Question

10:03 ... 46 X FNSACC513 - Assess.... At cu At the end of February 2018, he has 851 000 in the business bank account. A friend recommended Harry prepare a long- term forecast of future transactions. Therefore, Harry has provided you with the following information Note: March has 5 Fridays while April and Max have only 4 • In the quarter March to May 2012 he earned the following cash fees: March SSO 000, April $41 000 and May S44 000. • Harry purchases shampoo, conditioner and dyes as they are required. He believes these cost him 20% of his cash fees. • Harry employs two full-time workers who cach runa vehicle. Both earn $550 per week and are paid cach Friday, • He also employs a casual cleaner on the weekend to clean the cars and pays him $180 per week. This is also paid cach Friday, • Petrol expenses each month is expected to be $1500. • Insurance on the vehicles is due in 1 April. It is expected to cost $4500 this year. • Vehicle registration is due 5 May. It is expected to be S1470 in total • Advertising costs are $1600 per month. • Harry incurs office expenses of $230 per month • Each of the three vehicles has a mobile phone whose bills are capped at $79 per month each. • Loan repayments of $3100 are due 20 March • Harry usually withdraws $1000 each Friday for personal use • Interest earned from business investments is expected to be SI500 each month. Assessment Questions 1. Prepare a cash budget for Hairy Mobile Hairdressing for the period March to May 2012 2. Comment on whether Harry should purchase the new vehicle during any of the three months from March to May. How will this affect the businesses liquidity in the short term? 3. Harry is thinking about buying a jet ski for his personal use and adding it to the assets of the business Advise him on this latest idea he has using the entity principle. 4. Explain two reasons why it is important to prepare variance reports.

Answer 1

44.00 4600 - March (8) Apolls & May (6) 1 cash fees earned 50000 41000 44000 interest earned 1500 1500 1500 ra) Total cash available 51500 42500 ussoo sampoo 20% offeela) 10000 8200 8800 Worker paid 5500 4400 car cleaner 900 720 720 Petrol Expense 1500 1500 1500 Advertisement cost 1600 1600 office expense 230 230 230 Mobil phone sap 237 237 237 $798 3 rewiche Cash withdraw 5000 4000 4000 lasurance $4500 vehicle Reg $1470 Loan repayment 3100 (6) Total cash payment 28067 27457 cash bal excen/ (short) $23433 $21613 $18043 explanation worker.2.X $550 X 5week 2X SSOXG Week 2x1 SCOX4 WR! $ 5500 $4900 $ 4400 cleaner $140 X 5Week $180Xy week 120 YU Wear $900 $ 720 $ 720 1. cash withdrawl $100005 week $1000xy $1000xy $ sooo $ 4000 $ 4000 AT Harry should purchase the new vehicle at end of may as the cumulative cash balance heill wigheiie $23433 + $21613+ $18043) Total Cash avail = $63089 And Harry should not change personal expenses A REDMI NOTE 6 PRON expeme Otherwise thes MI DUAL CAMERA will be desallowed by income 1 the department,

Camlin Page Date I It is no lation of income tan rule by changing personal Expense into busines se pense. Reason 1. variance Report helps to identity excess or shortage in cash Budget 2. It is important for owner to take . decision based on hariance I report OO ME REDMI NOTE 6 PRO MI DUAL CAMERA