6.1 Explain why:
6.1.1 Depreciation and bad debts will not appear in a Cash Budget - NSC Accounting - Question 6 - 2017 - Paper 1
Question 6
6.1 Explain why:
6.1.1 Depreciation and bad debts will not appear in a Cash Budget.
Any valid explanation:
- Depreciation represents a non-cash expense, reflecting... show full transcript
Worked Solution & Example Answer:6.1 Explain why:
6.1.1 Depreciation and bad debts will not appear in a Cash Budget - NSC Accounting - Question 6 - 2017 - Paper 1
Step 1
6.2.1 Complete the Debtors Collection Schedule.
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Answer
MONTH CREDIT SALES NOVEMBER DECEMBER
September 180 000 32 400 ?
October 186 000 55 800 33 480
November ? 92 225 198 400
December 210 000 ? 42 000
TOTAL ? ?
Step 2
6.2.2 (i) Cash sales for December:
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Answer
To calculate Cash Sales for December, we use the formula:
Using the given increase of 8%:
[ 19,710 \times \frac{100}{100} = 18,250 ]
Thus, Rent income for November is R18,250.
Step 4
6.2.2 (iii) Payments to creditors for November:
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Answer
To calculate Payments to Creditors for November, we use the following calculation:
[ \text{Cash Purchases of Stock} = \text{Credit Sales} \times \frac{100}{60} ]
Using the values:
[ 186,000 \times \frac{100}{100} = 310,000]
Thus, Payments to creditors for November is R198,400.
Step 5
6.2.2 (iv) Salaries and wages for November:
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Answer
As given, Salaries and wages in November would remain the same:
[ 86,000 - 35,600 = 35,600]
Thus, Salaries and wages in November is R109,400.
Step 6
6.2.2 (v) Loan instalment (including interest) for December:
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Answer
To calculate Loan instalment (including interest) for December:
[ 13,625 - 1,625 + (150,000 - 12,000) \times 13% \times \frac{1}{12} ]
Using the values:
[ 12,000 + 1,495 = 13,495]
Thus, Loan instalment for December is R13,495.
