Part A: Income Statement and Balance Sheet
Laura Golarsa’s Asset and Liabilities as at June 30 are outlined in the post-closing trial balance below.
| Debit | Credit | |
| Cash at Bank | $2,700.00 | |
| Inventory (at cost) | $4,000.00 | |
| Accounts Receivable | $3,100.00 | |
| Plant & Equipment | $6,600.00 | |
| Accumulated Depreciation: Plant & Equipment | $2,640.00 | |
| Debit | Credit | |
| Motor Vehicles | $18,000.00 | |
| Accumulated Depreciation: Motor Vehicles | $4,500.00 | |
| Land & Buildings | $225,000.00 | |
| Accrued Expenses Payable | $530.00 | |
| Bank Loan | $51,730.00 | |
| Capital: Laura Golarsa | $200,000.00 | |
| $259,400.00 | $259,400.00 |
- Laura Golarsa estimates that her sales for the next three months will be as follows:
| July | August | September |
| $15,750 | $19,250 | $17,500 |
Selling price is firmly established a cost plus 75% Markup, with 80% of sales on credit.
- Actual and estimated inventory balances are as follows:
| June 30 (actual) | $4,000 |
| July 31 (estimated) | $4,800 |
| August 31 (estimated) | $4,500 |
| September (estimated) | $5,000 |
- All purchases are made for cash and take advantage of 5% trade discount.
- Expenses are:
| Marketing | 15% of Sales |
| General & Administration | 5% of Sales |
Other Expenses:
- At 1 July, accrued motor vehicle running expenses payable amounted to $530. These expenses are $250 plus 1% of sales and are paid in the following month. At the end of the quarter, September’s motor vehicle running expenses will be accrued.
- Motor Vehicles are depreciated at 20% per annum and Plant & Equipment at 10% per annum.
- Financial Expenses: Interest payable is $1,850 per quarter. Additionally, 2% of credit sales are expected to be bad.
Laura forecasts that the following will occur during the quarter ending September 30:
- Laura estimates that she will collect all of the accounts receivable at 30/06, and 75% of the collectible Accounts Receivable arising from the quarter’s sales.
- $11,730 will be paid off the bank loan.
- Laura will deposit additional capital of $21,000 during the period.
Required (Ignoring VAT for this question)
- Prepare a Budgeted Income Statement for the quarter ended 30 September, based on the information provided, clearly showing all component of Cost of Goods Sold.
- Prepare a Budgeted Balance Sheet as at 30 September.
Part B: Statement of Cash Flow
The following budgeted information is provided for the business of Rex’s Fishing Supplies for the year to end 30 June 2014.
| Cash Sales | $87,200.00 |
| Receipts from Accounts Receivable | $130,800.00 |
| Purchase of Shop Fittings | $10,900.00 |
| Payment to Accounts Payable | $65,400.00 |
| Investment Income Received | $5,000.00 |
| Repayment of Bank Loan | $50,000.00 |
| Operating Expenses Paid | $43,600.00 |
| Drawing by Rex | $30,000.00 |
| Cash at Bank 01 July 2013 (Actual) | $15,000.00 |
| Cash at Bank 30 June 2014 (Budgeted) | $30,000.00 |
Required:
(a) Prepare a budgeted Statement of Cash Flows for the year ended 30 June 2014. Rex’s Fishing Supplies is VAT Registered and reports on a cash basis. Net VAT Collected will be remitted to the FRCA during the year.
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