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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.
Answer
For the cash budget for July, record the full payment of R6 000 in the payments column, while noting R2 000 as a prepaid expense relating to the next financial year, which will not affect the current period's cash flow.
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.
Answer
Record the R45 000 in the cash budget under payments for July. For the projected income statement, calculate the interest for one month as follows:
ext{Interest} = rac{R45 000 imes 8 ext{%}}{12} = R300
This R300 will be recognized as income in the income statement.
Step 3
Step 4
3.2.1 Complete the Creditors’ Payment Schedule for the budget period ending 31 July 2021.
Answer
List the creditors' payments for each month as follows:
- May 2021: R164 500
- June 2021: R167 020
- July 2021: R170 660
- Total payments to creditors: R175 560 Proper allocation ensures that cash outflows are accounted for accurately.
Step 5
3.2.2 Calculate the amounts for (a) to (d) in the Cash Budget.
Answer
For part (a), the rent income in July 2021 is calculated as:
Part (b) the loan amount will be calculated according to the details cited in the question. For (c), salaries can be computed with:
Part (d), director's fees are:
96 000 = 720 000 imes rac{80}{100} + 36 000
Step 6
3.2.3 Kayla extracted the following actual and budgeted figures for May 2021. Comment on the control figures.
Answer
The total sales were budgeted at R882 000, with actual sales at R705 600, indicating an effectiveness issue in advertising, as actual sales were less than budgeted by R176 400. Similarly, delivery expenses appear lower than budgeted at R51 200, against R57 330, suggesting better control in managing costs.