# Grade 11 Accounting (Budgeting)

Introduction

Teacher greets the learners.

The teacher asks the following question based on the content done in the previous grade.

1)    What is Budgeting?

2)    What are the types of Budgeting?

3)    Who uses budgets?

Learner response:

1)    Budgeting refers to a financial plan that shows how much money is available and how it will be spend

2)    Medium term

Zero based

Long term

3)    Educational organisation, Businesses, parents, teachers etc

Instruction

From the following details and information provided by Thorn Stores you are ask to do the following for their budgeted period.

1.    Prepare the debtors collection schedule for the period 1 December 2012 to 28 February 2013                                                                                                                                                                                                            (15)

2.    Calculate the amount to be written off for the three months ending 28 February 2013.                                                          (7)

3.    Calculate the amount still owing by debtors on 28 February 2013.                                                                                         (5)

(27)

 Actual 2012 October 2012 November Credit Sales 74000 80 000 Cash sales 38000 42 800 Drawing of merchandise at cost 1600 2000 2012 November 2013 January 2013 February Budgeted Credit sales 222000 120 800 70 400 Cash sales 58000 44600 30 000 Drawings of merchandise at cost 2600 2600 2000

1.    Trade debtors are collected as follows:

·         30% in the month in which the transaction took place to receive a 5% discount.

·         50% after 30 days’

·         17% after 60 days

·         The rest are irrecoverable.

2.    All merchandise was sold at a mark-up of 25% at cost price.

3.    Cash purchases of merchandise normally amount to 25% of all purchases.

4.    Credit purchases are paid two months after the date of the transaction.

Process

The teachers explain to the learners that the next topic that will be focused on are budgeting.

The teachers explains the following concepts.

Cash Budget

·         A cash budget deals with transactions when the business expects receive and pay cash.

Projected income statement

·         The projected income statement shows the expected profitability of the business over the budget period.

Creditor’s payment schedule

·         The creditors payment schedule shows the payment that the business expects to make to creditors.

·         The business prepares a creditors payment schedule to calculate the amount expected to be due to creditors for goods they have brought on credit.

·         The creditors payment schedule assumes that the business will pay for credit purchases within two months.

Debtors’ collection schedule

·         The debtor’s collection schedule shows the money that the business expects to receive from its debtors.

·         The business prepares the schedule to calculate the amount they should expect to collect from debtors when goods have been sold on credit.

·         The debtor’s collection schedule assumes that credit sales will be collected over a period of three months. This amount will appear in the cash budgets under receipts from debtors.

·         Both the creditors schedule and debtors schedule are prepared before the cash budget.

Note: For today’s lesson the teacher will show the learners how to complete the debtor’s collection schedule

The teacher does the following activity as an example with the learners.

Complete the debtor’s collection schedule for the budgeted period 1 March to 30 April 2019.

Information

 Credit sales Actual Budgeted January 68000 February 70 000 March 74000 April 140 000

Debtors settle their account as follows:

60% in the month of sale

20% paid in the month following sale.

17% paid in the second month after sale.

3% are consider bad in the third month.

Debtors’ collection schedule

 Month Credit sales March April Bad debts January 68000 11560×17% 2040×3% February 70000 14000×20% 11900×17% 2100×3% March 74000 44400×60% 14800×20% April 140 000 84000×60% Total 69960 110 700 4140

Evaluation

·         Learners scripts will be marked according to the following marking criteria.

·         Method marking will be used when marking the scripts.

·         Learners need to submit their scrips to the following email address to be marked.

Juanecloete5@gmail.com

1.

 Debtors’ collection schedule for the period 1 December 2012 to 28 February 2013 Credit sales December 2012 January 2013 February 2013 October 74000 12 580 November 80 000 40 000 13600 December 222000 63 270√√√ 111000√√√ 37740√√ January 120 800 34 428√(√) 60400√√ February 70 400 20064 115 850(√) 159 028(√) 118 204(√)

(15)

2. Amount to be written of as irrecoverable

Dec- 6660√√+ Nov-24000√√+ Oct-2220√√= 32880(√)                                                                                                                     (7)

3.    Amount owing by debtors, 28 February 2013.

(120800×20%) +(70400+70%)

24160√√+49 280√√= 73 440(√)                                                                                                                                                        (5)

(27)

Conclusion

At the end of the lesson learners would be instructed to complete the activities in their textbook on debtor’s collection schedule.

Credits

The following textbook were used as reference.

·         Hattingh, A.& Vallabh, P. 2012. Unit 9 Budgeting. In Malinaric, R.(eds).  X-Kit Achieve 11 Accounting. Pearson South Africa Publishers. Page 103-105

Teacher Page

Name & Surname :Juane Cloete

Student number: 217055095

Email: juanecloete5@gmail.com