Grade 11 Accounting Term 3 | Cash budget |Creditors Payments Schedule

Summary

This 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.