INDIGENOUS BOOK-KEEPING Grarny Sithole bakoa ruaka from her home and enll them to the local community. The name of hor businesa ls Yummy Rusks.She does not havo a bank account and sha keeps all cash in a potty cask box. Sha has a book where che records all receipts and poyments and all the source documonta are kept in anfo. Granny Sithole's granddaughter who complotod a dogroo in Commoroe in December 2018 recolvod scholarshlp to sludy further ovorseas, beforo she lall she showod Granny how to record transactions In a reoolpts and payments book but not to calcutato the profl. The demand for ruska ls growing and Granny has beon approached by tho potential (poasiblo) partno Lerato Mooketsil who wants ta contribute capital and labour lowards the business. Granny Sithole requestodyou to arelet her in proparing the rocords for January, sha wants fo present tho information to Lermio MooketsL. Cash on hand on 1 January 2020 amountod to $$ R 2480 $$. REQUIRED Use the given information to complata the following In the books Yummy Ruslas for January 2020: 1.1 Granny Sithole bought baking Ingredients for R1 200 , the bated rueker were sold for for R1 800.Caloulats the proft mark-up. 12 Record the transactions for January 2020 in tho Recelpts and Payments Book. Balance the book on 31 January 2020. TRAN3ACTIONS FOR JANUARY 2020: 02 Granny Stuole has a propald box for electricity, she pald R850 to upload eloctricily. 05 Bought alrtime from Shid Stores for R180. 08. Bought ingrediente from SM Wholeselers for R4 B00 lass $$ 10 \% $$ Irade dlicount and pald eash. 10 Sold ruska to the communily and recolved R5 800 eash. 13 Puid RA80 to Pronto Newipaper for placing an advorthement for four weoka. 17 On the 17 Gnanry Sitholo was approached by postor at church and she was told that on 24 January 2020 the church was going to have a function and the motivational speakor (Mark Molofe) would Viat the church. Granryy mase requested to provide ruske et an increased proft mark-up of $$ 75 \% $$. The church did not pay any depoell. 18 Oranny bought ingredients for the function from SM Wholesalars for R10 400. SM Wholesalens charged Granny only $$ 85 \% $$ of the amount for Ingredients. 10 Pald Solly Trarsporions Re00 canh for Iransporting the ingredienta to her house. 16

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**INDIGENOUS BOOK-KEEPING**

**Yummy Rusks**
**Receipts and Payments Book for January 2020**

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### **1.1 Calculating the Profit Mark-up**

**Given:**
- **Cost Price of Ingredients:** R1,200
- **Selling Price of Rusks:** R1,800

**Calculation:**

1. **Profit:**
   $$
   \text{Profit} = \text{Selling Price} - \text{Cost Price} = R1,800 - R1,200 = R600
   $$

2. **Profit Mark-up:**
   $$
   \text{Mark-up (\%)} = \left( \frac{\text{Profit}}{\text{Cost Price}} \right) \times 100 = \left( \frac{R600}{R1,200} \right) \times 100 = 50\%
   $$

**Result:**
- **Profit Mark-up:** **50%**

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### **1.2 Recording Transactions in the Receipts and Payments Book for January 2020**

**Initial Cash on Hand (01 January 2020):** R2,480

**Transactions:**

| **Date** | **Description**                                     | **Receipt (R)** | **Payment (R)** |
|----------|-----------------------------------------------------|------------------|------------------|
| 02 Jan   | Paid electricity (upload)                           |                  | 850              |
| 05 Jan   | Bought airtime from Shid Stores                     |                  | 180              |
| 08 Jan   | Bought ingredients from SM Wholesalers (10% discount) |                  | 3,600            |
| 10 Jan   | Sold rusks to community                              | 5,800            |                  |
| 13 Jan   | Paid Pronto Newspaper for advertisement              |                  | 80               |
| 17 Jan   | Negotiated increased mark-up for church function     |                  |                  |
| 18 Jan   | Bought ingredients for function from SM Wholesalers (15% discount) |                  | 8,840            |
| 20 Jan   | Paid Solly Transportations for ingredient transport  |                  | 400              |
| **Total**|                                                     | **5,800**        | **13,950**       |

**Notes:**
- **08 Jan Transaction:**  
  - **Original Cost:** R4,000  
  - **Trade Discount (10%):** R400  
  - **Amount Paid:** R4,000 - R400 = R3,600

- **18 Jan Transaction:**  
  - **Original Cost:** R10,400  
  - **Discount (15%):** R1,560  
  - **Amount Charged by SM Wholesalers:** 85% of R10,400 = R8,840

- **17 Jan Transaction:**  
  - No cash movement occurred as the church did not pay any deposit.

---

**Cash Flow Summary:**

| **Description**      | **Amount (R)** |
|----------------------|----------------|
| **Opening Balance**  | 2,480          |
| **Total Receipts**   | 5,800          |
| **Total Payments**   | 13,950         |
| **Closing Balance**  | **-5,670**     |

**Calculation:**
$$
\text{Closing Balance} = \text{Opening Balance} + \text{Total Receipts} - \text{Total Payments} = R2,480 + R5,800 - R13,950 = -R5,670
$$

**Result:**
- **Closing Balance on 31 January 2020:** **-R5,670**

**Interpretation:**
- The negative closing balance of R5,670 indicates that the business has overdrawn its cash by this amount for January 2020. Granny Sithole may need to consider the following actions:
  - **Review Expenses:** Analyze and possibly reduce discretionary expenses.
  - **Increase Sales:** Explore strategies to boost sales to cover the deficit.
  - **Seek Additional Capital:** Consider contributions from potential partner Lerato Mooketsil or other sources to cover the shortfall.
  - **Implement Better Cash Management:** Regularly monitor cash flows to prevent future overdrafts.

---

**Recommendations for Improving Book-Keeping:**

1. **Maintain a Bank Account:**
   - Opening a business bank account can help in better managing cash flows and provide a clearer picture of the financial position.

2. **Detailed Record-Keeping:**
   - Use accounting software or maintain detailed ledger books to track all financial transactions systematically.

3. **Regular Financial Reviews:**
   - Conduct monthly financial reviews to monitor the business's financial health and make informed decisions.

4. **Inventory Management:**
   - Keep track of inventory levels to avoid over-purchasing ingredients and manage stock efficiently.

5. **Seek Financial Advice:**
   - Consulting with a financial advisor or accountant can provide insights into improving profitability and managing expenses.

---

**Conclusion:**
For January 2020, Yummy Rusks experienced a 50% profit mark-up on rusks sold. However, the business faced a cash deficit of R5,670 by the end of the month. Implementing better financial management practices and exploring opportunities to increase sales and reduce expenses will be crucial for sustainable growth.
**Yummy Rusks January 2020 Financial Summary** - **Profit Mark-up:** 50% on sales - **Transactions:** - Bought ingredients: R3,600 - Sold rusks: R5,800 - Paid electricity: R850 - Paid newspaper: R80 - Bought function ingredients: R8,840 - Paid transport: R400 - **Cash Flow:** - Opening Balance: R2,480 - Total Receipts: R5,800 - Total Payments: R13,950 - Closing Balance: -R5,670 (overdrawn) **Recommendations:** - Open a business bank account for better cash management. - Use accounting software to track all transactions. - Review and reduce expenses to improve cash flow. - Increase sales to cover the deficit. - Consider seeking financial advice for better management.

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