KOBUS HARDWARE You are provided with information relating to Kobus Hardware, owned by Kobus Groenewald. REQUIRED: 6.1.1 Calculate the missing amounts indicated by (a) to (e) in the Cash Budget for March and April 2016. 6.1.2 Complete the Debtors' Collection Schedule for April 2016. 6.1.3 Calculate the percentage increase in sundry expenses. 6.1.4 The Cash Budget for March and April 2016 indicates that this business will face serious financial difficulties. Identify TWO items to support this statement. Quote relevant figures. 6.1.5 Refer to Information K. Explain why each of the items reflects a problem for the business. State TWO points in EACH case. INFORMATION

NSC Accounting Analysis of cash budget: KOBUS HARDWARE You are provided

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: 6.1.1 Calculate the missing amounts indicated by... 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

96%

114 rated

Answer

To calculate the missing amounts:

(a) The missing amount can be calculated using the formula: $240 000 = 28 000 + 79\% \times 78 600$ Hence, the missing amount (a) is R240 000.

(b) For calculation (b): $R228 250 = R28 000 + 90\% \times R196 000$ Thus, (b) is R254 250.

(d) For (d): $R7 500 = R180 000 + 24$

(e) For calculation (e): $R1 575 = R180 000 + 10.5\% \times R1 200$ .

Step 2

Complete the Debtors' Collection Schedule for April 2016

99%

104 rated

Answer

The Debtors' Collection Schedule is completed as follows:

FEBRUARY: R152 000
MARCH: R76 000
APRIL: R80 000 (using the formula to find the credit sales)
Total for APRIL = R71716 (Calculated appropriately).

Step 3

Calculate the percentage increase in sundry expenses

96%

101 rated

Answer

To find the percentage increase in sundry expenses, the formula used is: $\text{Percentage Increase} = \frac{89 790 - 87 600}{87 600} \times 100\%\ = 2.5\%$ .

Step 4

The Cash Budget for March and April 2016 indicates that this business will face serious financial difficulties. Identify TWO items to support this statement. Quote relevant figures.

98%

120 rated

Answer

The overdraft in March is R75 300 and in April is R44 900 (exceeds the overdraft limit of R40 000).
The business plans to acquire a loan of R180 000 in April 2016.

Step 5

Explain why each of the items reflects a problem for the business. State TWO points in EACH case.

97%

117 rated

Answer

Collection from debtors:
- Collections are much lower than expected, causing cash flow issues.
- The internal control of debtors is poor.
Payments to creditors:
- Suppliers may slow down deliveries due to delayed payments.
- Poor credit ratings can arise.
Insurance:
- There is a risk of being uninsured if payments are delayed.
- There could be increased premiums in the future.
Drawings:
- Increased drawings during difficult times worsen cash flow.
- It is unethical to withdraw while the business struggles.

KOBUS HARDWARE You are provided with information relating to Kobus Hardware, owned by Kobus Groenewald - NSC Accounting - Question 6 - 2016 - Paper 1

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

Calculate the missing amounts indicated by (a) to (e) in the Cash Budget for March and April 2016

Complete the Debtors' Collection Schedule for April 2016

Calculate the percentage increase in sundry expenses

The Cash Budget for March and April 2016 indicates that this business will face serious financial difficulties. Identify TWO items to support this statement. Quote relevant figures.

Explain why each of the items reflects a problem for the business. State TWO points in EACH case.

Join the NSC students using SimpleStudy...