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


(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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