ASSESSMENT - STUDENT INFORMATION
The owner of Cupcake Heaven, Sarah Winter, needs some assistance in preparing her budget and budget reports. She has gone through her past records thoroughly and has prepared a summry of what has happened and what is expected to happen. However she is unsure how to determine cash receipts from debtors and for and cash payments from creditors. She has provided the following for your information
| From balance sheet |
|
|
|
Actual |
Predicated |
|
31-Jul-17 |
31-Aug-17 |
|
$ $ |
|
| Balance of stock control |
2600 |
36400 |
| Balance of debtors control |
2400 |
2800 |
| Balance of creditors control |
8500 |
9500 |
| Balance of cash at bank |
3210 |
? |
|
|
|
| From the profit and loss statement |
|
|
|
Actual |
Predicated |
|
31-Jul-17 |
31-Aug-17 |
|
$ |
$ |
| Cash sales |
6500 |
6600 |
| Credit sales |
2750 |
2800 |
| Cost of sales |
4500 |
4600 |
| Stock loss |
800 |
800 |
| Wages |
1600 |
1600 |
| Office expenses |
200 |
200 |
| Discount expense |
110 |
120 |
| Discount revenue |
150 |
160 |
| Bad debts |
100 |
100 |
a) Reconstruct the following general ledger accounts to help Sarah with the preparation of her budgeted cash flow statement. Debtors Control Stock control and creditors Control. Don't forget to allow for 10% GST on all sales and purchases
b) Using the above Information, plus your reconstructions from part a prepare a budgeted cash flow statement for Cupcake Heaven for the month ending 31 August 2017
c) Taking into consideration your budgeted cash flow statement from part b comment on the likely future cash position of this business
d) Prepare a budgeted profit and loss for the month ending 31 August 2017
e) Write one report on the future performance expectations of Cupcake Heaven in related to the expected profit or loss.
Assessment Summary - You are to submit the following
3 x reconstructed general ledger accounts
Budgeted cash flow statement and report
Budgeted Profit and Loss statement
Overview report on future performance expectations
Assessment
Allan smyth in the owner of cakes-2-U a specialist cake service that makes and delivers to wedding and celebratory cakes to customers. At the end of December 2016 there is only $250 in the company bank account. His other problem in that he would like to purchase a new vehicles (costing $25000) for the business. But he doesn't know when he will have the $10,000 is unsure how to do so. He has asked for your assistance and has provided the following information in relation to his business (You do not have to account for the GST in the question)
The quarter of January to March is cakes-2-U a business quarter each year. In January 2010 he earned the following revenue. January $12000, February $14,000 and March $15000. After this the business slowed down littlie. In this next quarter he earned the following revenue. April $14,000, May $12,000 and June $10,000. Allan is confident that revenue will be higher in the early part of 2017. He has already signed contracts to complete the following jobs in January 2017
Piketon's $1,900
Fox's $1,750
Tan's $1,800
Singh's $1,950
Strong's $1,850
Ablert's $1,950
O'Conner's $1,900
For the months of February and March. Allan expects to earn fees from about 10% higher than the previous year, but in the quarter April-June he doesn't expect the same level of business. In fact he has stated that he expects his revenue to be about 5% lower than in the same quarter last year.
Allan purchase all ingredients and materials for jobs as they are requested. When he is quaking for a jobs, he calculates the cost of materials and multiplies this by 4 to calculate the total cost of the jobs. Allan argues that this allows for labour costs. Vehicles expenses and a profit margin for himself. The cost of materials is therefore 25 %of the revenue expected to be earned.
The business employs 2 assistants who are each paid on Fridays. One is employed full time and is usually paid $50 per week. The other is employed on a casual basis. During the busiest months (January to march) the casual in probably paid around $500 per week. In the period April-June his wages will drop back to $400 per week.
The company has one vehicle which delivers all orders. Petrol expenses for the vehicles are usually around 200 per months, but in the January-March quarter this will go to about $240 per month. The vehicle is due for a service in February and this will cost about $320.
Insurance on the vehicle is due on 2 March each year and is expected to cost $540 this year. Registration of the vehicle is due on 11 June and should be about $540.
Allan advertises his business in the local papers at a cost of $150 per months.
New equipments will have to be purchase. The suppliers has agreed to take a $1,000 deposit on delivery of the equipments and then $400 payments will have to be paid each months until it is fully paid off.
Allan does his office work from home. He usually incurs office expenses for the business at around $100 per months
Loan repayments of $1500 are due on 15 February, 15 August and 15 November
Allan usually redraws $500 each Friday for the personal use.
a) Prepare a cash budget for cakes-2-U for the period January -June 2017. You budget should allow for the anticipated cash balance at the end of the month
b) Provide a written report that states when Allan will be able to afford the $10,000 deposit for the new vehicles. Support your answer with reasons
c) Arrange a time and present your budget to Allan (role played by your assessor) and explain your proposed cash budget along with your recommendations. It is important that you have access to a soft-copy of your budget for this meeting.
When you present your budget and response. It is important that you are professional. This means you must ensure all documentation is presented professionally and that you explain everything in detail.