Financial Budget Transactions Bill Board is trying to understand his business better and would like to know how to do a budget since he never went to UTS and therefore didn't have EEF. He has asked you to 1) Prepare a budget; 2) calculate his ratios based on the budget and 3) explain to him what it means Below is what he knows 1 In addition to the July transactions (some of them ongoing each month), he knows that the hotel construction will be completed in time for the last payment to be received this year. 2. He has tendered for a high rise apartment block and has secured the contract. The terms are cost plus. Cost is determined to be at $500,000 and his profit margin is 10%. Profit will be paid at the end of the contract. The contract is estimated for completion two years from now Cost is paid upon contract signature and Bill will spend 80% of these within 12 months. Bill has sent of the signed contract on 1 August 3 Due to a work boom, Bill needs to hire employees. He needs one admin person, one engineer and one builder which is employed at $70k pa, $120k pa and $100k pa respectively 4 Bill has also gotten quite a few work of mouth job requests that he has quoted on. 90% of these jobs are confirmed but not paid and they are service based jobs. The total of these quoted jobs come to $80,000 and Bill uses a subcontractor for this work. He pays the subcontractor 5% of the job price METHOD1 - Journal Entry Jnl # Ct Account Increase/ Decrease Debit/Credit Dt 80,000.00 Capital Equity Increase 1 credit Bank Asset Increase debit 80,000.00 1 2 Loan Liability Increase credit 110,000.00 110,000.00 2 Bank Asset Increase debit 3 Bank Asset Decrease 27,000.00 credit 3 Motor Vehicle Asset debit 27,000.00 Increase Equity 4 Capital credit 2,800.00 Increase 2,800.00 4 Equipment Asset Increase debit Revenue Income 360,000.00 5 Increase credit Bank Asset 180,000.00 5 Increase debit Debtors Asset Increase debit 180,000.00 5 Cost of Goods/Services debit Expense Increase 6 100,000.00 6 Bank Asset Decrease credit 100,000.00 Asset Decrease credit 28,000.00 7 Bank Equipment Asset 28,000.00 7 Increase debit Bank Asset Decrease 3,000.00 credit Computer Asset 3,000.00 8 Increase debit 9 Revenue credit 275.00 Income Increase Debtors Asset 275.00 9 Increase debit Creditors Liability credit 319.00 10 Increase Internet &Phone 10 Expense Increase debit 249.00 debit 10 Internet &Phone Expense Increase 70.00 Asset (neg) Acc Dpn Vehicle (10yr) 11 Increase credit 225.00 Acc Dpn Equip (4yr) Asset (neg) credit 11 Increase 58.00 Acc Dpn Equip (4yr) Acc Dpn Comp (2yr) Asset (neg) 583.00 11 Increase credit Asset (neg) 11 Increase credit 125.00 991.00 11 Depreciation Expense Increase debit Accounting: "do the books" for Billder Board Pty Ltd: Profit & Loss Revenue 360,275 - Cost of Goods/Services 100,000 Gross Profit 260,275 - Depreciation 991 - Phone & Internet 319 Net Profit 258,965 Balance Sheet Current Assets Bank 212,000 Inventory Debtors 180,275 Total Current Assets 392,275 Non Current Assets At cost 27,000 Acc dpn of MV 225 Total MV 26,775 At cost 30,800 Acc dpn of Equipment 641 Total Equipment 30,159 At cost 3,000 Acc dpn of Computer 125 Total Computer 2,875 Total Non Current Assets 59,809 Total Assets 452,084 Current Liabilities Creditors 319 Total Current Liabilities 319 Non Current Liabilities Loan 110,000 Total Non Current Liabilities 110,000 Total Liabilities 110,319 Capital 82,800 Profit/Loss (Retained Earnings) 258,965 Total Equity 341,765 Financial Budget Transactions Bill Board is trying to understand his business better and would like to know how to do a budget since he never went to UTS and therefore didn't have EEF. He has asked you to 1) Prepare a budget; 2) calculate his ratios based on the budget and 3) explain to him what it means Below is what he knows 1 In addition to the July transactions (some of them ongoing each month), he knows that the hotel construction will be completed in time for the last payment to be received this year. 2. He has tendered for a high rise apartment block and has secured the contract. The terms are cost plus. Cost is determined to be at $500,000 and his profit margin is 10%. Profit will be paid at the end of the contract. The contract is estimated for completion two years from now Cost is paid upon contract signature and Bill will spend 80% of these within 12 months. Bill has sent of the signed contract on 1 August 3 Due to a work boom, Bill needs to hire employees. He needs one admin person, one engineer and one builder which is employed at $70k pa, $120k pa and $100k pa respectively 4 Bill has also gotten quite a few work of mouth job requests that he has quoted on. 90% of these jobs are confirmed but not paid and they are service based jobs. The total of these quoted jobs come to $80,000 and Bill uses a subcontractor for this work. He pays the subcontractor 5% of the job price METHOD1 - Journal Entry Jnl # Ct Account Increase/ Decrease Debit/Credit Dt 80,000.00 Capital Equity Increase 1 credit Bank Asset Increase debit 80,000.00 1 2 Loan Liability Increase credit 110,000.00 110,000.00 2 Bank Asset Increase debit 3 Bank Asset Decrease 27,000.00 credit 3 Motor Vehicle Asset debit 27,000.00 Increase Equity 4 Capital credit 2,800.00 Increase 2,800.00 4 Equipment Asset Increase debit Revenue Income 360,000.00 5 Increase credit Bank Asset 180,000.00 5 Increase debit Debtors Asset Increase debit 180,000.00 5 Cost of Goods/Services debit Expense Increase 6 100,000.00 6 Bank Asset Decrease credit 100,000.00 Asset Decrease credit 28,000.00 7 Bank Equipment Asset 28,000.00 7 Increase debit Bank Asset Decrease 3,000.00 credit Computer Asset 3,000.00 8 Increase debit 9 Revenue credit 275.00 Income Increase Debtors Asset 275.00 9 Increase debit Creditors Liability credit 319.00 10 Increase Internet &Phone 10 Expense Increase debit 249.00 debit 10 Internet &Phone Expense Increase 70.00 Asset (neg) Acc Dpn Vehicle (10yr) 11 Increase credit 225.00 Acc Dpn Equip (4yr) Asset (neg) credit 11 Increase 58.00 Acc Dpn Equip (4yr) Acc Dpn Comp (2yr) Asset (neg) 583.00 11 Increase credit Asset (neg) 11 Increase credit 125.00 991.00 11 Depreciation Expense Increase debit Accounting: "do the books" for Billder Board Pty Ltd: Profit & Loss Revenue 360,275 - Cost of Goods/Services 100,000 Gross Profit 260,275 - Depreciation 991 - Phone & Internet 319 Net Profit 258,965 Balance Sheet Current Assets Bank 212,000 Inventory Debtors 180,275 Total Current Assets 392,275 Non Current Assets At cost 27,000 Acc dpn of MV 225 Total MV 26,775 At cost 30,800 Acc dpn of Equipment 641 Total Equipment 30,159 At cost 3,000 Acc dpn of Computer 125 Total Computer 2,875 Total Non Current Assets 59,809 Total Assets 452,084 Current Liabilities Creditors 319 Total Current Liabilities 319 Non Current Liabilities Loan 110,000 Total Non Current Liabilities 110,000 Total Liabilities 110,319 Capital 82,800 Profit/Loss (Retained Earnings) 258,965 Total Equity 341,765