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

Question 6

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

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

Step 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 following formula:

$\text{Percentage of goods sold on credit} = \left( \frac{\text{Credit Sales}}{\text{Total Sales}} \right) \times 100$

Where:

Credit Sales = R70,000
Total Sales = Credit Sales + Cash Sales = R70,000 + R17,500 = R87,500

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

Step 2

Complete the Debtors’ Collection Schedule for March 2017.

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Answer

The Debtors' Collection Schedule for March 2017 should reflect the expected collection pattern based on previous credit sales and payments received:

Month	Credit Sale	February	March
December 2016	R74,000	R16,280	R0
January 2017	R68,000	R27,200	R146,960
February 2017	R70,000	R0	R70,000
March 2017	R64,000	R0	R64,952
Cash from debtors	-	R67,480	R64,912

Step 3

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

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Answer

The owner is concerned because actual amounts collected from debtors in February (R43,870) were less than the budgeted amount (R67,490). This indicates cash flow issues.
Credit terms are set at 30 days, yet 48% of debtors are taking 60 days or more to settle their debts, which could hamper the liquidity of the business.

Step 4

Suggest ONE solution for this problem.

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Answer

One potential solution is to offer discounts for early or prompt payments. This could incentivize customers to settle their debts within the required timeframe.

Step 5

Calculate the following (a) and (b) as provided in the budget.

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Answer

a) Payment to creditors = R87,500 × 95% = R83,125.

b) Salaries of sales assistants = R20,000 (fixed rate).

Step 6

The percentage increase in rent on 1 March 2017.

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Answer

The percentage increase in rent can be calculated as:

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

Step 7

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

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Answer

The amount of interest expected can be calculated as follows:

$\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} = R16,830 \times 8\% \times (2/12) = R330$

Step 8

Identify TWO payments that you consider to be poorly managed in February 2017.

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Answer

Advertising: The business did not allocate sufficient budget towards advertising to influence sales effectively. Suggestion: Increase the advertising budget to boost sales and visibility.
Stationery: There is excessive expenditure on stationery. Suggestion: Minimize waste and manage purchases efficiently.

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

Calculate the expected monthly percentage of goods sold on credit.

Complete the Debtors’ Collection Schedule for March 2017.

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

Suggest ONE solution for this problem.

Calculate the following (a) and (b) as provided in the budget.

The percentage increase in rent on 1 March 2017.

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

Identify TWO payments that you consider to be poorly managed in February 2017.

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