Q.2.4

Use the information in Q.2.2 for the financial year ending 28 February 2019, and calculate the Average Debtors Collection period if Ngotso Enterprises average trade debtors were R60 000 at year-end and 60% of their sales are done on credit.

Show the formula and all workings. Round off to the nearest day. (4)

Q.2.2 Ngotso Enterprises incurred the following income and expenses for the year ending (18) 28 February 2019: R Wages and salaries 110 000 Sales returns 15 000 Interest on savings account Packing materials 25 000 Rent paid 10 000 Cost of sales 280 000 Stationery 1 800 2 500 19 2019 Interest on overdraft Equipment expenses Sales Advertising Insurance Water and electricity 2 800 18 000 400 000 60 000 3000 3 500 Required: Assume Ngotso Enterprises were to introduce the following measures for the following financial year ending 28 February 2020: Increase net sales revenue by 8%; Decrease cost of sales by 7%; Increase interest received by 5%; Decrease operating expenses by 2%, except for Wages & Salaries which increase by 6%; Interest payments to stay constant. Prepare a budgeted statement of comprehensive income for the financial year ended 28 February 2020 based on the above information. Q.2.4 Use the information in Q.2.2 for the financial year ending 28 February 2019, and (4) calculate the Average Debtor's Collection period if Ngotso Enterprises' average trade debtors were R60 000 at year-end and 60% of their sales are done on credit. Show the formula and all workings. Round off to the nearest day. Working Notes: 1 Net sales revenue by 8% Sales and sales returns both will increase by 8% Sales = 400000 + 400000*8% = $ 432,000 Sales returns = 15000 + 15000*8% = $ 16,200 2 cost of sales = 280000 - 280000*7% = $ 260,400 3 Interest Revenue = 2500 + 2500*5% = $ $ 2,625 4 Wages and Salaries = 110000 + 110000*6% = $ 116,600 5 Other Operating Expenses decrease by 2% a Packing Materials = 25000 - 25000*2% = b Rent Paid = 10000 - 10000*2% = c Stationery = 1800 - 1800*2% = d Equipment Expenses = 18000 - 18000*2% = e Advertising = 60000 - 60000*2% = f Insurance = 3000 - 3000*2% = g Water and Electricity = 5000 - 5000*2% = $ $ $ $ $ $ $ 24,500 9,800 1,764 17,640 58,800 2,940 4,900