Sachin Reddy operates a gift store at Brightwater Mall called Lucky Star. Sachin’s estimate of sales are given in the table below. Sales tend to reduce in the winter.


Projected Sales


Month $
April 56,000
May 55,000
June 45,000
July 40,000


As a general rule 70% of sales are for cash with the remainder on credit. Of the credit sales, 90% will be received in the month after sale and the balance two months after.

Purchases and Inventories

Sachin sources most of the gifts from wholesalers in the Nelson region. Goods are purchased in anticipation of the next month’s sales. The purchases cost is 65% of the selling price. The wholesalers give a month’s credit with payment due on the 20th of the month following purchase. (For the purposes of this assignment you may ignore any inventory held).

Non-Current Assets

  • It is business policy to use the straight line method of depreciation for all non-current assets.
  • The furniture and fittings for the shop cost $35,000 and have an expected life of 10 years with no residual value.
  • The office equipment cost $25,000 and it was estimated that the office equipment will be suitable to operate for five years after which time it will have a resale value of $5,000.


  • There are two assistants who work in the shop and the monthly wages bill is $6,500 a month which is payable during the month. (Ignore PAYE and other deductions).
  • Communication costs are estimated at $700 a month, payable on the 20th of the month following purchase.
  • The monthly rent on the shop of $4,200 is payable on the first of the month.
  • Electricity expenses of $300 a month are payable the month after use.
  • The annual insurance premium is $3,600 and was paid on the 2nd of March 2019.
  • Advertising is estimated at $500 a month and the terms are that the advertising should be paid in the month it is incurred.


Balances at end of March


  • The balance of Cash at Bank on 31 March 2019 is $24,250.
  • The balance of Accounts Payable for goods purchases as at 31 March 2019, is $32,500.
  • Accounts Payable for electricity as at 31 March 2019, is $280.
  • Accounts Payable for communication costs as at 31 March 2019, is $740.
  • Accounts Receivable relating to March sales as at 31 March 2019, is $14,000 and relating to February sales, is $1,600. (Hint: Assume the collection of February and March Accounts Receivable will follow the collection pattern given for April to June).





  1. On the Data Input Sheet, enter the given data which has not yet been entered.
  2. On Revenue & NCA sheet, complete the revenue, cash collections, purchases and depreciation calculations for the quarter 1 April to 30 June 2019.
  3. On the Cash Flow Sheet, complete the Projected Cash Flow from Operations for each of the three months April, May, June and the totals for the quarter 1 April to 30 June 2019. Note: Some cash flow rows have been named, but you will need to enter the remaining cash flow names yourself.
  4. On the Income Statement Sheet, complete the Projected Income Statement for the quarter ended 30 June 2019. A month by month Income Statement is not required. Note: Some expenses have been identified but you need to enter the remaining expenses yourself.
  5. Check the flexibility of your workbook by changing the purchases percentage of sales 65% to 60%. Enter the resulting Net Profit and ending Cash Balance in the boxes provided on the Income Statement Sheet (remember to change the purchases percentage of sales back to the original amount before submitting your assignment).

Ignore interest calculations and GST.

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