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Simply Traders have the telephone numbers of all their debtors - NSC Accounting - Question 2 - 2016 - Paper 1

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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? State TWO points with a reason in EACH case.

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Answer

  1. Salary advice slip / Proof of income: This helps determine the debtor's affordability by providing insight into their income level.

  2. Proof of residence / Address: This is essential to confirm the debtor’s identity and to trace debtors if they default on payment.

Step 2

Calculate the correct closing balance of the Debtors' Control Account on 31 October 2016.

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Answer

The correct closing balance can be calculated as follows:

extClosingBalance=extOpeningBalance+extDebtors′Invoices−extPaymentsReceived ext{Closing Balance} = ext{Opening Balance} + ext{Debtors' Invoices} - ext{Payments Received}

Substituting the numbers:

extClosingBalance=R179,500+R2,500−R900=R181,100 ext{Closing Balance} = R179,500 + R2,500 - R900 = R181,100

Step 3

The correct amounts owing by debtors: - J Ramsay (D2)

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J Ramsay (D2):

R60,200−R3,400+R8,350+R150=R41,700R60,200 - R3,400 + R8,350 + R150 = R41,700

Step 4

The correct amounts owing by debtors: - W Smith (D3)

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W Smith (D3):

R19,300+R2,500−R6,300=R19,500R19,300 + R2,500 - R6,300 = R19,500

Step 5

The correct amounts owing by debtors: - C Prince (D5)

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Answer

C Prince (D5):

R9,400+R3,400+R150=R18,400R9,400 + R3,400 + R150 = R18,400

Step 6

Calculate the percentage of debtors complying with the credit terms.

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Answer

The percentage of debtors complying with the credit terms is calculated as follows:

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

Substituting the values:

ext{Percentage} = rac{35,300 + 23,300}{142,600} imes 100 ext{%} = 29.1 ext{%}

Step 7

Explain TWO measures to improve collection from debtors.

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Answer

  1. Send monthly statements: Regular reminders can ensure debtors are aware of their balances and any payments due, promoting timely payment.

  2. Interest on overdue accounts: By imposing interest on late payments, debtors are incentivized to pay on time to avoid additional costs.

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