BSBFIM601 Finances Manage Sample Assignment

Sales Budget

GST Cash flow analysis

Aged Debtors budget

Budget notes:

Reason for profit and loses:

• Reasons are that there is an increasing customer base and the business is built on superior after sales service.
• Effectiveness of existing financial management approaches
• Inadequate analysis of revenue/expense to produce an informed estimate.
• Lack of computer software to produce timely and detailed reports.
• Too much reliance on qualitative input rather than balancing it with quantitative data and analysis.

PART B

1. Current compliance requirement and liabilities for this organization under the corporation Act 2001.

• a due diligence committee that oversees and documents the due diligence process and identifies issues for investigation and disclosure in the prospectus;
• directors, management and various advisers to the issuer undertaking particular tasks to ensure the prospectus is properly prepared;
• the due diligence committee undertaking verification of the prospectus to ensure it does not contain any false or misleading statements.
• Financial probity requires the preparer of budgets to do so with honesty, integrity and in an ethical manner. This would require objectivity and conduct that ensures that no conflict of interests exists or is perceived to exist in the preparation of budgets.
• Others must be advised to be truthful in their assessments, responses and the documentation of financial transactions and notes to the budgets.
• Financial viability – profit on target for the first quarter which is the seasonally slowest quarter of the year
• Gross profit margins – yes, the variance report identifies that the company was able to maintain its gross profit margin in line with the budget.
• Review the discount policy to protect the gross profit margin.
• Reduce loans to reduce exposure to rising interest rates.
• Review salaries and wages to reduce costs and improve viability.
• Revised budget to include adjustments to the advertising budget with the $50,000 added to the next quarter.

2. Most suitable software for the Ed`s Whitegoods Pty Ltd

Our target market is small business owners (1-9 employees), freelancers and solo entrepreneurs. Wave has users in 200 countries around the world and our ecosystem is 2 million strong.

Each products have cutmosizeable as Contemporary, Classic, Modern.

Wave offers 100% free, real double-entry accounting for small businesses. As a cloud-based software, Wave allows you to access your data from anywhere, add unlimited collaborators and work on all of your businesses from a single login. Wave eliminates data-entry and puts the financial reports you need at your fingers tips, allowing you to spend more time doing what you love. Your accounting is also seamlessly integrated with invoicing, receipt scanning, payment processing and payroll.

3. Principle of accounting in developing budget

1. Matching principle

The matching principle is applied in preparing a budget by making sure that the revenues for the period are matched with the expenses incurred in earning that revenue for the period.

1. Account group

Account groups are used in preparing a budget by separating the revenue and expense accounts into the profit budgets and the asset, liability and equity accounts into the capital budgets like cash flow and capital expenditure.

1. Time period

Time periods are applied in preparing a budget by applying the accounting assumption that a going concern can be divided into shorter time periods of weeks, months, quarters and years for the purpose of budgeting and reporting.

Implication of probity when preparing and revising budget

Following implication of probity need to be consider when preparing and revising budget for Ed`s Whitegoods ltd.

• Financial probity requires the preparer of budgets to do so with honesty, integrity and in an ethical way. This would require objectivity and conduct that ensures that no conflict of interest exists or is perceived to exist in the preparation of budgets.
• Others must be advised to be truthful in their assessments, responses and the documentation of financial transactions and notes to the budgets

4. list the new internal controls and risk management for Ed`s Whitegoods Pty Ltd including the maintenances of audit trails

Risk management

Risk management includes internal control additions and modifications:

• discounts to be recorded
• reconcile cash registers daily
• proper authorisation – timesheets and supplier invoices
• maintain currency of asset register
• open lines of communication
• need for separation of duties
• job descriptions
• roster duties to minimise fraud possibility.

Audit trails

• List of directives – all cash received receipted on pre-numbered forms, payments via cheques with stubs completed, voucher system in payments duly authorised, data entry to identify source, cross coded source with electronic entry.
• Paperwork – paperwork with complete details must be provided as evidence of any receipt or payment of cash.
• Secondary control – receipt of cash will have a secondary monitoring system like a cash register or a second person. Verify with an independent record.
• Proper authority – all payments must be authorised by the person responsible for the department or cost centre.

Appendix 1 – Big Ed’s Whitegoods Ltd

Edward Tan owns a medium sized whitegoods retail store. He provides you with the following information which is current as of 1 October 2014. All sales and purchasing figures are inclusive of GST.

Assets:

Cash (Bank) $245,000

Computer equipment $16,400

Delivery Van $26,000

Phones $2,300

Office Equipment $4,500

Debtors $13,580

Stock $117,303

Expenses

Phone Service / Calls $780

Electricity $1590

Gas $600

Water $550

Insurance $1300

Payroll $465,000

Cleaning $850

Finance Costs $1650

Advertising $560

Rent $25,000

Petrol $560

Accountants Fees $370

Maintenance $1405

Bank Fees $210

Office Supplies $600

Creditors:

JRL Holdings $22,626

Innovating Technology Ltd $3,653

LMS Marketing $1,200

Rowlings & Sons $35,622

Ed has 3 customers that purchase a large quantity of stock through him which he delivers to their premises. To keep these customers happy, Ed is providing this service on credit to the customers listed below. The listed customers have a debt owing to Ed as listed:

Debtors:

P.L Farthings $1,323

J Smyth & Co $800

L.L Incorporated $356

National Appliances Direct $4,233

Appendix 2 – Big Ed’s Whitegoods Ltd Transactions October 2014

Ed sold the following items:

Each sold at:

12 fridges $1600

15 freezers $800

13 microwaves $470

11 Range hoods $190

6 ovens $2100

16 cook tops $560

18 dishwashers $990

22 Vacuums $390

14 Coffee makers $600

25 Toasters $99

5 Irons $156

16 Mixers $89

13 Deep fryers $99

4 Portable A/Cs $350

0 Hairdryers $35

14 Irons $45

14 Scale Sets $24

13 Kettles $78

15 Small Bins $40

7 Large Bins $60

9 Wine coolers $299

5 Washing Machines $340

4 Dryers $330

TOTAL $111837

All Sales for cash

Ed purchased the following items:

Each purchased for:

10 fridges $800 Purchased on credit from JRL

15 freezers $250 Purchased on Credit from JRL

10 microwaves $150

10 Range hoods $80

5 ovens $900

15 cook tops $200

15 dishwashers $450

20 Vacuums $130 Purchased on credit from Innovative Tech

10 Coffee makers $250 Purchased on credit from Innovative Tech

20 Toasters $35

5 Irons $78

15 Mixers $45

10 Deep fryers $45

0 Portable A/Cs $180

0 Hairdryers $9

10 Irons $19

10 Scale Sets $12

10 Kettles $34

10 Small Bins $13

5 Large Bins $22

15 Wine coolers $130

5 Washing Machines $220 Purchased on credit from Rowlings

5 Dryers $210

TOTAL $40605

All Invoices paid at time of purchase unless otherwise stated

The following amounts were paid to creditors:

JRL Holdings $5,000

Innovating Technology Ltd $2,000

Rowlings & Sons $5,000

Deliver services were provided on credit to the following:

P.L Farthings $300

J Smyth & Co $150

L.L Incorporated $362

National Appliances Direct $600
the following was paid in expenses

Phone Service / Calls $65

Electricity $132.50

Gas $50

Water $45.83

Insurance $108.33

Payroll $38750

Cleaning $70.83

Finance Costs $137.50

Advertising $46.67

Rent $2083.33

Petrol $46.67

Accountants Fees $30.83

Maintenance $117.08

Bank Fees $17.50

Office Supplies $ 50

TOTAL EXPENSES $41,752.08

Bank Statement October 2014

Appendix 3 – Ed’s Whitegoods Ltd Transactions November 2014

Ed sold the following items:

Each sold at:

8 fridges $1600

10 freezers $800

6 microwaves $470

15 Range hoods $190

5 ovens $2100

18 cook tops $560

18 dishwashers $990

26 Vacuums $390

18 Coffee makers $600

13 Toasters $99

7 Irons $156

11 Mixers $89

9 Deep fryers $99

6 Portable A/Cs $350

2 Hairdryers $35

16 Irons $45

18 Scale Sets $24

14 Kettles $78

14 Small Bins $40

17 Large Bins $60

10 Wine coolers $299

10 Washing Machines $340

4 Dryers $330

TOTAL $103136

All Sales for cash

Ed purchased the following items:

Each purchased for:

5 fridges $800 Purchased on credit from JRL

5 freezers $250 Purchased on Credit from JRL

5 microwaves $150

10 Range hoods $80

5 ovens $900

10 cook tops $200

10 dishwashers $450

20 Vacuums $130 Purchased on credit from Innovative Tech

10 Coffee makers $250 Purchased on credit from Innovative Tech

10 Toasters $35

5 Irons $78

10 Mixers $45

5 Deep fryers $45

5 Portable A/Cs $180

0 Hairdryers $9

15 Irons $19

15 Scale Sets $12

10 Kettles $34

10 Small Bins $13

5 Large Bins $22

5 Wine coolers $130

0 Washing Machines $220 Purchased on credit from Rowlings

0 Dryers $210

TOTAL $26910

All Invoices paid at time of purchase unless otherwise stated

The following amounts were paid to creditors:

JRL Holdings $5,000

Innovating Technology Ltd $2,000

LMS Marketing $1,200

Rowlings & Sons $5,000

Deliver services were provided on credit to the following:

P.L Farthings $200

J Smyth & Co $350

L.L Incorporated $462

National Appliances Direct $490

TTNT $336

As of December 2014, Ed gains another valuable customer, TTNT, who he sets up on the same credit delivery scheme as his other regular customers.
The following was paid in expenses

Phone Service / Calls $65

Electricity $132.50

Gas $50

Water $45.83

Insurance $108.33

Payroll $38750

Cleaning $70.83

Finance Costs $137.50

Advertising $46.67

Rent $2083.33

Petrol $46.67

Accountants Fees $30.83

Maintenance $117.08

Bank Fees $17.50

Office Supplies $ 50

TOTAL EXPENSES $41,752.08

Bank Statement November 2014

Appendix 4 – Ed’s Whitegoods Ltd Transactions December 2014

Ed sold the following items:

Each sold at:

16 fridges $1600

15 freezers $800

6 microwaves $470

8 Range hoods $190

8 ovens $2100

14 cook tops $560

14 dishwashers $990

29 Vacuums $390

26 Coffee makers $600

19 Toasters $99

9 Irons $156

16 Mixers $89

13 Deep fryers $99

8 Portable A/Cs $350

1 Hairdryers $35

21 Irons $45

22 Scale Sets $24

19 Kettles $78

31 Small Bins $40

16 Large Bins $60

16 Wine coolers $299

15 Washing Machines $340

8 Dryers $330

TOTAL $133860

All Sales for cash

Ed purchased the following items:

Each purchased for:

10 fridges $800 Purchased on credit from JRL

10 freezers $250 Purchased on Credit from JRL

10 microwaves $150

15 Range hoods $80

10 ovens $900

15 cook tops $200

15 dishwashers $450

30 Vacuums $130 Purchased on credit from Innovative Tech

25 Coffee makers $250 Purchased on credit from Innovative Tech

20 Toasters $35

10 Irons $78

18 Mixers $45

15 Deep fryers $45

10 Portable A/Cs $180

5 Hairdryers $9

25 Irons $19

25 Scale Sets $12

20 Kettles $34

30 Small Bins $13

15 Large Bins $22

15 Wine coolers $130

10 Washing Machines $220 Purchased on credit from Rowlings

10 Dryers $210

TOTAL $55335

All Invoices paid at time of purchase unless otherwise stated

The following amounts were paid to creditors:

JRL Holdings $10,000

Innovating Technology Ltd $4,000

Rowlings & Sons $8,600

Deliver services were provided on credit to the following:

P.L Farthings $965

L.L Incorporated $332

National Appliances Direct $695
the following was paid in expenses

Phone Service / Calls $65

Electricity $132.50

Gas $50

Water $45.83

Insurance $108.33

Payroll $38750

Cleaning $70.83

Finance Costs $137.50

Advertising $46.67

Rent $2083.33

Petrol $46.67

Accountants Fees $30.83

Maintenance $117.08

Bank Fees $17.50

Office Supplies $ 50

TOTAL EXPENSES $41,752.08

Bank Statement December 2014

Appendix 5 – Ed’s Whitegoods Ltd Assumptions for 2015 financial year

Following research on market trends and consumer confidence, as well as inflation and other factors, Ed has provided you with the following set of assumptions for the 2015 business year.

1. Purchase cost of goods is set to rise by 5%
2. Decreased consumer confidence means that sales are expected to decrease by 12%
3. Ed believes he can increase his sale prices by 8% which should have minimal impact on overall sales, perhaps reducing total sales by a further 3%
4. Ed plans on reducing his expenses by laying off one of his part time staff members who has a yearly salary of $47,000. This is hoped to have only minimal impact on productivity

Appendix 6 – Ed’s Whitegoods Ltd Historic Data

2015 Business Year

Total Sales: 1366000

Total Purchases: 643000

Total Expenses: 186000

Jan - September 2014

Total Sales: 1080000

Total Purchases: 477000

Total Expenses: 378000