Accounting Grade 12 Gauteng Mock 2019 Question Paper (Eng)

Downloaded from hlayiso.com GAUTENG DEPARTMENT OF EDUCATION PREPARATORY EXAMINATION 2019 10710 ACCOUNTING TIME: 3 hours MARKS: 300 22 pages P.T.O.

Downloaded from hlayiso.com ACCOUNTING 2 10710 / 19 GAUTENG DEPARTMENT OF EDUCATION PREPARATORY EXAMINATION ACCOUNTING TIME: 3 hours MARKS: 300 INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. Answer ALL the questions. 2. A special ANSWER BOOK is provided in which to answer ALL the questions. 3. Show ALL workings in order to earn part-marks. 4. You may use a non-programmable calculator. 5. You may use a dark pencil or blue / black ink to answer the questions. 6. Where applicable, show all calculations to ONE decimal point (unless stated otherwise). 7. Write neatly and legibly. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 3 10710 / 19 8. Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it. QUESTION 1: 40 marks; 25 minutes Topic of the question: This question integrates: Financial accounting Concepts Bank Reconciliation Reconciliation Creditors’ Reconciliation Managing resources Internal control processes and Ethics QUESTION 2: 35 marks; 20 minutes Topic of the question: This question integrates: Managerial accounting Production Cost Statement Manufacturing Break-even analysis Managing resources Internal control processes QUESTION 3: 65 marks; 40 minutes Topic of the question: This question integrates: Financial accounting Concepts Balance Sheet and Audit Report Balance Sheet and notes Managerial Accounting Audit processes QUESTION 4: 70 marks; 45 minutes Topic of the question: This question integrates: Financial accounting Cash Flow Statement Fixed Assets, Cash Flow Interpretation of financial information Statement and Interpretation Managing resources Fixed assets Internal control QUESTION 5: 45 marks; 25 minutes Topic of the question: This question integrates: Financial Accounting VAT calculations Inventory valuation and VAT Managing Resources FIFO and weighted-average valuation methods Internal control QUESTION 6: 45 marks; 25 minutes Topic of the question: This question integrates: Managerial Accounting Interpretation of budgetary information Budgeting Managing resources Internal control processes and Ethics P.T.O.

Downloaded from hlayiso.com ACCOUNTING 4 10710 / 19 QUESTION 1: RECONCILIATION (40 marks; 25 minutes) 1.1 Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK. 1.1.1 A credit balance on the statement reflects an unfavourable balance in the bank. (1) 1.1.2 Bank Reconciliation must be prepared at the end of each financial year. (1) 1.1.3 A direct deposit made by a tenant will be recorded in the Cash Receipts Journal. (1) 1.2 BANK RECONCILIATION The information relates to Dendo Biza Traders for August 2019. REQUIRED: 1.2.1 Calculate the following on 31 August 2019:  Correct totals for the CRJ and CPJ (Use the table provided.)  Bank Account balance (15) 1.2.2 Prepare the Bank Reconciliation Statement on 31 August 2019. (7) 1.2.3 Explain ONE benefit of using the electronic funds transfer (EFT) system rather than cheques for direct payments to suppliers. (2) 1.2.4 The internal auditor is concerned about the management of cash. (a) Identify ONE problem that justifies his concern. Quote figures. (2) (b) Provide ONE point of advice to avoid this problem in future. (2) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 5 10710 / 19 INFORMATION A Information relating to the Bank Reconciliation Statement on 31 July 2019, the end of the previous month: Credit balance as per Bank Statement R3 500 Outstanding deposit for cash sales:  Dated 15 July 2019 12 000  Dated 29 July 2019 19 970 Outstanding cheques:  510 (dated 19 February 2019) 3 700  670 (dated 16 June 2019) 18 610  672 (dated 28 August 2019) 4 100  675 (dated 20 September 2019) 14 360 Credit balance as per bank account 5 300  The deposits of R12 000 and R19 970 appeared on the Bank Statement of FDC Bank on 1 August 2019.  Cheque no. 670 is reflected in the bank statement of August as R16 810. The bank statement is correct.  Cancel cheque no. 672 for R4 100, as it was lost in transit. The business decided to make an EFT payment together with an additional payment of R600 to settle the amount owing to creditor, Motloung Stores. The Bank will only clear the EFT payment on 1 September 2019. B The provisional totals in the Cash Journals for August 2019 before reconciling to the bank statement were as follows:  CRJ – R90 140  CPJ – R100 280 C The following items appeared only on the August 2019 bank statement:  Stop order for advertising, R234  Bank charges, R380  Interest for R200, debited on the bank statement  A cheque for R7 560, dishonoured. This was originally received from P Padi in settlement of a debt of R8 000.  A direct deposit of R9 600 for rent from P Malebe. This includes R6 400 for September and October 2019. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 6 10710 / 19 D The following appeared in the Cash Journals and not on the August 2019 Bank Statement:  Cheque no. 720 issued to Tok Suppliers in settlement of our debt of R12 500. A discount of R1 500 was received for prompt payment.  Cash and cheque deposits on 31 August 2019, R12 070 E The balance on the Bank Statement is missing on 31 August 2019. 1.3 CREDITORS’ RECONCILIATION The information relates to Kirsten Traders for August 2019. Kirsten Traders buys goods on credit from Amla Suppliers. REQUIRED: Use the table provided to indicate the changes that must be made:  In the Creditors' Ledger Account in the books of Kirsten Traders  In the Creditors' Reconciliation Statement on 31 August 2019 (9) INFORMATION: The following differences were discovered when comparing the account in the Creditors' Ledger with the statement received from Amla Suppliers: A An invoice for R14 800 was recorded incorrectly as R1 480 on the statement received from the creditor. B The bookkeeper of Kirsten Traders recorded an invoice for R1 350 as a credit note. C The discount of R850 was in error, overstated by R350 in the Creditors’ Ledger. D A cheque for R7 200 issued by Kirsten Traders did not appear on the statement due to the statement been processed early. E Goods for R2 700, returned by Kirsten Traders, was not recorded. 40 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 7 10710 / 19 QUESTION 2: MANUFACTURING (35 marks; 20 minutes) 2.1 KLEMISH MANUFACTURERS The business produces study desks. REQUIRED: Prepare the following for the financial year ended 28 February 2019: 2.1.1 Production cost statement (13) 2.1.2 Abridged Income Statement (11) INFORMATION: A Stock on hand: 28 February 2019 28 February 2018 Work-in-progress ? R500 800 Finished goods R18 000 R672 000 B  10 800 tables were produced at a unit cost of R495 each.  Sales of 16 000 tables amounted to R8 160 000. C Prime cost: R4 600 000 (after adjustments) D The bookkeeper calculated the following costs before taking into account the adjustments below: Administration R296 800 Factory overheads R974 400 Direct materials R3 100 000 Direct labour ? Selling and distribution R844 000  An amount of R204 000 for raw materials, purchased on credit, was not taken into account.  Stationery valued at R1 000, purchased for the Administration department was incorrectly allocated to the Selling and Distribution department.  Rent Expense, R252 000, was shared between the Factory and Selling and Distribution department in the ratio of 2:1. 85% should have been allocated to the Factory. Correct the error. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 8 10710 / 19 2.2 DAMARA’S JEWELLERY Damara owns a jewellery business. REQUIRED: 2.2.1 Break-even point: (a) Calculate the break-even point for February 2019. (4) (b) Damara is satisfied with the results. Explain ONE reason with figures to support Damara’s satisfaction. (3) 2.2.2 Refer to the unit costs. (a) Explain why the fixed costs per unit decreased. (2) (b) Provide ONE possible reason for the change in Direct Material Costs. (2) INFORMATION: February 2019 February 2018 Total units produced and sold 18 000 units 15 000 units Break-even point in units ? 13 500 units Selling price per unit R407,00 R330,00 TOTAL VARIABLE COSTS R4 410 000 R3 510 000 VARIABLE COSTS PER UNIT R245,00 R234,00 Direct material cost per unit R128,00 R135,00 Direct labour cost per unit R80,00 R62,00 Selling and distribution cost per unit R37,00 R37,00 TOTAL FIXED COSTS R1 296 000 R1 296 000 FIXED COST PER UNIT R72,00 R86,40 Factory overhead cost per unit R52,00 R62,40 Administration cost per unit R20,00 R24,00 35 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 9 10710 / 19 QUESTION 3: CONCEPTS, BALANCE SHEET AND AUDIT REPORT (65 marks; 40 minutes) 3.1 CONCEPTS Choose an explanation from COLUMN B that matches a concept in COLUMN A. Write only the letter (A – D) next to the question number (3.1.1 – 3.1.4) in the ANSWER BOOK. COLUMN A COLUMN B 3.1.1 Finance cost A Consumable stores not used at the end of the financial year 3.1.2 Dividends B Interest on bank overdraft on the Income 3.1.3 Inventory Statement 3.1.4 Current liability C A financial indicator which reflects liquidity D Profits distributed to shareholders in proportion to the number of shares held E Debts payable over a short period of time (4) 3.2 PHAMBILI LIMITED The information below relates to Phambili Ltd. The financial year ended on 28 February 2019. REQUIRED: 3.2.1 Prepare the following notes for the financial year ended 28 February 2019. (a) Ordinary share capital (11) (b) Retained income (11) 3.2.2 Complete the Balance Sheet (Statement of Financial Position) on 28 February 2019. Where notes are not required, show ALL workings. (29) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 10 10710 / 19 INFORMATION: A Balances extracted from the accounting records on 28 February 2019 (unless otherwise stated). R Ordinary share capital (1 March 2018) 1 220 000 Retained income (1 March 2018) 355 500 Loan from VDS Bank 1 376 000 Fixed assets at carrying value 1 499 500 Fixed deposit: Sandton Bank ? Trading stock 480 000 Creditors' control 177 500 Debtors' control 400 000 Packing material on hand 16 000 Accrued expenses (expenses payable) 10 000 Income received in advance (deferred income) 11 500 Bank (favourable) 1 010 100 Provision for bad debts (1 March 2018) 6 200 SARS: Income tax (provisional tax payments) 1 180 000 Ordinary share dividends 350 000 B Share capital:  Phambili Ltd. is authorised to sell 6 000 000 ordinary shares.  500 000 shares were in issue on 1 March 2018.  900 000 new shares were issued on 1 August 2018 at R3,00 per share. This has been properly recorded.  150 000 shares were repurchased on 10 January 2019 from a disgruntled shareholder for 75 cents above the average share price. This transaction was not recorded. This shareholder does not qualify for final dividends. C Dividends: The Directors declared a final dividend of 50 cents per share on 28 February 2019. D Provision for bad debts: The provision for bad debts must be decreased to R5 400. E Loan:  The loan was received on 1 September 2016.  This loan is to be repaid over 6 years in equal monthly instalments with effect from 1 October 2016. All payments have been made.  Interest is not capitalised and has been paid in full. F Taxation: After taking into account all relevant information, taxation for the year was accurately calculated to be R1 148 000 at 28%. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 11 10710 / 19 3.3 AUDITING You are provided with an extract from the report of the independent auditors. Audit Opinion – To the shareholders: We have examined the financial statements as set out on Pages 23 to 89. In our opinion, the financial statements fairly present, in all material respects, the financial position of the company as at 28 February 2019 and the results of their operation and cash flows for the year ended are in accordance with International Financial Reporting Standards (IFRS), and in the manner as required by the Companies Act in South Africa. Mxo and Frank Chartered Accountants (SA) Registered Accountants and Auditors Midrand, 31 March 2019 REQUIRED: 3.3.1 Explain why the shareholders would be satisfied with this audit report. (2) 3.3.2 Tello Motloung, the managing director, has informed the auditors that he intends to buy the unissued shares for himself without informing the other shareholders. What advice should the auditors give to Tello? Explain. (2) 3.3.3 Explain why the auditors found it necessary to stipulate the page numbers in the report. (2) 3.3.4 Explain TWO major consequences for Mxo and Frank should they be negligent in performing their duties. (4) 65 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 12 10710 / 19 QUESTION 4: FIXED ASSETS, CASH FLOW STATEMENT AND INTERPRETATION (70 marks; 45 minutes) The given information relates to Hadley Ltd. The company has an authorised share capital of 900 000 ordinary shares. The financial year ended on 28 February 2019. REQUIRED: 4.1 Refer to Information A, B and C. Calculate the missing figures indicated by (a) to (e) in the Fixed Asset Note below. (17) 4.2 Prepare the Cash Flow Statement for the year ended 28 February 2019. (Where applicable show calculations / figures in brackets to earn part marks). (30) 4.3 Calculate the Debt-Equity ratio for 2019. (Round-off to TWO decimal points.) (3) 4.4 The directors decided to increase the loan during the current financial year. Explain TWO financial indicators to indicate why this was a good decision. Quote figures. (8) 4.5 The board of directors is of the opinion that the shareholders should be happy with their percentage return and the market price of their shares. Quote and explain TWO financial indicators with figures to support their opinion. (6) 4.6 The Cash Flow Statement reflects some important decisions taken by the Directors. Apart from the loans, identify TWO good decisions. Explain the effect of these decisions on the company. Quote figures. (6) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 13 10710 / 19 INFORMATION: A Extract from the Income Statement for the year ended 28 February 2019 R Depreciation ? Interest expense 208 800 Net profit before tax ? Income tax 713 250 Net profit after tax ? B Extract from the Balance Sheet on 28 February 2019 2018 Land and Buildings 5 800 000 6 800 000 Vehicles 2 700 000 ? Equipment ? 850 000 Accumulated depreciation on vehicles ? 960 000 Accumulated depreciation on equipment ? 180 000 Financial Assets (Fixed Deposit) 2 000 000 2 000 000 Trade and other receivables 405 750 168 300 Trade debtors 378 675 144 600 Accrued income 27 075 0 SARS (Income tax) 0 23 700 Inventories 360 750 436 185 Cash and cash equivalents 2 841 250 1 429 465 Shareholders’ equity 11 000 250 10 200 000 Ordinary share capital 10 260 000 9 000 000 Retained income 740 250 1 200 000 Mortgage loan SS Bank 2 100 000 1 380 000 Trade and other payables ? 763 950 Trade creditors 55 200 72 450 Income received in advance 19 350 15 000 SARS (Income tax) 31 950 0 Shareholders for dividends ? 676 500 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 14 10710 / 19 C Fixed Asset Note Land and Vehicles Equipment Building Carrying value on 28 Feb 2018 6 800 000 840 000 (c) Cost 6 800 000 (b) 850 000 Accumulated depreciation 0 (960 000) (180 000) Movements Additions at cost 900 000 400 000 Disposals (a) 0 (d) Depreciation (171 000) (e) Carrying value on 28 Feb 2019 5 800 000 Cost 5 800 000 2 700 000 Accumulated depreciation Land and Building  Part of the Land and Building was sold at carrying value during the financial year. Vehicles  A new delivery van was bought on 1 November 2018.  No vehicles were sold during the financial year. Equipment  A printer bought for R150 000 on 1 March 2016, was sold at carrying value on 31 August 2018.  A new printer was purchased on 31 August 2018.  Depreciation on equipment is written-off at 10% p.a. on the cost price. D The following is an extract from Note 1 to the Cash Flow Statement: Reconciliation between Net Profit before Tax and Cash Generated from Operations R Operating profit before changes in working capital 2 854 800 Cash effects of changes in working capital (198 615) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 15 10710 / 19 E Share capital and Dividends  Authorised shares: 900 000  On 1 March 2018, there were 600 000 shares in issue.  On 31 August 2018 an interim dividend of 243 cents per share was paid.  On 1 November 2018, 40% of the unissued shares were issued for R1 800 000.  On 28 February 2019, 5% of the issued shares were repurchased at R16 each.  A final dividend of 90 cents per share was recommended. All shares, including the shares repurchased, qualified for final dividends. F Income Tax  Tax is 30% of the net profit. G Financial indicators on 28 February: 2019 2018 Earnings per share 252 cents 110 cents % return on average shareholders’ equity 15,7% 12,3% (ROSHE) % return on average capital employed 20,9% 21,3% (ROTCE) Net asset value per share 1 608 cents 1 700 cents Debt-equity ratio ? 0,13:1 The market price of shares on the JSE 1 680 cents 1 560 cents Interest on alternative investments 7,5% 6,5% Interest on loans 12,0% 10,5% 70 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 16 10710 / 19 QUESTION 5: STOCK VALUATION AND VAT (45 marks; 25 minutes) 5.1 Choose the correct word(s) from those given in brackets. Write only the word(s) next to the question number (5.1.1 – 5.1.4) in the ANSWER BOOK. 5.1.1 In the (perpetual / periodic) inventory system, the cost of sales must be calculated at the end of the year. 5.1.2 The (specific identification / weighted-average) stock valuation method is best suited for unique high-value products. 5.1.3 In the perpetual inventory system, merchandise purchased is recorded as an (asset / expense) to the business. 5.1.4 The (first-in-first-out / weighted-average) stock valuation method is best suited for products of similar value purchased in large quantities. (4) 5.2 KROOKED SKATEBOARD TRADERS You are provided with information relating to Krooked Skateboard Traders owned by G Gonzales. The business sells a type of skateboard that is imported from California. The financial year ended on 28 February 2019. The business uses the weighted-average method to value their stock and uses the periodic inventory system. REQUIRED: 5.2.1 Calculate the following on 28 February 2019: (a) The value of closing stock using the weighted-average method. (9) (b) Cost of Sales (4) (c) Gross Profit (3) 5.2.2 G Gonzales wants to alternate between using the weighted-average method and a FIFO method, depending on which will result in the higher cost of sales. (a) In your opinion, why do you think G Gonzales wants to increase the value of cost of sales in the financial statements? (2) (b) Provide ONE reason why the bookkeeper says that alternating between two methods of valuing stock does not comply with the requirements of GAAP. (2) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 17 10710 / 19 INFORMATION: A Stock records of skateboards Number Total Date of units value 01 March 2018 860 R238 600 28 February 2019 420 ? B Purchases of skateboards Purchases: PRICE TOTAL TOTAL NO. OF TOTAL CARRIAGE ON CARRIAGE ON DATE PER PURCHASE UNITS PURCHASES PURCHASES PURCHASES UNIT COST R R R R R 31/05/18 1 200 280 336 000 20 24 000 360 000 01/07/18 1 600 300 480 000 20 32 000 512 000 12/09/18 1 000 290 290 000 24 24 000 314 000 15/01/19 600 320 192 000 24 14 400 206 400 Totals 4 400 1 298 000 94 400 1 392 400 C Returns of skateboards Forty (40) skateboards from the July purchases that were not of good quality were returned to the supplier. They credited the business account with the total cost, including carriage on purchases. D Sales 4 800 units at R350 each: R1 680 000 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 18 10710 / 19 5.3 PROTEC TRADERS Patrick Ace is the owner of PROTEC Traders, who sells safety helmets. He has three different stores that are managed by Lucas, Pitso and Pepe. He is concerned that the stores are not running effectively and gave you the following information to analyse for February 2019. REQUIRED: Identify a different problem in each store. Quote figures to support the problem identified in each case and give Patrick Ace advice on how to solve each problem. (9) Store 1 Store 2 Store 3 Lucas Pitso Pepe Sales R280 000 R340 000 R300 000 Returns from customers for the month R4 000 R28 000 R3 000 Returns policy 7 days 21 days 7 days Stock stolen during the month 0 units 4 units 50 units Advertising R30 000 R10 000 R24 000 Number of employees 6 4 6 5.4 VALUE ADDED TAX (VAT) Mandla Traders is a VAT-registered business. All items are subject to VAT at 15%. 5.4.1 Calculate the amount of VAT either receivable from, or payable to SARS on 30 June 2019. Indicate whether this amount is receivable or payable. (10) 5.4.2 The owner wants to change the VAT amount on bad debts from R900 to R6 000. Give ONE reason why you would disagree with him. (2) INFORMATION: The following transactions relate to Mandla Traders for the VAT period ended 30 June 2019. R A Balance owing by SARS on 1 June 2019 33 600 B Purchase of trading stock (VAT exclusive) 1 625 000 C Cash and credit sales (VAT inclusive) 2 415 000 D VAT on discount received from suppliers 1 200 E VAT on bad debts written-off 900 45 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 19 10710 / 19 QUESTION 6: BUDGETING (45 marks; 25 minutes) 6.1 SEAGATE TRADERS The information relates to Seagate Traders. REQUIRED: Complete the table in the ANSWER BOOK by filling in only the amounts for July 2019 in the appropriate columns. EXAMPLE: Commission will be received on promotion items sold, R3 300. Amount in the Projected Amount in the Cash Budget Income Statement for July No. for July 2019 2019 RECEIPT PAYMENT INCOME EXPENSE Example R3 300 R3 300 Transactions for July 2019: 6.1.1 Expected cash sales will amount to R49 500 (cost of sales, R23 300). 6.1.2 Payments to creditors, R19 800, are expected to be made. Discount of R990 will be claimed. 6.1.3 Bad debts to be written-off will amount to R1 320. 6.1.4 Depreciation for the 2019 financial year will be R36 960. 6.1.5 Directors’ fees to be paid, R55 000 6.1.6 Interim dividends to be paid to shareholders, R27 500 (10) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 20 10710 / 19 6.2 BRITE TRADERS You are provided with an incomplete Cash Budget of Brite Traders for the period 1 August 2019 to 30 September 2019. Cleve Brite is the owner. 6.2.1 Calculate the credit sales for August 2019 and then complete the Debtors' Collection Schedule for September 2019. (7) 6.2.2 Calculate the missing amounts indicated by (a) – (e) on the Cash Budget. (12) 6.2.3 Refer to information F (a) Cleve, the owner, decided to offer special discounts to customers during August. The customers will be reminded weekly by telephone or sms about this offer. You are of opinion that this has NOT benefited the business. Provide TWO reasons to support your opinion. Quote figures. (4) (b) Explain what you would say to Cleve about the control of the following costs. Quote figures to support your answer and provide ONE point of advice in EACH case.  Delivery costs  Advertising (6) 6.2.4 Refer to information G and H. (a) Calculate the purchase price of the new vehicle. (4) (b) Apart from the deposit and the monthly instalment of R6 875 on the new vehicle, explain how the next month’s Cash Budget will be affected. State TWO points. (2) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 21 10710 / 19 INFORMATION: A Sales, cost of sales and debtors' collection  Actual and budgeted sales and cost of sales: TOTAL SALES (R) COST OF SALES (R) BUDGETED ACTUAL BUDGETED ACTUAL June 115 500 85 800 77 000 57 200 July 135 000 98 010 90 000 65 340 August 118 800 79 200 September 92 400 ?  60% of the total sales are for cash.  Credit sales are collected as follows: o 20% in the month of sale o 70% in the first month following the sale o 8% in the second month following the sale o The balance is written-off in the third month following the month of the sale. B Stock levels and payments to creditors  Brite Traders uses a mark-up of 50% on cost.  A fixed-based stock level is maintained by replacing stock on a monthly basis.  75% of the total purchases are on credit.  Creditors are paid in the month following the month of purchase to take advantage of the 5% discount. C Delivery costs  All goods sold are delivered to customers free of charge.  Dell Deliveries has been contracted to render this service.  The delivery costs are budgeted at 10% of sales. D Salaries  Workers will receive an increase of 6% on 1 September 2019. E Insurance  The insurance premium is paid at the end of each month.  The monthly premium will increase by 10% on 1 September 2019. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 22 10710 / 19 F A comparison of budgeted and actual amounts revealed the following: AUGUST 2019 BUDGETED ACTUAL Sales R118 800 R89 400 Cost of sales 79 200 66 000 Gross profit 39 600 26 400 Delivery costs 11 880 13 860 Telephone costs 5 500 8 250 Advertising 19 800 21 400 G Details relating to the delivery costs and new vehicle Cleve is considering the following to improve the cash flow:  Purchasing a delivery vehicle in October 2019  Paying a 10% deposit  Borrowing an interest-free loan from his uncle for the remaining balance  Making a repayment of R6 875 per month over 36 months  Stopping the services of Dell Deliveries H Extract from the Cash Budget for the two months ending 30 September 2019 Receipts August September Cash sales of goods 71 280 55 440 Collection from debtors 51 000 Rent income 8 250 9 075 Additional capital to be contributed 110 000 Total receipts Payments Cash purchase of trading stock 19 800 (a) Payment to creditors (b) 56 430 Salary: Five workers 35 200 (c) Telephone 5 500 6 600 Advertising 19 800 13 200 Insurance (d) 5 808 Delivery costs (payable to Dell Deliveries) 11 880 9 240 Other operating expenses Drawings 16 500 16 500 Total payments Cash surplus / deficit (24 860) Bank balance at beginning of month (11 220) (e) Bank balance at end of month 45 TOTAL: 300 END