BSBFIM601 Finances Manage Sample Assignment

ASSESSMENT 1 – STUDENT INFORMATION

This information is to be handed to each student to outline the assessment requirements

PART A - For this assessment, students are to utilise the data in the Appendices regarding Ed’s Whitegoods. The instructor can role-play the part of Edward Tan, the proprietor and will give any additional information required, including company policies and procedures, milestones etc.

Students are to undertake the following:

  • List all personnel you would consult with in order to gain adequate advice prior to commencing your reports.
  • Consult with your instructor to determine management requirements
  • Outline the statutory requirements in relation to compliance and tax that affect your budget
  • Prepare a 1 year budget & projected financial statement including:
  • Sales forecast, taking into account additional information in Appendix 5
  • Estimated expenses / inventory costs
  • Estimated profits
  • Ensure report layout and format comply with management information requirements, are clear and error-free

Note: Students must use appropriate spreadsheet or accounting software to undertake this task.

Students must ensure that estimates of future cash flow, costs and revenues are realistic in context of the available information at the time of creating the budget. Changes in circumstances should be anticipated as best as possible with particular emphasis on financial risks and creating protection strategies in accordance with organisational procedures. Any liaison with the proprietor of the business to determine milestones, policies, goals etc. should be carried out with your instructor, who will role play the relevant parts.

Assessment Summary

You are to submit the following evidence / perform the following tasks

  • Develop and submit your annual budget as outlined above

PART B - Now you are to take your completed budget and arrange an appointment with your assessor, who will role-play a finance specialist. In this meeting, you are to

  • Manage the meeting direction and progress
  • Discuss with the finance specialist the aspects of your budgets / financial plans (the package)
  • Have your package reviewed, ensuring your validate your reasons and proposals
  • Amend / revise your package as appropriate

You must now:

  • Detail in writing all delegations and budget accountabilities for implementation and management of your package
  • Develop a written procedure that details the recording systems and documentation process you will follow for monitoring and controlling all activities against your plans.
  • Develop a risk management and contingency plan for all your proposed financial plans; along with a policy and procedure to be followed when implementing these plans
  • Develop a policy and procedure that outlines proper maintenance of records of financial performance and provides for evaluation of the effectiveness of your financial management process

PART A

PROFIT BUDGET

PROFIT BUDGET

2015/16 ($)

2014/10

2014/11

2014/12

Revenue

-

20%

24%

26%

Sales

16,971,237

3,394,247

4,073,097

4,412,522

– Cost of Goods Sold

9,673,605

1,934,721

2,321,665

2,515,137

Gross Profit

7,297,632

1,459,526

1,751,526

1,897,384

Gross Profit %

43%

43%

43%

Expenses

– Accounting Fees

10,000

2,500

2,500

2,500

– Interest Expense

84,508

21,127

21,127

21,127

– Bank Charges

1,600

400

400

400

– Depreciation

170,000

42,500

42,500

42,500

– Insurance

13,390

3,348

3,348

3,348

– Store Supplies

3,749

750

900

975

– Advertising

350,000

200,000

50,000

50,000

– Cleaning

16,282

3,256

3,908

4,233

– Repairs & Maintenance

64,272

16,068

16,068

16,068

– Rent

2,640,508

660,127

660,127

660,127

– Telephone

14,997

2,999

3,599

3,899

– Electricity Expense

26,780

5,356

6,427

6,963

– Fringe Benefits Tax

28,000

7,000

7,000

7,000

– Superannuation

187,020

37,404

44,885

48,625

– Wages & Salaries

2,078,000

415,600

498,720

540,280

– Payroll Tax

98,705

19,741

23,689

25,663

– Workers’ Compensation

41,560

8,312

9,974

10,806

Total Expenses

5,841,371

1,458,488

1,395,172

1,444,514

Net Profit (Before Tax)

1,456,261

1,038

356,260

452,871

Income Tax

436,878

311

106,878

135,861

Net Profit

1,019,383

727

249,382

317,009

Sales Budget

SALES

2014/15 ($)

2014/10

2014/11

2014/12

BUDGET

Total Budget

20%

24%

26%

Total Sales

16,971,237

3,394,247

4,073,097

4,412,522

GST Cash flow analysis

CASH FLOW ANALYSIS-

GST

net

2014/10

2014/11

2014/12

GST Collected

1,697,124

339,425

407,310

441,252

Less GST Paid

12,281,358

282,913

306,854

326,325

GST Payable

415,765

56,512

100,456

114,927

Aged Debtors budget

AGED DEBETORS BUDGET

TOTAL

2014/10

2014/11

2014/12

Sales

348833

111837

103136

133860

% Debtors Sales

20%

20%

20%

Total Debtors

100%

678,849

814,619

882,504

Current

84%

570,234

684,280

741,304

30 Days

10%

67,885

81,462

88,250

60 Days

5%

33,942

40,731

44,125

90 Days

1%

6,788

8,146

8,825

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

1-Oct

BALANCE FORWARD

$245,000.00

CR

3-Oct

Loan Costs (National)

$137.50

$244,862.50

CR

4-Oct

Telsta Invoice 3365432

$65.00

$244,797.50

CR

5-Oct

HLH Electricity

$132.50

$244,665.00

CR

6-Oct

Ultimate Gas

$50.00

$244,615.00

CR

8-Oct

Wages

$19,375.00

$225,240.00

8-Oct

Rent

$2,083.33

$223,156.67

CR

9-Oct

Cash Deposit

$6,000.00

$229,156.67

CR

13-Oct

JRL Holdings

$5,000.00

$224,156.67

CR

15-Oct

Innovative Technology

$2,000.00

$222,156.67

CR

17-Oct

Cash Deposit

$25,837.00

$247,993.67

CR

22-Oct

Cash Withdraw

$500.00

$247,493.67

CR

22-Oct

Wages

$19,375.00

$228,118.67

CR

22-Oct

Purchase 11451

$12,620.00

$215,498.67

CR

23-Oct

Shell

$46.67

$215,452.00

CR

23-Oct

Purchase 11452

$8,630.00

$206,822.00

CR

25-Oct

Cash Withdraw

$500.00

$206,322.00

CR

25-Oct

Purchase 11453

$1,405.00

$204,917.00

CR

25-Oct

LMS Marketing

$46.67

$204,870.33

CR

25-Oct

Cash Withdraw

$50.00

$204,820.33

CR

26-Oct

Water

$45.83

$204,774.50

CR

26-Oct

Insurance Direct Debit

$108.33

$204,666.17

CR

27-Oct

Corporate Cleaning Ltd

$70.83

$204,595.34

CR

27-Oct

Rowlings & Sons

$5,000.00

$199,595.34

CR

27-Oct

Cash Deposit

$35,000.00

$234,595.34

CR

28-Oct

Fees

$17.50

$234,577.84

CR

28-Oct

P.L.Harris Repairs

$117.08

$234,460.76

CR

29-Oct

Yarra Valley

$45.83

$234,414.93

CR

30-Oct

Cash Deposit

$45,000.00

$279,414.93

CR

30-Oct

Cash Withdraw

$500.00

$278,914.93

CR

30-Oct

Office Supplies

$50.00

$278,864.93

CR

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

1-Nov

BALANCE FORWARD

$278,864.93

CR

3-Nov

Loan Costs (National)

$137.50

$278,727.43

CR

4-Nov

Telsta Invoice 3365433

$65.00

$278,662.43

CR

5-Nov

HLH Electricity

$132.50

$278,529.93

CR

6-Nov

Ultimate Gas

$50.00

$278,479.93

CR

8-Nov

Wages

$19,375.00

$259,104.93

8-Nov

Rent

$2,083.33

$257,021.60

CR

9-Nov

Cash Deposit

$3,606.00

$260,627.60

CR

13-Nov

JRL Holdings

$5,000.00

$255,627.60

CR

15-Nov

Innovative Technology

$2,000.00

$253,627.60

CR

17-Nov

Cash Deposit

$9,000.00

$262,627.60

CR

22-Nov

Cash Withdraw

$500.00

$262,127.60

CR

22-Nov

Wages

$19,375.00

$242,752.60

CR

22-Nov

Purchase 11454

$7,209.00

$235,543.60

CR

23-Nov

Shell

$46.67

$235,496.93

CR

23-Nov

Purchase 11455

$5,695.00

$229,801.93

CR

25-Nov

Cash Withdraw

$500.00

$229,301.93

CR

25-Nov

Purchase 11456

$3,656.00

$225,645.93

CR

25-Nov

LMS Marketing

$1,200.00

$224,445.93

CR

25-Nov

LMS Marketing

$46.67

$224,399.26

CR

25-Nov

Cash Withdraw

$50.00

$224,349.26

CR

26-Nov

Water

$45.83

$224,303.43

CR

26-Nov

Insurance Direct Debit

$108.33

$224,195.10

CR

27-Nov

Corporate Cleaning Ltd

$70.83

$224,124.27

CR

27-Nov

Rowlings & Sons

$5,000.00

$219,124.27

CR

27-Nov

Cash Deposit

$46,530.00

$265,654.27

CR

28-Nov

Fees

$17.50

$265,636.77

CR

28-Nov

P.L.Harris Repairs

$117.08

$265,519.69

CR

29-Nov

Yarra Valley

$45.83

$265,473.86

CR

30-Nov

Cash Deposit

$44,000.00

$309,473.86

CR

30-Nov

Cash Withdraw

$500.00

$308,973.86

CR

30-Nov

Office Supplies

$50.00

$308,923.86

CR

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

1-Dec

BALANCE FORWARD

$308,923.86

CR

3-Dec

Loan Costs (National)

$137.50

$308,786.36

CR

4-Dec

Telsta Invoice 3365434

$65.00

$308,721.36

CR

5-Dec

HLH Electricity

$132.50

$308,588.86

CR

6-Dec

Ultimate Gas

$50.00

$308,538.86

CR

8-Dec

Wages

$19,375.00

$289,163.86

8-Dec

Rent

$2,083.33

$287,080.53

CR

9-Dec

Cash Deposit

$32,615.00

$319,695.53

CR

13-Dec

JRL Holdings

$10,000.00

$309,695.53

CR

15-Dec

Innovative Technology

$4,000.00

$305,695.53

CR

17-Dec

Cash Deposit

$58,565.00

$364,260.53

CR

22-Dec

Cash Withdraw

$500.00

$363,760.53

CR

22-Dec

Wages

$19,375.00

$344,385.53

CR

22-Dec

Purchase 11457

$9,643.00

$334,742.53

CR

23-Dec

Shell

$46.67

$334,695.86

CR

23-Dec

Purchase 11458

$11,555.00

$323,140.86

CR

25-Dec

Cash Withdraw

$500.00

$322,640.86

CR

25-Dec

Purchase 11459

$11,287.00

$311,353.86

CR

25-Dec

Cash Withdraw

$600.00

$310,753.86

CR

25-Dec

LMS Marketing

$46.67

$310,707.19

CR

25-Dec

Cash Withdraw

$50.00

$310,657.19

CR

26-Dec

Water

$45.83

$310,611.36

CR

26-Dec

Insurance Direct Debit

$108.33

$310,503.03

CR

27-Dec

Corporate Cleaning Ltd

$70.83

$310,432.20

CR

27-Dec

Rowlings & Sons

$8,600.00

$301,832.20

CR

27-Dec

Cash Deposit

$20,652.00

$322,484.20

CR

28-Dec

Fees

$17.50

$322,466.70

CR

28-Dec

P.L.Harris Repairs

$117.08

$322,349.62

CR

29-Dec

Yarra Valley

$45.83

$322,303.79

CR

30-Dec

Cash Deposit

$22,028.00

$344,331.79

CR

30-Dec

Cash Withdraw

$500.00

$343,831.79

CR

30-Dec

Office Supplies

$50.00

$343,781.79

CR

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