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Simply Traders have the telephone numbers of all their debtors - NSC Accounting - Question 2 - 2016 - Paper 1
Question 2
Simply Traders have the telephone numbers of all their debtors. What other information should they obtain before allowing customers to open accounts? State TWO point... show full transcript
Worked Solution & Example Answer:Simply Traders have the telephone numbers of all their debtors - NSC Accounting - Question 2 - 2016 - Paper 1
Step 1
What other information should they obtain before allowing customers to open accounts?
Answer
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Proof of income: This is essential to determine the debtor's ability to repay the credit extended. Knowing their financial stability helps assess their affordability.
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Contact details of family/friends: This information can be useful for tracing debtors in case of defaults, supporting the credit provider in recovering debts.
Step 2
Step 3
The correct amounts owing by debtors:
Answer
- J Ramsay (D2): Initial amount of R37,500, minus allowances:
- Total owing = R37,500 - R4,300 = R33,200
- W Smith (D3): Initial amount of R19,100 plus the invoice not recorded:
- Total owing = R19,100 + R2,500 = R21,600
- C Prince (D5): Initial amount of R9,300 with no adjustments:
- Total owing = R9,300 = R9,300.
Step 4
Calculate the percentage of debtors complying with the credit terms.
Answer
To calculate the percentage, use the formula:
ext{Percentage} = rac{ ext{Debtors complying}}{ ext{Total debtors}} imes 100
Total debtors owed: 181,900 Debtors complying with terms: 142,600
So,
ext{Percentage} = rac{142600}{181900} imes 100 ext{ = } 78.40 ext{ \\ (approximately 78.4\%)}
Step 5
Explain TWO measures to improve collection from debtors.
Answer
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Send Monthly Statements: Regularly updating debtors on their account status can prompt timely payments and reduce oversight.
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Employ Collection Agencies: Utilizing the expertise of debt collection agencies can help recover debts that are overdue, ensuring that funds are retrieved more effectively.