Current Assets Accounts Receivable $137,808 Cash at Bank $40,000 Inventory $18,200 $196,008 Non Current Assets Plant and Equipment (at cost) $140,000 Accumulated Depreciation on Plant & Equipment $52,000 $92,000 Office Equipment (at cost) $65,000 Accumulated Depreciation on Office Equipment $20,000 $45,000 $137,000 Total Assets $329,008 Current Liabilities Trade Creditors $45,300 GST Payable $8,000 Non Current Liabilities 5.4% Loan (due in 2 years) $110,000 Total Liabilities $163,300 Net Assets $165,708 Proprietors Equity Capital $115,200 Accumulated Profits $50,508 $165,708 Data and Supporting Information Sales Sales (in dollars excluding GST). Actual January $ 75,000 February 78,000 March 85.200 Forecast April $ 86.100 May 90.500 June 87.500 July 85,000 

 

Accounts Receivable (Debtors) Current industry experience reveals the following pattern of debtors' collections. 90% of sales are on credit and the remaining 10% are cash sales. GST applies to all sales. Each month's invoices are mailed on the last day of the month. The historical collection pattern for credit sales is: . 50% pay in the month after sale. . 30% pay in the second month after sale. . 20% pay in the third month after sale. Purchases and Accounts Payable The only Accounts Payable are for purchases of paint stock. All other expenses are paid in cash. The markup on cost for paint averages 70%. Closing inventory for each month should represent 30% of the next month's cost of sales . All purchases for a month are paid for in the month following the purchase. GST applies to all paint purchases. Rent Revenue Golden sublets space in her warehouse to another business. She charges a monthly rent of $500 plus GST which will rise to $530 plus GST in June. The tenant meets all his own power and utility costs; the rental amount includes a portion of the rent and other costs associated with the building. Operating Expenses Administration costs (excluding depreciation and rent) represent 20% of each month's purchases and are paid in cash in the month in which they are incurred. GST applies. . Depreciation is charged to the accounts at the rate of: Plant and equipment (marketing) 15% per year on cost. Office equipment 12% per year on cost. . Marketing and Distributing costs represent 10% of each month's sales and are paid in the month in which they are incurred. GST applies. . Loan interest is paid at the end of each month at the rate of 5.4% per year. ( The mortgage is an interest only loan with the principal due next year [ Not subject to GST]). . Property rental (commercial) of $4,000 plus GST is paid at the beginning of each month. 

 

The paint manufacturers offer the wholesalers credit terms. The premises are rented and located in an industrial estate. The lease agreement has six years to run with an option to renew for an additional six years ensuring a reasonable level of continuity at the same location. The premises are sublet to a business to defray some of the monthly rental costs. Distribution of the paint to the retail paint shops is outsourced to the local transport company on a needs basis. This relieves her of maintaining her own trucks and associated labour costs. Golden Horn is registered for GST, reporting quarterly on an Accruals Basis. The GST Payable per the Balance Sheet at 31 March is payable by 21 April. The GST rate is 10%. A balance sheet as at 31 March has been produced and provides the opening balances for the period commencing 1 April.

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Current Assets Accounts Receivable Cash at Bank $137,808 $40,000 Inventory $18,200 $196,008 Non Current Assets Plant and Equipment (at cost) $140,000 Accumulated Depreciation on Plant & Equipment $52,000 $92,000 Office Equipment (at cost) $65,000 Accumulated Depreciation on Office Equipment $20,000 $45,000 $137,000 Total Assets $329,008 Current Liabilities Trade Creditors $45,300 GST Payable $8,000 Non Current Liabilities 5.4% Loan (due in 2 years) $110,000 Total Liabilities $163,300 Net Assets $165,708 Proprietors Equity Capital $115,200 Accumulated Profits $50,508 $165,708 Data and Supporting Information Sales Sales (in dollars excluding GST). Actual January February March $75,000 78,000 85,200 Forecast April $86,100 May 90,500 June 87.500 July 85,000 Current Assets Accounts Receivable Cash at Bank $137,808 $40,000 Inventory $18,200 $196,008 Non Current Assets Plant and Equipment (at cost) $140,000 Accumulated Depreciation on Plant & Equipment $52,000 $92,000 Office Equipment (at cost) $65,000 Accumulated Depreciation on Office Equipment $20,000 $45,000 $137,000 Total Assets $329,008 Current Liabilities Trade Creditors $45,300 GST Payable $8,000 Non Current Liabilities 5.4% Loan (due in 2 years) $110,000 Total Liabilities $163,300 Net Assets $165,708 Proprietors Equity Capital $115,200 Accumulated Profits $50,508 $165,708 Data and Supporting Information Sales Sales (in dollars excluding GST). Actual January February March $75,000 78,000 85,200 Forecast April $86,100 May 90,500 June 87.500 July 85,000