QUESTION $3$

$3\mathrm{.}1$

REQUIRED

Use the information provided below to determine the net cost of factoring to Micron Limited.

INFORMATION

The management of Micron Limited is considering factoring the company's debtors. The current sales of the

company are R$2000000$ per year of which $60\%$ is on credit. The debtors collection period is $36\mathrm{.}5$ days. A

factor has offered the following deal:

Service charge of $5\%$ of the credit sales;

Finance charge of $11\%$ of the accounts receivable;

Retention of $15\%$ to be held by the factor.

The service agreement is expected to save Micron Limited costs amounting to R$4000$ per month.

$3\mathrm{.}2$

REQUIRED

Use the information provided below to answer the following questions $($amounts expressed in rands ar

cents$)$:

$3\mathrm{.}2\mathrm{.}1$ Calculate the profit that Tesco Suppliers would make if the account is settled in $12$ days'

time.

$3\mathrm{.}2\mathrm{.}2$ Should Mariam fail to pay the amount due and the account is written off after $60$ days,

how much would the loss be to Tesco Suppliers?

$3\mathrm{.}2\mathrm{.}3$ Calculate the profit that Tesco Suppliers would make if the credit terms were "net $60$

days".

INFORMATION

Tesco Suppliers is considering selling an oven to Mariam on credit. The selling price of the oven is R$15000$

and it was priced at cost plus $50\%.$ Credit terms of $\frac{2\mathrm{.}5}{12}$ net $30$ days were agreed upon. The cost of capital

is $15\%.$ QUESTION $4$

$4\mathrm{.}1$

REQUIRED

Use the information provided below to answer the following questions:

$4\mathrm{.}1\mathrm{.}1$ Calculate the cost $($as a percentage, expressed to two decimal places$)$ to Mega Stores

of forgoing the discount.

$4\mathrm{.}1\mathrm{.}2$ Should Mega Stores take advantage of the discount offered by Macs Suppliers?

Motivate your answer.

INFORMATION

The credit terms of Macs Suppliers to Mega Stores are $30$ days but the supplier is prepared to allow a discount

of R$140$ on a credit purchase of $R4000$ if Mega Stores pays the account within $12$ days. The interest rate on

overdraft quoted by the bank where Mega Stores has its current account is $21\%.$

$4\mathrm{.}2$

REQUIRED

Study the extract of the statement of cash flows of Samithi Limited for the year ended $31$ May $2024$ and

answer the following questions:

$4\mathrm{.}2\mathrm{.}1$ Calculate the cash balance as at $31$ May $2024,$ if the cash balance on $01$ June $2023$

was an overdraft of R$30000.$

$4\mathrm{.}2\mathrm{.}2$ Comment on the cash flows from operating activities, investing activities and financing

activities.

$4\mathrm{.}2\mathrm{.}3$ A further breakdown of the statement of cash flows of Samithi Limited revealed that

there was a substantial increase in inventory, receivables and payables. How would

you interpret these increases?

INFORMATION

An extract of the Statement of Cash Flows of Samithi Limited for the year ended $31$ May $2024$ is provided

below: REQUIRED

Study the information given below and calculate the following:

$5\mathrm{.}3\mathrm{.}1$ Incremental profit after tax

$5\mathrm{.}3\mathrm{.}2$ Incremental return on sales.

INFORMATION

Millenium Limited is considering extending credit to customers in a different province. Sales are expected to

increase from R$10000000$ to R$11800000$ if credit is granted to customers in the new province. The goods

will be sold at cost price plus $80\%.$ From the new accounts receivable generated, $18\%$ is expected to be bad

debts. Additional collection costs are estimated at $7\%$ of sales. Millenium Limited is subject to a tax rate of

$27\%\mathrm{.}2\mathrm{.}2$

REQUIRED

Study the information provided below and answer the following questions:

$2\mathrm{.}2\mathrm{.}1$ Prepare an extract of the Statement of Comprehensive Income to determine the gross

profit for the year ended $31$ December $2023$ and the value of closing inventory as at $31$

December $2023$ using the LIFO method.

$2\mathrm{.}2\mathrm{.}2$ Calculate the value of closing inventory as at $31$ December $2023,$ if the weighted average

cost method is used. $($Express the weighted average cost per unit to the nearest cent.$)$

INFORMATION

Elna Suppliers had the following inventory of retaining blocks on $01$ January $2023,$ the start of the

financial year:

During $2023$ the following purchases$/$returns were made:

$1350$ blocks were purchased at R$40$ each on $31$ March $2023.$ Carriage amounted to R$2$ per unit.

$250$ blocks that were purchased on $31$ March $2023$ were returned to the supplier a day later. A refund was

obtained on the carriage.

$400$ blocks were purchased at $R42$ each on $31$ October $2023.$ Carriage amounted to $R3$ per unit.

Note: Carriage on purchases are not included in the purchase prices.

During the year $1400$ blocks were sold. $1000$ blocks were sold at R$70$ each and the balance was sold at R$80$

each.