Grade 11 Accounting Term 3 | Cash budget |Creditors Payments Schedule
Summary
TLDRThis video tutorial guides viewers through the process of preparing a creditors' payment schedule, using a case study of 'Fantasy Laptop' business. It covers the calculation of credit purchases based on sales, taking into account the markup percentage, and demonstrates how to apply different payment schedules with discounts. The video also touches on related calculations for a cash budget, including percentage increases in security costs and commission rates, as well as water and electricity budgeting and loan repayments. Aimed at educating viewers on financial management, it encourages practice and offers additional study materials for further learning.
Takeaways
- 📚 The video is a tutorial on preparing a creditors payment schedule, which is a data collection schedule for creditors.
- 📋 The tutorial is based on a question paper that involves a business scenario with a budgeted period from December to January.
- 💻 The business in question, Fantasy Laptop, sells laptops and provides repair services, but does not sell on credit.
- 🔢 The markup percentage used to set the sales price of laptops is 75%, and historical sales data from October to February is provided.
- 🛒 All stock is bought on credit, meaning 100% of purchases are made with creditors.
- 💼 The first step in calculating the creditors payment schedule is to determine the cost of sales, which is the same as total credit purchases.
- 💰 Creditors offer a 10% discount for payments made in the month of purchase, and the payment schedule is divided into 50% in the month of purchase, 30% the following month, and 20% two months after purchase.
- 📉 The tutorial includes calculations for the months of December, January, and February, showing how to apply the payment schedule to determine the amounts due.
- 📈 Additional calculations are made for percentage increases in security costs and commission paid to salespersons, using the formula (new - old) / old * 100.
- 💡 The video encourages viewers to subscribe for more educational content and mentions the availability of study guides and online classes for further learning.
- 🎓 The presenter emphasizes the importance of practice and preparation for tests and examinations, suggesting that the content provided can help viewers succeed in their academic pursuits.
Q & A
What is the main topic of the video?
-The main topic of the video is to prepare a creditors payment schedule for a business named Fantasy Laptop.
What is the business model of Fantasy Laptop according to the script?
-Fantasy Laptop sells various types of laptop computers and does not sell on credit. They also repair items for customers at a fee.
What is the markup percentage used by Fantasy Laptop to set the sales price of the laptops?
-Fantasy Laptop uses a markup of 75% on cost to set the sales price of the laptops.
What is the significance of calculating credit purchases in the context of the video?
-Calculating credit purchases is important because it helps determine the cost of sales, which is essential for preparing the creditors payment schedule.
How does the script suggest calculating the cost of sales from the sales amount?
-The script suggests dividing the sales amount by 1 plus the markup percentage (175% in this case) to calculate the cost of sales.
What is the payment schedule for creditors as described in the video?
-The payment schedule involves 50% payment in the month of purchase, 30% in the following month, and 20% two months after the purchase, with a 10% discount if paid within the purchase month.
What is the purpose of the discount offered by some creditors in the video?
-The discount is offered as an incentive for prompt payment within the month of purchase.
How does the script explain the process of replacing stock sold?
-The script explains that all stock sold is replaced in the months of sales, meaning that any stock purchased and sold is immediately replaced.
What are the additional calculations mentioned in the video related to the cash budget?
-The additional calculations include the percentage increase in insecurity cost from February and the percentage commission paid to the salesperson during February.
How is the percentage increase calculated in the video?
-The percentage increase is calculated by taking the difference between the new and old amounts, dividing by the old amount, and then multiplying by 100.
What is the expected increase in water and electricity costs mentioned in the video?
-The expected increase in water and electricity costs from January 2021 is 24%.
How does the video describe the loan repayment process?
-The video describes a fixed loan repayment process where the interest on the loan decreases due to repayments, and the capital amount can be calculated using the interest rate.
Outlines
📋 Preparing a Creditors Payment Schedule
The video script introduces the task of preparing a creditors payment schedule, which is likened to a data collection schedule. The presenter encourages viewers to watch the entire video to learn about the nuances of this financial tool. The example provided involves 'Fantasy Laptop,' a business that sells laptops and offers repair services, but does not sell on credit. The script outlines the process of calculating credit purchases based on sales figures and a 75% markup on cost. It also explains how to account for discounts offered by creditors for prompt payments and how stock is managed, with all purchases being made on credit and replaced immediately after sale.
🔢 Calculating Payment Schedules and Discounts
This paragraph delves into the specifics of calculating the payment schedule, including the application of discounts for prompt payments. The script explains how to calculate the payment for the same month, the following month, and two months after the sale, with percentages of 50%, 30%, and 20% respectively. It provides numerical examples for December, January, and February, showing how to apply these percentages to the credit purchases to determine the payments due. The importance of showing these calculations for marking purposes is highlighted.
📈 Analyzing Financial Changes and Commissions
The script shifts focus to analyzing financial changes, such as the increase in security costs and the decrease in sales commissions. It provides a formula for calculating percentage increases or decreases, emphasizing its reliability. The presenter demonstrates how to apply this formula to security costs, which have risen from 18,000 to 28,000, resulting in a 58.3% increase. Similarly, the commission paid to salespersons has decreased by 23%. The script also touches on the expected increase in water and electricity costs and how to calculate it based on a 24% rise from January 2021.
💼 Loan Repayment Calculations and Future Engagement
The final paragraph discusses loan repayments, explaining that the interest on the loan does not get capitalized and that fixed repayments are made. The presenter guides through the calculation of the loan repayment amount based on the decrease in interest from one month to the next. A specific example is given, showing how to determine the capital amount repaid. The script concludes with an invitation for viewers to subscribe to the channel for more educational content and an encouragement to join extra classes for further training.
Mindmap
Keywords
💡Creditors Payment Schedule
💡Markup Percentage
💡Cost of Sales
💡Credit Purchase
💡Discount for Early Payment
💡Cash Budget
💡Security Cost
💡Commission
💡Loan Repayment
💡Percentage Increase
💡Water and Electricity
Highlights
Introduction to preparing a creditors payment schedule for a business scenario.
Explanation of the difference between a creditors payment schedule and a data collection schedule.
The importance of understanding the provided question paper for the creditors payment schedule.
Business scenario setup: Fantasy Laptop, a business owned by R, selling laptops and providing repair services.
Business operates without selling on credit, which simplifies the creditors payment schedule.
Use of a 75% markup on cost to set the sales price of laptops.
Calculation of credit purchases based on sales amount and markup percentage.
All stock is bought on credit, affecting the calculation of credit purchases.
Demonstration of calculating credit purchases for December, January, and February.
Explanation of payment terms: 50% payment in the month of purchase with a 10% discount.
How to calculate the creditors payment schedule for each month based on the payment terms.
Calculation of payments for December, January, and February with discounts and payment terms.
Stock sold is replaced in the month of sales, affecting the creditors payment schedule.
The impact of payment terms on the distribution of payments over several months.
Calculation of percentage increase in security cost from previous months.
Explanation of how to calculate the percentage change in commission paid to salespersons.
Expected increase in water and electricity costs and how to calculate it.
Details on loan repayment, including interest rates and fixed repayment amounts.
Final thoughts on the importance of understanding the creditors payment schedule for business management.
Transcripts
guys so into this video we are going to
prepare creditors payment schedule so
crator payment schedule guys H is more
like a data collection schedule the one
we were doing on the previous video but
in today's video I come with the
question paper that is going to deonate
with the creditors payment schedule so
please make sure that you stay tuned
watch until the end so that you're going
to learn something that you didn't know
know about the Creator payment schedule
okay let's read the question you are
provided with the information of fantasy
laptop a business owned by R for the
budgeted period December to
january2 okay and the business sell
various type of laptop computers and
does not sell on credit and they also
repair this item for customers at fee
okay H required 4.1
refer to information A and B number one
complete the cror payment schedule
that's our main question and we also
going to touch 4.2 which is related to
calculation that are going to be
recorded under a cash budget okay let's
go to information number A and
B markup percentage and sales a markup
of 75% on cost is used to set the sales
price of the laptop okay and they give
us H sales from October up to H February
all right so we were already provided
with an answer sheet uh that look like
this okay now let's
calculate they said that we need to
calculate for
only
uh
February this month but we can calculate
this one as well so that you will be
learning how to calculate this schedule
okay the first step the first step when
you calculate a crus payment you must
calculate a credit purchase like when
you prepare data collection schedule you
first calculate credit sales here we
deal with credit purchase because
creditors payment we are paying to our
supplier which means that we must use
credit purchase so in this case we are
given a sales amount but we have a
markup that we can convert it to cost of
sales cost of sales is the same as total
purchase and you don't just put it as
total purchase here we are looking for
only credit purchase okay let's read
number B all stock is bought on credit
which means that all stock are on credit
which means that 100% of it is on credit
now let's
calculate because we have a markup we
can calculate our credit purchase
because they said all of them is um
credit which means that no need for us
to go and calculate again the percentage
of credit purchase because all of them
they said are on credit okay for
December we're going to have
770,000
M by because we are looking for cost of
sales 100 must be on top and we divide
by 175 because our markup is 75
okay
January H we're going to have
560 M by 100 over 175 and for February
is
520
5,000 100 over
175 okay let's first get answers
here uh for December it's going to be
440 ,000 and January is going to be
320,000 and for February it's going to
be
330,000
that's our
answers okay you need to make sure that
you show this calculation so that you
can in marks okay now let's check how
this payment schedule are made they said
number B some creditors offer discount
for payment in the the months of
purchase okay 50% okay let's read the
one that I skip stock sold is replaced
in the months of sales simple means that
all stock that they purchase if we sold
them we replace them immediately okay
then they give us the schedule 50% is
paid in the month of purchase in the
same month if we purchase December 50%
will be paid in December and 30%
after H month of sales the following
month
20% is settled the second month after
the second month or the following month
of sales okay we have a 10% discount
where there's a 50% so guys when you
start this schedule the first step if
you want to simplify it because they
said the same month is 50% you must look
at the same month here when we said the
same month you must point December and
this side you must also point December
January and January and you check they
going to meet here February and February
they're going to meet here just like
that which means that these
three they are going to be
50% okay let's calculate it's going to
be
440,000
M
50% M by
90% why 90 because we have 10% %c
discount 100us 10 it give us 9 we get
answer
jary it's me here
320 M by
100 okay apology M by
50% M by
90% it's going to give us answer and we
go to February we do the same 330,000
M by 50%
by
90% it's going to give us answer okay uh
if you calculate for February it's going
to give you
135,000 and for
January it's going to give you
144,000 and for
December is going to give you
198,000 just like that all right now
moving to the next one remember they say
that
50% same
month then they say
that
uh
30% is follow following
months then 20% is after following
months okay 50% we did it which for
example was December and December now
when we go to 30% following month if we
are on December following month is
January if you were on December
following month is January if you were
on January following month is February
if you were on February following month
is March just like that okay December
January is going to be following month
and we say
440 mly by 30%
and we get
answer January following month is
February we're going to see
320
by
%. okay and it's going to give
us0 30% is going to give us
96,000
okay and this one is going to give us
132
th000 just like that now we are going to
20% 20% is months after the following
month if we talking about December
following month is January and after
following month is February 20% is going
to apply here we are going to say
440 mly by
20% and it's going to give us
88,000 that's how
we deal with creditors payment schedule
this month is the previous one
January December is the previous month
that's why you see there's no anything
February December is the old month
because already February we on the
following year J February and January
January is the previous month that's why
we have nothing here so that's how H we
compile H collection schedule guys very
simple very simple and straightforward
so please guys for those who want to buy
a stud guide a soft copy is still
available grade 11 and gr 12 and grade
10 make sure that you purchase as soon
as possible so that you can get question
like this one so that you will be able
to practice more and more example and
train yourself so we are going to do 4.2
which we are going to do some
calculation and also guys those who want
to join extra class online they still
available only 100 you attend twice a
week and we also provide a lot of
examples so that you can train yourself
before you write a test make sure that
you join as as early as possible so that
you won't face any challenge when you
write U your test guys under R is
nothing compared to your future so make
sure that you join andand per month
communicate with your parents so that
they can help you to pay okay 4.2
calculate the following refer
information C and D calculate
increase percentage increase
in insecurity cost from February and
number two percentage commission paid to
sales person during
February
okay let's start by expected insecurity
Cod
from February if we
check uh security cost it has increased
from 18,000 to 28,000 now we want to
calculate increase when we calculate the
percentage increase guys use this
formula
new minus
old divide by old M by 100 this formula
will never give you a wrong answer
always correct
okay a new amount of security was
28,000 500 the old one
minus uh
18,000 and we divide by 8
18,000 and we multiply by
100 okay and it's going to give you
58 it's going to give you
58
3% okay and the next
one they want us to calculate
for okay let me check commission paid to
sales percent percentage change to
commission okay if you take commission
guys uh
okay they said which month
December okay commission for December it
uh came
from
123 going down to
89,00 which means that our new is
89 600 obviously it's going to give you
a decrease a negative minus
123 200 divide by 123 200
by 100 it's going to give
you
uh
sixa
3% of
decrease all right H you need to
recalculate this to be 100 100 100% CH
but the the formula is still very
correct because I'm using a cell phone
to do calculation okay and also guys
make sure that you first calculate this
and get answer then you divide so that
because some calcul T they will give you
different figures okay otherwise let's
go to water and electricity budgeted for
December okay let's take water and
electricity transation they said
expected increase from January 2021 is
24%
there's an expected increase from
January which is
24% uh let's check water and
electricity for December we don't have
any amount we are looking for it and
jary is
18,000 Janu is
18,
600 and we want to go back when we want
to go back we are looking for 100% and
what we have is after increase of 124
100 + 24 and it's going to give you an
answer okay I'm going to calculate this
after the loan okay now let's go to
loan the loan amount they say
that
um let me check let me check question
again the loan repayment to be made on
December we are looking for loan
repayment okay a loan repayment they
said the loan from Delta Bank bear
interest of 12.5% per year and interest
is NOT capitalized and fixed loan
repayment is made a fixed loan it does
not change in other words okay if you
check we have only one option to
calculate this repayment we have a
interest on
loan December it was 9,000 and January
it was 8,000 the interest decreased
because of what of repayment the first
step we must calculate the
different
9,375 minus
8,125 is going to give us the different
of that
H loan uh this this interest let's
calculate
9375 -
8125 the interest gave us
12550 and now we are looking for this
Capital amount we must say 100
divide by 12a 5 of Interest then it's
going to give
us 10,000 the loan repayment that was
made it was 10,000 and this one let me
calculate
8,600 M by 100 over
124 then is 15,000 this
side this is water and electricity
C this one is loan
repayment I hope you learn something
guys and you enjoy please if you haven't
subscribed to this channel make sure
that you do so so that by the end of
this month or by the end of this year
guys we must be able to reach at least
20,000 H subscribers we're going to keep
uploading more and more more videos so
that you will prepare yourself to write
test and examination see you on the next
one
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