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  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 1

    Exercise 17.1 Top Hats

    a.

    Calculation

    GST on: Stock 400

    Advertising 210

    Rent 840

    Shop fittings 350 1 800

    Budgeted GST paid $ 1 800

    c.

    Action 1 Reduce payments like drawings, reduce or defer the loan repayment / pay only 6 months

    rent in advance / defer or purchase the shop fittings on credit

    Action 2 Increase inflows by making a capital contribution / using a loan to purchase the fittings /

    organise a bank overdraft

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 2

    b.

    Top Hats

    Budgeted Cash Flow Statement for July 2011

    $ $

    OPERATING ACTIVITIES

    Cash inflows

    Cash sales 12 000

    Receipts from debtors 3 000

    GST received 1 200 16 200

    less Cash outflows

    GST paid 1 800

    Stock 4 000

    Advertising 2 100

    Wages 3 600

    Interest expense 230

    Prepaid rent expense 8 400 20 130

    Net Operating Cash Flows (3 930)

    INVESTING ACTIVITIES

    Cash inflows

    nil

    less Cash outflows

    Shop fittings 3 500

    Net Investing Cash Flows (3 500)

    FINANCING ACTIVITIES

    Cash inflows

    nil

    less Cash outflows

    Loan repayment 1 600

    Drawings 1 000 2 600

    Net Financing Cash Flows (2 600)

    Net Increase (Decrease) in Cash (10 030)

    Cash balance at start 2 700

    Cash balance at end $7 330

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 3

    Exercise 17.2 Lockhardt Locks

    a.

    January

    Calculation

    GST on: Advertising 130

    Rent 900

    Budgeted GST paid $ 1 030

    February

    Calculation

    GST on: Advertising 130

    Vehicle 2 100

    Budgeted GST paid $ 2 230

    March

    Calculation

    GST on: Advertising 130

    Budgeted GST paid $ 130

    c.

    Action 1 Defer the purchase of the vehicle until March

    Bring the capital contribution forward to February

    Action 2 Use credit / a loan to purchase the vehicle

    Organise a bank overdraft

    d.

    Explanation Planning is assisted as monthly trends can be identified, allowing the owner to plan the

    best time to undertake a cash activity (such as the purchase of an NCA).

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 4

    b.

    Lockhardt Locks

    Budgeted Cash Flow Statement for January March 2011

    January February March

    OPERATING ACTIVITIES

    Cash inflows

    Cash sales 26 000 27 000 25 000

    GST received 2 600 2 700 2 500

    Total Operating Inflows 28 600 29 700 27 500

    less Cash outflows

    GST paid 1 030 2 230 130

    Payments to creditors 13 200 14 300 14 850

    Wages 4 000 4 000 4 000

    Advertising 1 300 1 300 1 300

    Interest expense 150 150 150

    Prepaid rent expense 9 000

    GST settlement 1 600

    Total Operating Outflows 30 280 21 980 20 430

    Net Operating Cash Flows (1 680) 7 720 7 070

    INVESTING ACTIVITIES

    Cash inflows

    Cash sale of vehicle 1 900

    less Cash outflows

    Vehicle 21 000

    Net Investing Cash Flows 1 900 (21 000) nil

    FINANCING ACTIVITIES

    Cash inflows

    Capital contribution 15 000

    less Cash outflows

    Drawings 2 000 2 000 2 000

    Loan repayment 1 500

    Net Financing Cash Flows (3 500) (2 000) 13 000

    Net Increase (Decrease) in Cash (3 280) (15 280) 20 070

    Cash balance at start 3 400 120 (15 160)

    Cash balance at end 120 (15 160) 4 910

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 5

    Exercise 17.3 Bats n Balls

    a. Accept any one of two

    Reason Start of summer sports (such as cricket, tennis)

    Christmas

    b.

    Month Credit sales

    (incl. GST)

    October November December

    August 8 800 2 640

    September 9 900 6 930 2 970

    October 11 000 7 700 3 300

    November 12 100 8 470

    December 13 200

    Budgeted receipts from debtors 9 570 10 670 11 770

    c.

    Explanation Credit sales ($13 200) is budgeted to be higher than Receipts from debtors ($11 770),

    meaning cash inflows and budgeted Net cash flows will increase by more than revenues

    and budgeted Net profit.

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 6

    Exercise 17.4 Jazzy Jackets

    a.

    Month Credit sales

    (incl. GST)

    April May June

    February 44 000 8 800

    March 49 500 14 850 9 900

    April 38 500 19 250 11 550 7 700

    May 33 000 16 500 9 900

    June 22 000 11 000

    Budgeted receipts from debtors 42 900 37 950 28 600

    b.

    Jazzy Jackets

    Budgeted Cash Flow Statement (extract) for April June 2011

    April May June

    OPERATING ACTIVITIES

    Cash inflows

    Cash sales 27 000 32 000 26 000

    GST received 2 700 3 200 2 600

    Receipts from debtors 42 900 37 950 28 600

    Total Operating Inflows 72 600 73 150 57 200

    c.

    Explanation It allows the owner to prepare in advance for a budgeted increase or decrease in cash.

    A budgeted decrease in cash might require the organisation of an overdraft or other

    finance, or the deferment of certain payments. A budgeted increase in cash might allow

    for the repayment of loans, purchase of assets, or extra drawings.

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 7

    Exercise 17.5 Barrys Bags

    a.

    Month Credit sales

    (incl. GST)

    January February March

    January 22 000 8 360 7 700

    February 27 500 10 450 9 625

    March 30 800 11 704

    Budgeted receipts from debtors 8 360 18 150 21 329

    b.

    Month Credit purchases

    (incl. GST)

    January February March

    January 13 200 6 600 6 600

    February 14 300 7 150 7 150

    March 15 400 7 700

    Budgeted payments to creditors 6 600 13 750 14 850

    c.

    Barrys Bags

    Budgeted Cash Flow Statement (extract) for January March 2011

    OPERATING ACTIVITIES January February March

    Cash inflows

    Cash sales 30 000 34 000 36 000

    GST received 3 000 3 400 3 600

    Receipts from debtors 8 360 18 150 21 329

    Total Operating Inflows 41 360 55 550 60 929

    less Cash outflows

    Payments to creditors 6 600 13 750 14 850

    Advertising 2 500 2 500 2 500

    GST paid 250 250 250

    Wages 1 800 1 800 1 800

    Total Operating Outflows 11 150 18 300 19 400

    Net Operating Cash Flows 30 210 37 250 41 529

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 8

    d.

    Explanation Excluded as it is does not involve a cash flow: depreciation is the allocation of the cost

    of a non-current asset over its useful life

    e.

    Explanation As a Financing Outflow, as it is a cash outflow related to a change in the firms

    financial structure

    f.

    Explanation It can identify problem areas in the management of cash, so that corrective action can

    be taken.

    (This is particularly the case when it is used in conjunction with a Cash Variance

    Report.)

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 9

    Exercise 17.6 Dans Detergents

    a.

    Dans Detergents

    Budgeted Cash Flow Statement for May 2011

    $ $

    OPERATING ACTIVITIES

    Cash inflows

    Cash sales 15 000

    GST received 1 500

    Receipts from debtors 9 700 26 200

    less Cash outflows

    Payments to creditors 32 000

    Prepaid advertising 1 200

    GST paid 220

    Wages 2 000

    Rent expense 1 000 36 420

    (10 220)

    Net Operating Cash Flows

    INVESTING ACTIVITIES

    Cash inflows

    nil

    less Cash outflows

    Sundry creditor Jancke Fittings 400

    Net Investing Cash Flows (400)

    FINANCING ACTIVITIES

    Cash inflows

    Capital 20 000

    Loan ZNA 35 000 55 000

    less Cash outflows

    Drawings 1 900

    Net Financing Cash Flows 53 100

    Net Increase (Decrease) in Cash 42 480

    Cash balance at start nil

    Cash balance at end 42 480

  • Cambridge VCE Accounting Units 3 & 4 Teacher CD-ROM

    Simmons, Hardy 2006 Cambridge University Press 10

    b.

    Dans Detergents

    Budgeted Profit and Loss Statement for May 2011

    $ $

    Revenue

    Cash sales 15 000

    Credit sales 12 000 27 000

    less Cost of Goods Sold

    Cost of sales 18 000

    Gross profit 9 000

    less Stock loss 500

    Adjusted Gross Profit

    8 500

    less Other Expenses

    Advertising 200

    Wages 2 000

    Depreciation shelving 50

    Rent expense 1 000 3 250

    Net Profit $5 250

    c.

    Reason 1 Capital contribution / Loan ZNA are both cash inflows which increase Bank but are not

    revenues