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6.1 Complete the Debtors' Collection Schedule for October 2018 - NSC Accounting - Question 6 - 2018 - Paper 1
Question 6
6.1 Complete the Debtors' Collection Schedule for October 2018. 6.2 Calculate the amounts indicated by (i) to (iii) in the extract from the Cash Budget. 6.3 Calcul... show full transcript
Worked Solution & Example Answer:6.1 Complete the Debtors' Collection Schedule for October 2018 - NSC Accounting - Question 6 - 2018 - Paper 1
Step 1
Complete the Debtors' Collection Schedule for October 2018
Answer
To complete the Debtors' Collection Schedule for October 2018, we need to examine the data provided:
- From the information, the collection schedule shows that:
- July had a credit sale of R369,600 with R81,312 due in October.
- August has a credit sale of R384,400 with R84,568 due in October.
- September had a credit sale of R403,200 with R76,680 due in October.
- October is needed to calculate.
Completing this gives:
- Total sales collection for October will include all the sales amounts from previous months that are collected in October. This results in:
- Total Debtors for October = R369,340 + R384,400 + R403,200 = R1,156,940, which gives us the collection schedule as:
- October:
- From September: R221,760
- From October: R369,340
- Therefore, the completed collection schedule for October should be:
- July: R81,312
- August: R84,568
- September: R76,680
- October: R386,128
- October:
Step 2
Calculate the amounts indicated by (i) to (iii) in the extract from the Cash Budget
Answer
To calculate the amounts indicated in the Cash Budget:
(i) Cash sales for September:
- The cash sales formula based on the total sales would be:
ext{Cash Sales} = rac{403200}{0.60} = 604000.
(ii) Rent income for October:
- The rent income calculation with an increase of 9% over September gives: .
(iii) Payments to creditors in October:
- The payments to creditors calculated using 50% of the purchases:
- Following the policies on sales, we perform the calculation to determine the expected payments: ext{Payments to Creditors} = rac{288000}{0.50} = 576000.
Step 3
Calculate the % increase in salaries of sales assistants for October 2018
Answer
To find the percentage increase in salaries for the sales assistants:
-
Previous Salaries = R92,400
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Current Salaries = R102,102
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The percentage increase can be calculated as follows:
ext{Percentage Increase} = rac{102,102 - 92,400}{92,400} imes 100 = 10.5\%.
Explanation: The sales assistants should feel content with a 10.5% increase as it exceeds the current inflation rate.
Step 4
Explain the effect of the new competitor on any TWO items in the budget for September. Provide figures.
Answer
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Decrease in total sales: Sales dropped from R1,008,000 to R840,000, leading to a R168,000 decrease.
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Reduced cash sales: Cash sales fell below budget from R604,800 to R336,000, an increase in credit sales from R504,000 to R403,200.
Step 5
Identify TWO changes Donald implemented in October in response to the new competitor. Quote figures. Give ONE reason for EACH change.
Answer
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Increase in cash purchases: Raised from R630,000 to R852,000.
- Reason: To improve cash flow for increased supply.
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Increased delivery costs: From R67,200 to R125,760
- Reason: To offer free delivery to increase customer base.
Step 6
Explain why Donald feels that his decisions were successful. Provide TWO points (with figures).
Answer
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Sales of air-conditioners exceeded budget by 50 units (300 - 250): This indicates an increase in market acceptance post-competitive adjustments.
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Cash surplus: Exceeded initial budget expectations (R420,000 instead of R151,000), indicating improved cash flow health.