The Happyville Social Club’s Constitution requires it to prepare annual financial statements and present them to members at the Annual General Meeting.
Using the following information provided by the Happyville Social Club, you are required to complete the following tasks in line with the organisation’s and accepted industry policies and procedures:
a) Calculate credit bar purchases
b) Calculate the bar wages expense
c) Prepare a Bar Trading Statement (to calculate surplus or deficit from bar trading)
d) Calculate subscription income
e) Calculate rent expense
f) Prepare a Statement of Income & Expenditure for the year ended 30th June 2019
g) Prepare a Statement of Receipts and Payments for the year ended 30th June 2019
h) Prepare a Classified Statement of Assets & Liabilities as at 30th June 2019
Cash receipts and payments for the year ended 30th June 2019:
|
Cash Receipts: | $ | |
Cash Payments: | $ |
| Subscriptions | 11,000 | | Bar purchases | 12,000 |
| Bar sales | 30,000 | | Payments to accounts payable | 6,000 |
| Hire of function room | 5,300 | | Telephone | 900 |
| | | | Insurance | 1,200 |
| | | | Cleaner’s wages | 1,500 |
| | | | Electricity | 800 |
| |
| | Bar wages | 5,000 |
| | | | Bank Loan interest | 2,900 |
| | | | Rent paid | 10,000 |
| | $46,300 | | | $40,300 |
| Assets & Liabilities as at | 1 July 2018 | 30 June 2019 |
| Bank | 15,000 | ? (Please find this missing amount after completing your statement of receipts and payments) |
| Bar inventory | 2,600 | 2,400 |
| Subscription in arrears | 220 | 880 |
| Subscription in advance | 800 | 270 |
| Bar equipment – at cost | 35,000 | 35,000 |
| Accumulated depreciation – bar equipment | 5,000 | 6,000 |
| Bank Loan (Due 30/6/20) | 16,000 | 16,000 |
| Accounts payable (bar) | 1,000 | 2,000 |
| Accrued bar wages | 0 | 100 |
| Prepaid rent expense | 0 | 500 |
| Accumulated funds | 30020 | |
a) Credit Bar Purchases
b) Bar Wages Expense
c) Bar Trading Statement
d) Subscriptions Income
e) Rent Expense
f) Statement of Income & Expenditure for the year ended 30th June 2019
h) Statement of Receipts and Payments for the year ended 30th June 2019
· Statement of Assets & Liabilities as at 30 June 2019
Question 4
The following information is provided by A. Budha for the year ended 30 June 2019.
You are required to:
Prepare a Statement of Cash Flows for the year ended 30 June 2019.
| | $ |
| Cash sales | 25,000 |
| Credit sales | 145,000 |
| Repayment of mortgage: | |
| - Principal | 55,000 |
| - Interest | 2,000 |
| Wages paid | 46,000 |
| Other operating expenses paid | 21,000 |
| Credit purchases | 30,000 |
| Payments to accounts payable | 32,000 |
| Depreciation expense | 5,000 |
| Receipts from accounts receivable | 165,000 |
| Dividends received on share investments | 550 |
| Proceeds from sale of motor vehicle | 2,000 |
| Additional capital introduced by Budha | 50,000 |
| Drawings by Budha | 20,000 |
| Purchase of motor vehicle | 17,500 |
| Net profit | 66,550 |
| Cash at bank balance at 1/7/18 | $37,000 |
Statement of Cash Flows for year ended 30 June 2019
| | $ | $ |
| Cash Flows from Operating Activities: | | |
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| Cash Flows from Investing Activities: | | |
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| Cash Flows from Financing Activities: | | |
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| Net increase (decrease) in cash | | |
| Cash at beginning (1 July 2018) | | |
| Cash at end (30 June 2019) | | |
Ratio ANALYSIS:
Question 5:
| The following financial statements are for Arumugam Trading |
| Income Statement for the year ended 30 June 2019 | |
| Sales (all credit) | | | $ 96,000.00 |
| less: Cost of Goods Sold | | | |
| Inventories 01/07/2018 | | $ 10,900.00 | |
| Purchases | | $ 66,360.00 | |
| Cost of Goods Available for Sale | | $ 77,260.00 | |
| less: Inventories 30/06/2019 | | $ 13,900.00 | $ 63,360.00 |
| Gross Profit | | | $ 32,640.00 |
| Other Income | | | $ 1,000.00 |
| | | | $ 33,640.00 |
| Operating Expenses | | | $ 22,120.00 |
| Net Profit | | | $ 11,520.00 |
| Balance Sheet as at 30 June 2019 | |
| Current Assets: | | | |
| Accounts Receivable | $ 15,600 | | |
| less: Allowance for Doubtful Debts Inventories | $ 600 | | |
| | | $ 15,000 | |
| Inventories | | $ 13,900 | |
| Prepaid Expenses | | $ 100 | |
| Accrued Revenue | | $ 200 | $ 29,200 |
| Non-Current Assets: | | | |
| Land | | $ 20,000 | |
| Buildings (net) | | $ 10,800 | |
| Plant & Equipment (net) | | $ 16,000 | |
| Motor Vehicles (net) | | $ 4,000 | $ 50,800 |
| Total Assets | | | $ 80,000 |
| Current Liabilities | | | |
| Bank – Overdraft | | $ 5,000 | |
| Accounts Payable | | $ 10,500 | |
| Accrued Expenses | | $ 500 | $ 16,000 |
| Non-Current Liabilities | | | |
| Mortgage 4 year Loan (due 31 March 2024) | | $ 16,000 | $ 16,000 |
| Total Liabilities | | | $ 32,000 |
| Net Assets | | | $ 48,000 |
| Owner’s Equity: | | | |
| Capital – A. Bowman 1 July 2018 | | $ 44,480 | |
| Add: Net Profit for the year | | $ 11,520 | |
| | | $ 56,000 | |
| Less: Drawings | | $ 8,000 | $ 48,000 |
| | | | $ 48,000 |
| Extra Information | 30/06/2018 | Industry Averages |
| Gross Profit Rate | 40.0% | 35.0% |
| Net Profit Rate | 13.5% | 15.0% |
| Current Ratio | 1.6 : 1 | 2.0 : 1 |
| Quick Ratio | 1.3 : 1 | 1.2 : 1 |
| Inventory Turnover Rate | 5.8 times | 5 times |
| Average Collection Period | 50 days | 45 days |
Required:
(a) Calculate for the year ended 30 June 2019:
1. Gross Profit Rate.
2. Net Profit Rate.
3. Current Ratio.
4. Quick Ratio.
5. Inventory Turnover Rate.
6. Accounts Receivable Collection Period.
(b) Based on the ratios you have calculated, and the other information given, comment briefly on each of the following for Arumugam’s business:
A) Profitability.
B) Business Activity.
C) Liquidity.
(C) Advise Arumugam of possible reasons for any unsatisfactory situations that exist in relation to the business and suggest actions that may be taken to improve them.
(Please add extra pages to answer the questions below)