You are provided with information relating to Lamba Traders, a business owned by Larry Lamba - NSC Accounting - Question 6 - 2017 - Paper 1

The primary purpose of a Projected Income Statement is to estimate the profit that the business expects to earn over a period. It projects income and expenses to give a clear picture of future financial performance.

To calculate the % of debtors expected to comply with the credit terms, use the formula:

ext{Percentage} = rac{ ext{Amount compliant} }{ ext{Total debtors} } imes 100

Using the given figures:

ext{Percentage} = rac{ 56,000 + 125,440 }{ 224,000 } imes 100 = 81 ext{%}

To find the % of bad debts expected, apply the formula:

ext{Bad debts percentage} = rac{ ext{Total bad debts} }{ ext{Total debtors} } imes 100

Using November figures:

ext{Bad debts percentage} = rac{ 56,000 - 125,440 }{ 224,000 } imes 100 = 40 ext{%}

According to the Age Analysis, 58% of the amounts owed are still within the credit terms, indicating better performance, while 42% are not compliant. This supports Larry's opinion that Shirley does not deserve a bonus due to her insufficient performance in managing debtors.

1. Larry should consider contacting debtors via phone calls or sending SMS reminders to encourage timely payments.

2. Implement a system for offering discounts for prompt payments, incentivizing customers to settle their accounts quickly.

The fixed % of sales used by Larry to budget for delivery expenses is calculated as follows:

Fixed % = 4% of total sales.

To calculate the loan repayment:

$ext{Loan repayment} = 510 imes 12 + 0.085 = R720,000$

Larry would identify issues such as:

• Cash sales being under budget, contributing to cash flow issues.
• Under-utilization of the advertising budget, which may lead to decreased sales.
• Misuse of packing materials resulting in increased costs.
• Variations in delivery expenses, affecting overall profitability.