Buffett wants you to prepare her cash payment budget for January to February (two months only. She is GST registered and accounts for GST on a cash basis. She wants you to show GST on a separate line within the budget.

Expected Sales at selling prices are:

January	February	March
$  30,000.00	$  36,000.00	$  42,000.00

All stock is sold at a mark-up of 50%. The cost price of stock has not altered. The purchases each month will be equal to the usage (COGS) in the following month.

60% of purchases are paid in the month of purchase and earn a 10% discount.

10% of purchases are also paid in the months of purchase but with no discount.

30% of purchases are paid in the month after purchase.

At the end of December, accounts payable were owed $11,000.00

Expenditure other than on accounts payable:

• Rates & Electricity totaling $3,000 (Excl. GST) payable in February only.
• Wages $9,000.00 per month
• Rent $2,000.00 per month (Excl. GST)

General expenses (Incl. depreciation of $500 per month) Total$5,000 per month.

All cash items in general expenses are subject to GST.

Office equipment will be purchased in February for $7,000 (Excl. GST), this purchase will not alter the depreciation for February.

 

• Determine the Cost of Goods Sold
• Payment to accounts payable prior to GST being added
• Details of other payments prior to GST being added
• A separate line showing GST totals
• Payments for any items or items which are not affected by GST
• Finally, a total cash payment for each month

Answer rating: 100% (QA)

ADetermine the cost of Goods sold Solution Sales Jan Feb March Cost of 23 23 23 goods 30000 36000 42000 Sold23200002400028000 Purchases 24000 28000 Pa... View the full answer