Gateway Parts

account-budget homework?

retail-low is a small store in the outer suburbs of brisbane that has been successful over recent years despite the recession.below are the estimated transaction totals for the quarter ending 30 june 2009. item area apr may jun item 1 sales 130000 140000 145000 item 2 closing inventory 49000 53000 41000 item 3 purchases 72000 80000 73500 item 4 wages-sales 16000 22000 24000 item 5 insurance - 18000 - item 6 delivery costs(outwards) 8000 12200 6400 item 7 aministration costs 4000 4200 4100 item 8 financial costs 800 900 500 item 9 interest received 500 440 700 item10 drawings 2000 2300 700 item 4 to 10 are expected to be cash items from the cash receipts and cash payments journals for the months indicated. the following items need further consideration and have not been included in the figures above. item 1 sales are nornally 50% cash and 50% credit.the credit sales collection is:80% received the month following sale and these accounts receivable are allowed 10% discount,20%collected second month after sale.there are normally no bad debts,due to tight credit controls. item 3 general policy is that all purchases are on credit and paid the month following the purchase.we are given 5% discount if accounts are paid within 30 days. item 5 a new annual insurance policy will be paid on 1 may 2009. item 8 financial costs do not include the discount on account receivable for this quarter. note: A delivery vehicles are depreciation 18% pa reducing balance method. B salary bonus equal to 3% of total sales for the quarter are paid to staff in the first pay-cheque the following quarter. C area jan feb mar total sales for the month 120000 128000 126000 total purchases for the month 50000 53000 56000 balance sheet for retail-low as at 31 march 2009 current assets 98900 bank 75800 inventory 40000 investment bonds-maturing 12 june 2009 102000 total current assets 316700 non-current asset computer 2000 delivery vehicles 85000 less accumulated depreciation 4000 81000 total non-current assets 83000 total assets 399700 current liabilities accrued expense-salary bonus 11220 accounts payable 56000 loan number 1-due 6 apr 2009 136500 loan number 2-due 12 jun 2009 120000 total liabilities 323720 net assets 75980 equity capital 20180 add profit 60300 80480 less drawings 4500 total equity 75980 (a)prepare the cash budget for retail-low to show the bank balance for each of the months for the quarter ended 30 june 2009. (b)prepare the budgeted income statement for retail-low for the quarter ended 30 june 2009. (c)using the figures prepared in the cash budget part(b),comment on the estimated cash flow position of retail traders for the quarter ending june 30 2009.how will the cash budget assist the owner in planning and controlling his business. (d)using examples from the question,and the AASB standards,clearly explain the difference between cash receipts and income;and cash payments and expenses.

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