Assessment 1.2 - Part 2

Transaction Analysis Scenario

Introduction: Ms Mari Kimura, karate teacher.

Ms Mari Kimura runs a small business that provides tuition in karate for primary school children i.e. children aged 5 to 12. Ms Kimura holds high qualifications in karate and is also a registered teacher for the primary school age group.

Ms Kimura offers these karate lessons in two ways:

1. Group weekly sessions of 1 hour with up to 12 children in the group. Parents and caregivers enrol the child for a set of 8 lessons. These lessons are held after school hours or on Saturdays in a community centre. For example, one set of lessons might be held on Thursday afternoons from 5pm to 6pm at a particular community centre and another set at another community centre from 10am to 11am.

Lessons are offered in each school term with sets of lessons for starting in the week beginning Monday 18 July, 2022. For this present term, it can be assumed that, for all sets of lessons, two of the lessons will be held in July, four of the lessons will be held in August, and the final two lessons of the term will be held in September.

2. Sessions arranged by primary schools. These sessions can take many forms, with Ms Kimura and the school together working out how and when the sessions will be run, and who will attend them.

For the group weekly lessons, participants are expected to wear a uniform, known as a karate-gi. Ms Kimura buys these uniforms from a wholesaler and sells them to the parents and caregivers. As children become more proficient, they earn different colour belts to wear as part of the karate-gi. Just as with the uniforms, Ms Kimura buys these belts from a wholesaler and sells them to the students as they become eligible to wear a particular belt.

For the school sessions, there are no specific requirements regarding what the children need to wear, but the school does provide some guidance as to what is appropriate.

For the cost of the school courses, each course is bespoke, with agreement being reached between Ms Kimura and the school in advance. Ms Kimura invoices the school after the lessons with the terms of payment being 60 days.

For the group sessions, the cost at present for a set of 8 lessons is $200 with full payment needing to be made before the first lesson.

Ms Kimura takes a majority of the lessons herself. However, she does have people to call upon if she cannot meet all the demand. She is extremely particular as to who she contracts to take a class. Such a person must have the highest karate skills, have expertise in teaching primary school children, meet all government requirements re child safety legislation and have excellent references.

For the group lessons held in community centres, Ms Kimura has arrangements with four different centres. Each of these centres operates in different ways with regard to hire of rooms.

When Ms Kimura started her small business, she opened a business bank account with the Provincial Bank of Victoria (PBV). The bank has issued a business debit card for Ms Kimura to use in her business. She also has access to online banking with this account.

Ms Kimura has had a website developed for her business. Enrolments for the sessions of 8 lessons, together with payments are taken via this website. Orders for the karate uniforms are also made using this website.

Ms Kimura s accountant has advised her to maintain a monthly reporting system using the accrual basis of accounting. The following information provides details of some of the activities of Ms Kimura for the first two weeks of July 2022. At close of business on 30 June 2022 there was $3,000 in this business bank account.

You must identify and record the relevant business transactions in the accounting workbook/equation format. You may create meaningful accounts names as you need. Provide your assumptions if you make any.

1. I July: using online banking, Ms Kimura orders and pays for 20 uniforms at a cost of $25 per uniform and 50 coloured belts at a cost of $7.50 per belt. These uniforms and belts will be delivered to Ms Kimuras home address before 8 July. Ms Kimura will be selling these uniforms at a price of $35 each and the belts at $10 each.

(500 + 375). (700 + 500)

2. 4 July: Ms Kimura transfers $280 to Gemcreek Community Centre for the hire of a room to run lessons during the last two weeks of July.

3. 4 July: Ms Kimura is concerned about the cash balance of the business bank account, given she knows that there are several transactions that need to be paid over the next two weeks. She transfers $1,200 from her personal account to the business bank account.

4. 4 July: in the evening of 4 July, Ms Kimura visits her parents. In the course of their conversation, her parents learn about Ms Kimuras concern about the cash situation of her business. Her parents understand the business and want to support their daughter, so they offer to lend Ms Kimura $2,000 until the end of July. Ms Kimuras mother makes an immediate transfer of $2,000 from the parents bank account to Ms Kimuras business bank account.

5. 5 July: Using electronic banking, Ms Kimura pays $240 to TopClassMarketing for a targeted social media advertisement during the week starting 11 July.

6. 6 July: Ms Kimura receives $1,500 from Heidlehoe East Primary School for a session she provided at the school in early May 2022.

7. 6 July: Ms Kimura sends an email asking for immediate payment to Fairbury Primary School. Ms Kimura provided a session for this school in April 2022 and sent an invoice for $2,000 at the beginning of May, but no payment has yet been received.

8. 7 July: Ms Kimura receives notification that two children of the Young family have been enrolled in an eight week session starting in the week of 18 July. She checks the business bank account and sees that $400 has been transferred into this account from the Young family. As well, she receives an email from this family asking to purchase two karate uniforms. Ms Kimura replies to the email, asking that $70 be transferred electronically to the business bank account. Once the money is received, Ms Kimura will liaise with the family for the unforms to be picked up.

9. 8 July: Ms Kimura visits the Heidlehoe Community Centre, one of the places where Ms Kimura gives her classes. Using the business debit card, she pays $800 for the use of a room in the centre for the eight weeks of the course.

10. 11 July: Ms Kimura sees that the Young family has paid $70 for the two karate uniforms. She sends an email to the family and makes arrangements for the uniforms to be picked up.

11. 12 July: Ms Kimura visits MontJolie primary school to discuss the possibility of participating in the schools sports program by providing an introduction to karate for school beginners.

12. 13 July: Ms Kimura renews the insurance premium for the business. The cost is $600 with coverage from 1 July 2022 to 31 December 2022

13. 14 July: Ms Kimura interviews a potential karate teacher. She is impressed with his interview, so she checks his documentation and speaks to two referees. That evening she rings the applicant and offers him two classes per week for the coming term. The new teacher will be paid $50 per hour, and so in total for the term he will earn $800.

14. 15 July: Ms Kimura enrols in a conference for teachers of karate, to be held interstate in December 2022. The cost of the conference is $500, to be paid immediately. On reading the website for the conference she realises that accommodation for the conference could be difficult to find for that particular time but that she can book a room now, Ms Kimura uses electronic banking to transfer $600 to the conference organisers. $500 of this amount is for the conference itself and $100 is a deposit for the hotel room. Ms Kimura must pay for the remainder of the hotel cost by the end of October 2022.

The Solution should be in assets = Liabilities + owners equity format where in the different accounts are listed below the three main headings