Photo AI
Zig Zag Traders sells ladies clothing on credit - NSC Accounting - Question 1 - 2021 - Paper 2
Question 1
Zig Zag Traders sells ladies clothing on credit. Debtors are allowed a credit term of 30 days to settle their accounts. 1.1 Provide TWO documents that Zig Zag Trade... show full transcript
Worked Solution & Example Answer:Zig Zag Traders sells ladies clothing on credit - NSC Accounting - Question 1 - 2021 - Paper 2
Step 1
Step 2
The correct closing balance of the Debtors' Control Account on 30 September 2021.
Answer
To calculate the correct closing balance, we take the balance from the Debtors' Control Account and adjust for any errors or omissions:
Starting balance: R228,000 (A Barnes: +R13,500, C Davis: +R25,000, E Foley: +R18,300)
As all accounts are current, we add their amounts:
Final balance = R228,000 + R13,500 + R25,000 + R18,300 = R284,800 Thus, the correct closing balance is +.
Step 3
Step 4
Explain THREE different problems highlighted by the debtors' age analysis.
Answer
-
Not adhering to credit terms / slow payers
- Debtor: O. Mach; Amount: R4,000; Days: 90 days.
-
Exceeding credit limits
- Debtor: Z Phi; Exceeded limit by R7,000; Limit R22,000.
-
Poor / ineffective internal controls over debtors
- Debtor: O. Mach; Current purchase of R2,000 whilst R4,000 of balance > 90 days.
Step 5
Provide TWO points to support the internal auditor's concern that Susan's job description could lead to potential fraud.
Answer
- Too many related functions performed by one person - could compromise efficiency / job control.
- Lack of supervision could lead to negligence - misappropriation of cash or theft / no division of duties.