You have just been appointed as Assistant Financial Accountant of Born 2 Speak Ltd, a new...

 

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You have just been appointed as Assistant Financial Accountant of Born 2 Speak Ltd, a new cellular communications company. You are assisting in the preparation of the financial statements for the year ended October 2021. The company was granted its cellular telephone operator license in 2019. The company operates with the intention of bringing low cost cellular packages to a broader spectrum of clients who require a "no-frills" cellular service. The company is run by young, dynamic entrepreneurs under the CEO Bokaako, who are mainly concerned with the short term profitability of the company. The company is also a registered VAT vendor. Since its inception in 2019, the company has offered standard cell-phone contracts with varying terms and tariffs aimed at different sectors of the cell phone market. On 1 November 2020, the company launched its Pay as you Speak (PAYS) scheme. A massive marking campaign was launched which had the catchphrase "It pays to be on PAYS". The PAYS scheme involves the sale of two different vouchers, one for airtime and the other an SMS bundle. The two types of vouchers issued are: - SMS Bundles: These vouchers are sold for M114 each and entitle the purchaser to three months unlimited SMS's. - Airtime: These vouchers are sold for M91.20 each and entitle the user to make calls up to that value. Management feels that this scheme will enhance their reputation in the cellular industry as a serious participant and will give them exposure to a niche market. The PAYS cards are sold to various vendors including newsagents, selected clothing retailers and service stations. The vendors then sell the vouchers to their customers. The vendors may not mark up the price on these vouchers as the price is dictated by Born 2 Speak Ltd, but they do earn a commission of M10 per voucher sold. An invoice is made out to the vendors in respect of vouchers dispatched at the date of dispatch. At the end of the month, the vendors pay the company for the vouchers sold after deducting their commission. Should vendors wish to return unsold vouchers, they may do so provided the voucher is still unused. Required: (i). Calculate the amount of revenue to be recognised for the year ended 31 October 2021 You have just been appointed as Assistant Financial Accountant of Born 2 Speak Ltd, a new cellular communications company. You are assisting in the preparation of the financial statements for the year ended October 2021. The company was granted its cellular telephone operator license in 2019. The company operates with the intention of bringing low cost cellular packages to a broader spectrum of clients who require a "no-frills" cellular service. The company is run by young, dynamic entrepreneurs under the CEO Bokaako, who are mainly concerned with the short term profitability of the company. The company is also a registered VAT vendor. Since its inception in 2019, the company has offered standard cell-phone contracts with varying terms and tariffs aimed at different sectors of the cell phone market. On 1 November 2020, the company launched its Pay as you Speak (PAYS) scheme. A massive marking campaign was launched which had the catchphrase "It pays to be on PAYS". The PAYS scheme involves the sale of two different vouchers, one for airtime and the other an SMS bundle. The two types of vouchers issued are: - SMS Bundles: These vouchers are sold for M114 each and entitle the purchaser to three months unlimited SMS's. - Airtime: These vouchers are sold for M91.20 each and entitle the user to make calls up to that value. Management feels that this scheme will enhance their reputation in the cellular industry as a serious participant and will give them exposure to a niche market. The PAYS cards are sold to various vendors including newsagents, selected clothing retailers and service stations. The vendors then sell the vouchers to their customers. The vendors may not mark up the price on these vouchers as the price is dictated by Born 2 Speak Ltd, but they do earn a commission of M10 per voucher sold. An invoice is made out to the vendors in respect of vouchers dispatched at the date of dispatch. At the end of the month, the vendors pay the company for the vouchers sold after deducting their commission. Should vendors wish to return unsold vouchers, they may do so provided the voucher is still unused. Required: (i). Calculate the amount of revenue to be recognised for the year ended 31 October 2021 You have just been appointed as Assistant Financial Accountant of Born 2 Speak Ltd, a new cellular communications company. You are assisting in the preparation of the financial statements for the year ended October 2021. The company was granted its cellular telephone operator license in 2019. The company operates with the intention of bringing low cost cellular packages to a broader spectrum of clients who require a "no-frills" cellular service. The company is run by young, dynamic entrepreneurs under the CEO Bokaako, who are mainly concerned with the short term profitability of the company. The company is also a registered VAT vendor. Since its inception in 2019, the company has offered standard cell-phone contracts with varying terms and tariffs aimed at different sectors of the cell phone market. On 1 November 2020, the company launched its Pay as you Speak (PAYS) scheme. A massive marking campaign was launched which had the catchphrase "It pays to be on PAYS". The PAYS scheme involves the sale of two different vouchers, one for airtime and the other an SMS bundle. The two types of vouchers issued are: - SMS Bundles: These vouchers are sold for M114 each and entitle the purchaser to three months unlimited SMS's. - Airtime: These vouchers are sold for M91.20 each and entitle the user to make calls up to that value. Management feels that this scheme will enhance their reputation in the cellular industry as a serious participant and will give them exposure to a niche market. The PAYS cards are sold to various vendors including newsagents, selected clothing retailers and service stations. The vendors then sell the vouchers to their customers. The vendors may not mark up the price on these vouchers as the price is dictated by Born 2 Speak Ltd, but they do earn a commission of M10 per voucher sold. An invoice is made out to the vendors in respect of vouchers dispatched at the date of dispatch. At the end of the month, the vendors pay the company for the vouchers sold after deducting their commission. Should vendors wish to return unsold vouchers, they may do so provided the voucher is still unused. Required: (i). Calculate the amount of revenue to be recognised for the year ended 31 October 2021 You have just been appointed as Assistant Financial Accountant of Born 2 Speak Ltd, a new cellular communications company. You are assisting in the preparation of the financial statements for the year ended October 2021. The company was granted its cellular telephone operator license in 2019. The company operates with the intention of bringing low cost cellular packages to a broader spectrum of clients who require a "no-frills" cellular service. The company is run by young, dynamic entrepreneurs under the CEO Bokaako, who are mainly concerned with the short term profitability of the company. The company is also a registered VAT vendor. Since its inception in 2019, the company has offered standard cell-phone contracts with varying terms and tariffs aimed at different sectors of the cell phone market. On 1 November 2020, the company launched its Pay as you Speak (PAYS) scheme. A massive marking campaign was launched which had the catchphrase "It pays to be on PAYS". The PAYS scheme involves the sale of two different vouchers, one for airtime and the other an SMS bundle. The two types of vouchers issued are: - SMS Bundles: These vouchers are sold for M114 each and entitle the purchaser to three months unlimited SMS's. - Airtime: These vouchers are sold for M91.20 each and entitle the user to make calls up to that value. Management feels that this scheme will enhance their reputation in the cellular industry as a serious participant and will give them exposure to a niche market. The PAYS cards are sold to various vendors including newsagents, selected clothing retailers and service stations. The vendors then sell the vouchers to their customers. The vendors may not mark up the price on these vouchers as the price is dictated by Born 2 Speak Ltd, but they do earn a commission of M10 per voucher sold. An invoice is made out to the vendors in respect of vouchers dispatched at the date of dispatch. At the end of the month, the vendors pay the company for the vouchers sold after deducting their commission. Should vendors wish to return unsold vouchers, they may do so provided the voucher is still unused. Required: (i). Calculate the amount of revenue to be recognised for the year ended 31 October 2021

Answer rating: 100% (QA)

Total value of PAYS cards sold M1140000 Total commission ... View the full answer