3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021 - NSC Accounting - Question 3 - 2021 - Paper 2
Question 3
3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021.... show full transcript
Worked Solution & Example Answer:3.1 Insert the relevant amount(s) for EACH transaction below into the appropriate columns for the following Cash Budget and Projected Income Statement for July 2021 - NSC Accounting - Question 3 - 2021 - Paper 2
Step 1
3.1.1 A three-month advertising contract for R6 000 will be paid on 1 July 2021. R2 000 of this amount relates to the next financial year.
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Answer
| 1 000 | 6 000 | | 2 000 |
Step 2
3.1.2 On 1 July 2021, R45 000 will be invested in a fixed deposit at 8% interest p.a. Interest is not capitalised and is received at the end of each month.
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Answer
| | 23 200 | | 16 000 | |
Step 4
3.2.1 Complete the Creditors' Payment Schedule for the budget period ending 31 July 2021.
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Answer
| March 2021 | 164 500 |
| April 2021 | 165 600 |
| May 2021 | 171 500 |
| June 2021 | 178 500 |
| July 2021 | 180 750 | |
| Payment to creditors | 175 560 |
Step 5
3.2.2 Calculate the amounts for (a) to (d) in the Cash Budget.
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Answer
(a) Rent income in July 2021:
15 500 x 1.09 = 16 895 R
(b) Amount of the loan:
280 000 at 13.5%. Loan amount correct, R280 000.
(c) Salaries of sales assistants:
63 550 R
(d) Directors' fees:
96 000 R
Step 6
3.2.3 Comment on the effectiveness of the advertising.
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Answer
Although the actual amount (Nil change / R35 280) as budgeted was utilized, sales was less than budgeted by 20% or R176 400 or R882 000 - R705 600; advertising was therefore not effective.
Step 7
3.2.3 Comment on the control over delivery expenses.
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Answer
Delivery expenses are lower than budgeted by R130 (R57 330 - R51 200) or 10.7%, while sales were less than budgeted by R176 400 or (R882 000 - R705 600); delivery expenses therefore not well controlled.
