Grade 12 Accounting Term 2 Debtors age analysis Reconciliation Exam Paper 2

Hello grade 12 student. So in this video we are going to do what what we call data age analysis. So this topic guys is from reconciliation. So I'm going to give you an explanation what is all about this topic. Okay so that when you answer the questions it will be easy for you. All right. So guys when we talk about data age analysis this is what every business do major business or what we can say maybe big companies normally this is what business do in order for them to be able to track how much the datas those customer who purchase to us on credit. Okay, because remember guys, those people who are purchasing on credit, we have our terms and condition on our side on when they should pay, the due date, if they don't pay, this is the date that we are going to charge them interest and so on and so on. So in order to identify that individually and see who is still owing us, what we must do the next step and so on and so on, we must draft what we call data age analysis. We analyze our datas through the payment and how much limit we should borrow them and so on and so on. Okay. So it depend on the company guys. Some companies they prefer that if the data purchased to them on credit they must pay within certain time. Okay. Others they can say 30 days others 60 days 90 days and so on and so on depend on the company and what you are purchasing. Okay. So let's look at the analysis of this business so that can explain more further. Okay. when you see on the question paper. Okay. data age analysis or testport atorium sell sport equipment and offers credit facilities to customers. They offer credit. They allow customer to buy on credit. Okay. The financial year end 31 July 2024. we have information testport data age analysis on the 21 July 2024 so they give us table that's where we're going to do analysis okay and additional information okay we have name of the customers we have Marise Ves for and Olivia okay those are the names of our customer that purchase on credit okay column number two These customers credit limit are different depending on the afford affordability. Okay. Marrias limited is 55,000. Voes is 25 for is 36. Olivia is 41,000. They must not owe us more than that. That's their limit. Okay. But if you check the amount owing Marius ow 45,000 VJ is owing 27,000 which is more than limit of 25 there is something wrong. Okay for is owing 18,000 and Olivia is owing 16,000. Okay. So the amount which is not yet due July is current month and the following then we have June which is the previous month then it's not yet due but if it's exceed that 3 months is going to be overdue. Okay. Then we have two months actually because the our current credit limit is 30 days. So we have overdue which is the last month last last month which is May and April long long ago. Okay. yeah we have some people who are still owing some amount you can see there. Okay. So now let's check the additional information. we're going to also check individually who is still owing and why what must be done and so on and so on on the question one credit limit are 30 days every customer is expected to pay within 30 days if it exceed 30 days something wrong interest of 2% per month will be charged on the amount that are overdue if it exceed 30 days they going to charge interest of 2% per month. Okay. And the total credit sales for the year end is the 31 July amounted to 56658. We sell on credit the total amount is 566 and the amount owing by trade datas on one August 303 was 92,000. So one August is at the beginning of the year and at the end of the year total amount of win was 106. You can check on the table. Okay. Now let's check required study the data age analysis and answer the question. We studied the data age analysis. We understood it. Now let's go to the question. Since through the credit check is done before granting the credit or is of opinion that it is unnecessary to prepare data's age analysis and explain to her how preparation of age analysis can assist the business in controlling the data. Guys the the person this person of this company is saying that it's not it's unnecessary to prepare data age analysis. Now let's prove point why is it in important number 1.1.1 reason number one to prepare data age analysis guys it's part of internal control internal control. So guys, if you are running professional business, you can't avoid internal control. Each and every internal control must be done. Okay? Because if we don't draw this, how are we going to see who is owing us how much? Okay? It's going to be problem. Some of the customers, we're going to forget them and we're going to run away. So it can be like that when we are running professional business. So we must be able to do internal control so that we can be able to comply with what with terms and condition. Okay. Our terms and condition of 30 days we can be be able to take it only if we do what we apply the internal control for this age analysis. Okay. The next one, this will help us to recover to recover our funds. Those who are owning us, we will be able to quickly take them and recover our fats. So that's why it's very very important to draw this age analysis. Okay. And also this will help us to identify who must be charged interest. It will help us to charge interest on overdue account. Okay, think that's that's enough because they needed only two point. Okay, then the next question, calculate the average datas period for the year end 31 July 2024. Okay. average datas guys you know this formula from the other topic for paper one which is financial ratio analysis. So the formula for this one we must say average datas divide by credit sales. So our credit sales was given under number three it was 566 58 average datas guys you add opening plus the closing. So our opening here guys it was they say it's 92 plus on 31 July it was 106500 the total. So you need to add this together and you get the total. After getting the total you divide them by two. Okay. And this will give you let me use the another color so that you can see our average how much. Okay. So when we combine and get total we divide by two it's going to give us 425. Okay, we multiply by let's check. They said we must calculate for the period N31 July. So they didn't specify whether in terms of days or months. So if you do any of those is still going to be fine for days. You say 365. Okay. It's going to be how many days? days. Also, if they said in month, you can say multiply by 12. Still going to be fine. All answers they were awarded for for for for 3 months. Okay. 1.1.3. As internal auditor, identify two concern you will report to the owner of the business. In each case code the figure to support your answer. Let's identify two problem that we have on these datas. Number one, the problem that we have here remember here the collection period is taking 64 days to collect to our data. Number one collection period is 64 days which is more than which is more than 30 days of terms and condition. Okay. So as internal auditor will be worried that hey these days are too much. Then the other one if we check Oliver account is overdue. And the overdue amount you can see the whole 16,000 that he owes us the whole of it is overdue. So we must be concerned that is this person still alive? Is this person going to pay us? So it's it's it's bit of concern. And the other one that you can mention guys is for see Ves the credit limit exceeded and this credit limit that has exceeded there is 8,000 6,000 and 2,000 that is overdue. So that's concern we must worried about that as well. So guys data age analysis is not really difficult is easy and straightforward. So yeah, that's how you must analyze it. This question they are not going to change guys. They're just going to change this table. They ask the question in same way because even the answers if you know these answers you will you good to go. If you check other question papers of data age analysis you'll find that they are very similar. Okay. hope you enjoy guys. Please let's keep subscribing. We one day guys we're going to reach 1 million subscribe. I'm telling you let's keep subscribing. One day is one day we are going there. And also guys those who are in grade you have to know that during the holiday our extra class are going to continue. We will be doing temp 3's work and after that immediately guys we're going to start with preparation of trial because trial you're going to only have month of July August you are starting immediately with your trial examination. So we want to make sure that we finish temp 3's work in time. Then after that we revise everything paper one and paper two same time so that you guys you can go and prepare yourself for trial final examination. if you have been watching accounting solution guys since grade 10 tell me on the comment section guys wish you distinction because you have been learning lot from this channel so we want distinction some of you guys please we must see you on TV when minister of fin of education announce results we we need to see you guys on television please let's study let's prepare ourself for all subject so that we can pass with good marks and we choose the cause of our dream. So otherwise let's meet on the next video.