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2.1 Simply Traders sell goods for cash and on credit - NSC Accounting - Question 2 - 2016 - Paper 1
Question 2
2.1 Simply Traders sell goods for cash and on credit. 2.1.1 Simply Traders have the telephone numbers of all their debtors. What other information should they obtai... show full transcript
Worked Solution & Example Answer:2.1 Simply Traders sell goods for cash and on credit - NSC Accounting - Question 2 - 2016 - Paper 1
Step 1
Simply Traders have the telephone numbers of all their debtors. What other information should they obtain before allowing customers to open accounts? State TWO points with a reason in EACH case.
Answer
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Salary advice slip / Proof of income
- This helps to determine the debtor's ability to afford the credit provided by Simply Traders.
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Proof of residence / Address
- This is essential for contacting the debtor if there are any issues with payment or if further information is needed.
Step 2
Calculate the correct closing balance of the Debtors' Control Account on 31 October 2016.
Answer
To determine the correct closing balance of the Debtors' Control Account, we start with the balance before adjustments of R179,500. Then, consider the missing invoice of R2,500 for W Smith and the incorrect posting of R21,000 for allowances:
Closing Balance = Previous Balance + Missing Invoice - Incorrect Posting
Closing Balance = R179,500 + R2,500 - R21,000 = R181,000.
Step 3
Step 4
Step 5
Explain TWO measures to improve collection from debtors.
Answer
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Monthly statements must be sent out / emailed on time: Regular reminders help keep debtors informed about their obligations, thereby improving collection rates.
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Send SMS reminders: Quick text reminders to debtors about upcoming payments can boost timely payments.