You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar. REQUIRED. 6.1 Calculate the expected monthly percentage of goods sold on credit. 6.2 Complete the Debtors’ Collection Schedule for March 2017. 6.3 The owner wants to improve the control over debtors. Credit terms are 30 days. 6.3.1 Explain why the owner is concerned. Give TWO reasons with supporting figures. 6.3.2 Suggest ONE solution for this problem. 6.4 Calculate the following: (a) and (b) as provided in the budget. Use budgeted figures in your calculations. 6.4.2 The percentage increase in rent on 1 March 2017. 6.4.3 The amount of the interest on the investment expected to be received in March 2017. 6.5 Refer to Information H. Identify TWO payments that you consider to be poorly managed in February 2017. In EACH case, give a suggestion to improve the internal control of the items identified.

NSC Accounting Debtors’ collection schedule: You are provided with the incomp

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1

Question 6

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar. REQUIRED. 6.1 Calculate the expected monthly percentage of goods... show full transcript

Worked Solution & Example Answer:You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1

Step 1

6.1 Calculate the expected monthly percentage of goods sold on credit.

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Answer

To calculate the expected monthly percentage of goods sold on credit, use the formula:

ext{Credit sales percentage} = \left( \frac{\text{Credit Sales}}{\text{Total Sales}} \right) \times 100

Where:

Credit Sales for the month are R70,000.
Total Sales are given by the sum of Cash Sales (R17,500) and Credit Sales (R70,000):

\text{Total Sales} = R70,000 + R17,500 = R87,500

Thus, the expected percentage is:

\left( \frac{70,000}{87,500} \right) \times 100 = 80\%

Therefore, the expected monthly percentage of goods sold on credit is 80%.

Step 2

6.2 Complete the Debtors’ Collection Schedule for March 2017.

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Answer

The Debtors’ Collection Schedule can be filled as follows:

Month	Credit Sale	February	March
December 2016	74,000	16,280	0
January 2017	68,000	27,200	146,960
February 2017	70,000	0	64,912
March 2017	64,000	0	0
Cash from debtors		67,480	64,912

Thus, the scheduled collections from debtors for March total R64,912.

Step 3

6.3.1 Explain why the owner is concerned. Give TWO reasons with supporting figures.

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Answer

The owner is concerned about the collection of debts due to:

Under-collection of Debts: In February, the actual amount collected (R63,870) was less than the budgeted amount (R67,490). This under-collection raises concerns about cash flow and operational efficiency.
Delayed Payments: Out of the debtors, 52% are not adhering to the 30-day credit term, resulting in liquidity issues. This means that only 48% of debtors pay on time, potentially impacting the business's ability to cover ongoing expenses.

Step 4

6.3.2 Suggest ONE solution for this problem.

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Answer

A possible solution to improve debt control could be:

Implementing Discounts for Early Payments: Offering discounts to customers who pay their invoices before the due date can incentivize timely payments and improve cash flow for the business.

Step 5

6.4.1 (a) and (b) as provided in the budget. Use budgeted figures in your calculations.

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Answer

(a) To calculate the payment to creditors for stock:

\text{Payment to creditors} = R(70,000 \times 0.95) = R66,500

(b) For the salaries of sales assistants:

\text{Salaries} = R20,000 + R(20,000 \times 0.075) = R21,500

Step 6

6.4.2 The percentage increase in rent on 1 March 2017.

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Answer

To find the percentage increase in rent:

\text{Percentage Increase} = \left( \frac{12,544 - 11,200}{11,200} \right) \times 100 = 12\%

Step 7

6.4.3 The amount of the interest on the investment expected to be received in March 2017.

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Answer

The interest for the fixed deposit can be calculated as follows:

\text{Interest} = R(16,830 \times 0.08) = R334.80

Step 8

6.5 Identify TWO payments that you consider to be poorly managed in February 2017. In EACH case, give a suggestion to improve the internal control of the items identified.

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Answer

Advertising: The budget for advertising was not effectively utilized. It is recommended that the business should assess the advertising strategy to ensure it aligns with sales targets.
Stationery: There seemed to be waste or overuse of stationery supplies. The business could adopt stricter inventory controls and a tracking system to minimize waste.

You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1

Worked Solution & Example Answer:You are provided with the incomplete Debtors’ Collection Schedule and Cash Budget of Zeppe Bazaar - NSC Accounting - Question 6 - 2017 - Paper 1

6.1 Calculate the expected monthly percentage of goods sold on credit.

6.2 Complete the Debtors’ Collection Schedule for March 2017.

6.3.1 Explain why the owner is concerned. Give TWO reasons with supporting figures.

6.3.2 Suggest ONE solution for this problem.

6.4.1 (a) and (b) as provided in the budget. Use budgeted figures in your calculations.

6.4.2 The percentage increase in rent on 1 March 2017.

6.4.3 The amount of the interest on the investment expected to be received in March 2017.

6.5 Identify TWO payments that you consider to be poorly managed in February 2017. In EACH case, give a suggestion to improve the internal control of the items identified.

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