Calculating GST based on the below information When preparing your original budget and profit and loss
Question:
- Calculating GST based on the below information
When preparing your original budget and profit and loss statement you failed to take into account ATO requirements for the collection and payment of GST and its impact on the business's finances.
You collected GST by adding the standard rate of 10% to all customer accounts during the accounting period. You also paid GST on all expenses except for salaries, wages and depreciation.
Using the actual revenue and expense figures for that financial year, you now need to calculate your GST liability so you can lodge a business activity statement with the ATO.
If you can't remember the formulas for calculating GST, they are located in Section 1 of your learning material.
Financial result for year ending: 31.06.20XX | Actual $ |
Nights booked | 7,665 |
Tariff revenues | 919,800 |
Less variable costs | |
Room servicing labour | 160,965 |
Room servicing supplies | 41,391 |
Total variable costs | 202,356 |
Gross profit | 717,444 |
Less fixed costs | |
Admin/reception salaries | 189,000 |
Grounds & maintenance | 105,000 |
General manager | 87,500 |
Utilities | 86,000 |
Depreciation | 140,000 |
Total fixed costs | 607,500 |
Net profit before tax | 109,944 |
Less estimated tax expense (30%) | 32,983 |
Net profit after tax | 76,961 |
Perform the following calculations
Using the actual figures, calculate the GST that was charged to customers for the entire year and is therefore payable to the ATO. Show how you calculated the figures |
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Using the actual figures, calculate the GST that had to be paid to suppliers on the business expenses and is therefore refundable from the ATO. Show how you calculated the figures |
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Using the actual figures, calculate the net GST payable or receivable as at the end of the year. Show how you calculated the figures |
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Ultimately, what impact does GST have on a business's profitability and cash flow? Explain your answer |
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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw