,790
Using the formula for percentage increase:
ext{Percentage Increase} = rac{ ext{New Amount} - ext{Old Amount}}{ ext{Old Amount}} imes 100
The calculation is:
rac{(89,790 - 87,600)}{87,600} imes 100 = 2.5\%
Step 4
Identify TWO items that support the statement of financial difficulties.
Answer
The cash budget indicates serious financial difficulties for the following reasons:
- The overdraft in both March (R75,300) and April (R44,900) exceeds the overdraft limit of R40,000, which poses a risk to operational stability.
- The business plans to acquire an additional asset worth R180,000 in April, which may strain the budget further.
Step 5
Explain why each of the items reflects a problem for the business. State TWO points in EACH case.
Answer
-
Overdraft Issues:
- The business is exceeding its overdraft limit, indicating potential cash flow problems.
- This could lead to penalties or interest charges, exacerbating financial troubles.
-
Insurance Policy Risks:
- Risk of policy lapsing could lead to being uninsured during a claim situation.
- Increased premiums could strain the already tight budget, resulting in costlier operational expenses for the business.