John and Jim are brothers who have worked within the building sector for several years John is a plumber who has been working for a large plumbing business and Jim is a carpenter who works for a large city residential housing construction company They have decided that they want to start their own business which would be the building of residential properties With their combined experience within the industry they feel now is a great time to branch out on their own Before they move forward with their plans, you have agreed to assist them with the research and planning of the new business which they hope to call JIMMON CONSTRUCTIONS They dont want to proceed with the business until they are sure that they have covered all legal and risk aspects of starting and maintaining the new business They estimate that the business will exceed the existing GST tax threshold of $75,000 00 for the financial year so they will need to register for GST and their actual paid staffing levels will warrant the need to declare and make PAYG payments as well The business will specialise in residential construction and the brothers have enlisted your help to establish all aspects of setting up the business as well as identifying and addressing any potential risks You have already been assisting in this area and have established the business set up as a partnership obtained an ABN set up GST registration as the business is expected to exceed an income of $75,000 00 for the financial year established specific licenses and permits which a residential construction company must have in order to operate legally locate the building code of practice which must be followed You are required to complete the financial plan for the business and establish the financial reports which will be presented to Jim and John You will also need to provide them with some background information regarding financial reporting as they have no experience in this area of the business and would like to have a better understanding of the financial aspects of JIMMON CONSTRUCTIONS Activities Overview for using the case study organisation The following activities will provide you with the skills and knowledge to compile the necessary financial information and data which is used when reporting on the financial activity for JIMMON CONSTRUCTIONS You have been provided with a series of tasks to demonstrate your knowledge in this area as well as demonstrate your skills in preparing the necessary financial statements and statutory reports which are required for a small business For the purpose of completing the following activities you will need to conduct the necessary research to establish the statutory reporting requirements as needed and understand the processes to be undertaken, to analyse and calculate the necessary financial information needed to determine where the business is situated financially You will be required to submit a reference document which lists all research you have undertaken to complete your assessment Activity 1 Financial reports Activity based on Jimmon Constructions Activity 1 choice 1 Case study Jimmon Constructions As part of the financial planning for JIMMON CONSTRUCTIONS, you need to develop several financial reports which have been listed below and provide additional information to Jim and John on areas such as the principles used when preparing financial reports (such as cash projections, profit and loss statements and balance sheets) as they have informed you that they have no understanding of these areas of the business You will be required to submit a report for Activity 1 which includes Completing the following financial reports Statement of Cash Flow forecast for the month of July Projected Profit and Loss Statement for the 3 months ending 30 September Balance Sheet forecast as at 30 September Templates for the financial reports are provided in Appendices A, B C for you to complete Based on your completed financial plan and the additional information provided below, complete the following financial reports provided in Task 1 complete Appendix A Statement of Cash Flow forecast for the month of July, Task 2 complete Appendix B Projected Profit and Loss Statement for the 3 months ending 30 September and Task 3 complete Appendix C Balance Sheet forecast as at 30 September When completing the financial reports, please take into account the following information Cash Flow forecast is to be completed for July only Projected Profit Statement to be based on the property information provided below for the period July September Balance Sheet forecast is to be prepared as at the end of September profit margins, mark ups, and prices (e g hourly charge out rates) the break even sales point for the business Additional Information for Case study There is one property ready to commence in July (total Revenue $340,247 00 with payments from the customer as follows Deposit To be paid July $17,012 35 Base stage To be paid July $ 34,024 70 includes slab, site works, temporary fencing Frame stage To be paid August $51,037 05 includes frames, trusses quarter electrical and plumbing costs Enclosed stage To be paid August $119,086 45 includes bricks tiles, quarter electrical and plumbing Fixing stage To be paid September $68,049 40 includes internal cabinetry, tiling, balance of plumbing, electrical and 90 painting Practical completion and handover To be paid October Driveway, final preparation of site for handover The following amounts have been provided to complete the financial reports Cash flow amounts for the month of July Payments to suppliers $22,600 00 Interest payments $450 00 Income tax paid $846 00 GST paid $7,250 00 GST collected $5,000 00 General expenses $6,000 00 Jimmon Constructions plans to buy a new Hi Lux Ute in July at a cash price of $35,600 as mentioned in the case study Cash at bank on 1 st July is $350,000 00 Each partner will withdraw $2,000 00, per month as per the Business Plan Receipts from customers are to be calculated by students Wages paid are to be calculated by students (refer to Projected Profit Loss figures) All other payments Cash expenses for July should be equal to cash spent on the Cash Flow Forecast Projected Profit Loss figures for 3 months ended 30 September Variable costs Amount Incurred unless it states otherwise Equipment rental $1,500 00 July Electrical supplies $3,000 00 per month August September Fuel and oil $600 00 per month July, August, September Plans and permits $1,200 00 July Safety fencing $1,600 00 July Site costs $3,000 00 July Travelling costs $450 per month July, August, September Toilet hire $600 00 per month July, August, September Tipping fees $600 00 per month July, August, September Concrete slab $15,000 July Subcontractors $80 00 per hr 150 hrs in July 187 50 hrs in August 125 hrs in September Cabinetry $20,000 September Plumbing supplies $5,000 per month August September Painting costs $13,500 $13,500 incurred in September Only 90 was paid in September Tiling flooring $5,000 00 per month August September Frames and trusses $4,000 August Bricks tiles $10,000 August Fixed costs Postage $50 00 per month July, August, September Office supplies $200 00 July, August, September Motor vehicles expenses $400 00 per month July, August, September Depreciation of vehicles $416 67 for July, thereafter $713 33 Depreciation of equipment 10 of cost p a Equipment at cost $40,000 Depreciation of furniture fittings 5 of cost p a Furniture fittings at cost $20,000 Telephone $300 00 July, August, September Freight $7,000 $2,000 for months of July August $3,000 for September Staff amenities $280 July, August, September Superannuation 9 5 on wages each month July, August, September but paid in October for the 3 months Wages $3,846 15 per week (average of 4 weeks month) July, August, September, paid each week Rent $1,800 per month July, August, September Insurance $3,200 p a July, August, September Electricity $325 00 per month July, August, September Interest $460 00 per month July, August, September Note Students are to calculate income earned each month Additional information to complete the Balance Sheet Cash at bank as at 30 September is $450,339 78 Inventory on hand is $8,250 00 2 Hi Lux UTEs with a total value of $85,600 (accumulated depreciation $1,843 33) Equipment valued at $40,000 (Accumulated depreciation $1,000) Furniture and fittings valued at $20,000 (accumulated depreciation $250 00) Amounts owing on credit cards $4,350 00 Amounts owing to suppliers $20,324 as at 30 September GST collected balance as at 30 September $12,921 18 GST paid balance as at 30 September $7,607 50 PAYG withholding payable as at 30 September $2,978 Bank loan $250,000 (payable in 10 years) Both partners contributed $150,000 each to the business at start up Both partners withdraw $2,000 each per month Students are to calculate amounts owing by customers (October) Students are to calculate superannuation payable Retained Profit (Equity) is the amount of total profit as per projected Profit Loss Break even sales point and profit Information Fixed Costs $34,970 45 Variable Costs $139,550 00 Total Costs $174,520 45 Total Income July Sept $289,209 95 Total wages for Jim John each house $50,000 00 Price of House $340,247 00 Using the figures above, calculate the break even point profit for Jimmon Constructions to build the house Based on a 26 week building time and a 35 hour week each for Jim and John, calculate the hourly rate they will need to charge to earn $50,000 wages each Include a Reference page for all research you have conducted during this activity Appendix A Statement of Cash Flow for month of July Cash flow from operating activities Receipts from customers Payments to suppliers Payments to employees Interest payments Interest received Taxes paid General expenses GST paid GST collected Net cash flow from operating activities Cash flow from investing activities Purchases of equipment Other new vehicle purchase Other Net cash flow from investing activities Cash flow from financing activities Proceeds from borrowings Drawings from business investment Drawings by partner Jim Drawings by partner John Net cash flow from financing activities Net increase (decrease) in cash held Cash at beginning of period Cash at end of period Note Receipts from customers and payments to employees are to be calculated by students Appendix B Projected Profit and Loss for the 3 months ending 30 September Jimmon Constructions July August September Total Income Cost of Sales Gross Profit Expenses Net Profit Loss Appendix C Balance Sheet as at 30 September BALANCE SHEET JIMMON CONSTRUCTIONS September Assets Current Assets Total Current Assets Non Current Assets Total Non current assets Total Assets Liabilities Current Liabilities Non current liabilities Total Liabilities Net Assets Owners Equity Owners capital Jim Owners capital John Drawings Jim Drawings John Total owners equity Checklist for Assessment 2 Activity 1 Report on Financial Reports Case study Completed report Financial plans using the templates provided complete the financial reports and ensure that you have included Appendix A Cash Flow Appendix B Projected Profit Statement Appendix C Balance Sheet profit margins the break even sales point for the business Include a Reference page for all research you have conducted during this activity Attachments Portfolio of doc

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Mar 29, 2024

John and Jim are brothers who have worked within the building sector for several years. John is a plumber who has been working for a

John and Jim are brothers who have worked within the building sector for several years. John is a plumber who has been working for a large plumbing business and Jim is a carpenter who works for a large city residential housing construction company. They have decided that they want to start their own business which would be the building of residential properties. With their combined experience within the industry they feel now is a great time to branch out on their own. Before they move forward with their plans, you have agreed to assist them with the research and planning of the new business which they hope to call JIMMON CONSTRUCTIONS. They dont want to proceed with the business until they are sure that they have covered all legal and risk aspects of starting and maintaining the new business. They estimate that the business will exceed the existing GST tax threshold of $75,000.00 for the financial year so they will need to register for GST and their actual paid staffing levels will warrant the need to declare and make PAYG payments as well. The business will specialise in residential construction and the brothers have enlisted your help to establish all aspects of setting up the business as well as identifying and addressing any potential risks. You have already been assisting in this area and have:

established the business set-up as a partnership
obtained an ABN
set up GST registration as the business is expected to exceed an income of $75,000.00 for the financial year
established specific licenses and permits which a residential construction company must have in order to operate legally
locate the building code of practice which must be followed

You are required to complete the financial plan for the business and establish the financial reports which will be presented to Jim and John. You will also need to provide them with some background information regarding financial reporting as they have no experience in this area of the business and would like to have a better understanding of the financial aspects of JIMMON CONSTRUCTIONS.

Activities Overview for using the case study organisation: The following activities will provide you with the skills and knowledge to compile the necessary financial information and data which is used when reporting on the financial activity for JIMMON CONSTRUCTIONS. You have been provided with a series of tasks to demonstrate your knowledge in this area as well as demonstrate your skills in preparing the necessary financial statements and statutory reports which are required for a small business. For the purpose of completing the following activities you will need to conduct the necessary research to establish the statutory reporting requirements as needed and understand the processes to be undertaken, to analyse and calculate the necessary financial information needed to determine where the business is situated financially. You will be required to submit a reference document which lists all research you have undertaken to complete your assessment. Activity 1: Financial reports Activity based on Jimmon Constructions. Activity 1 choice 1: Case study Jimmon Constructions As part of the financial planning for JIMMON CONSTRUCTIONS, you need to develop several financial reports which have been listed below and provide additional information to Jim and John on areas such as the principles used when preparing financial reports (such as cash projections, profit and loss statements and balance sheets) as they have informed you that they have no understanding of these areas of the business. You will be required to submit a report for Activity 1 which includes:

Completing the following financial reports:
- Statement of Cash Flow forecast for the month of July
- Projected Profit and Loss Statement for the 3 months ending 30 September
- Balance Sheet forecast as at 30 September

Templates for the financial reports are provided in Appendices A, B & C for you to complete. Based on your completed financial plan and the additional information provided below, complete the following financial reports provided in:

Task 1 complete Appendix A: Statement of Cash Flow forecast for the month of July,
Task 2 complete Appendix B: Projected Profit and Loss Statement for the 3 months ending 30 September and
Task 3 complete Appendix C: Balance Sheet forecast as at 30 September

When completing the financial reports, please take into account the following information:

Cash Flow forecast is to be completed for July only
Projected Profit Statement to be based on the property information provided below for the period July September
Balance Sheet forecast is to be prepared as at the end of September
profit margins, mark ups, and prices (e.g. hourly charge out rates)
the break-even sales point for the business

Additional Information for Case study There is one property ready to commence in July (total Revenue $340,247.00 with payments from the customer as follows:

Deposit	To be paid July	$17,012.35
Base stage	To be paid July	$ 34,024.70 includes slab, site works, temporary fencing
Frame stage	To be paid August	$51,037.05 includes frames, trusses quarter electrical and plumbing costs
Enclosed stage	To be paid August	$119,086.45 includes bricks/tiles, quarter electrical and plumbing
Fixing stage	To be paid September	$68,049.40 includes internal cabinetry, tiling, balance of plumbing, electrical and 90% painting
Practical completion and handover	To be paid October	Driveway, final preparation of site for handover

The following amounts have been provided to complete the financial reports: Cash flow amounts for the month of July:

Payments to suppliers	$22,600.00
Interest payments	$450.00
Income tax paid	$846.00
GST paid	$7,250.00
GST collected	$5,000.00
General expenses	$6,000.00

Jimmon Constructions plans to buy a new Hi Lux Ute in July at a cash price of $35,600 as mentioned in the case study.Cash at bank on 1^st July is $350,000.00
Each partner will withdraw $2,000.00, per month as per the Business Plan
Receipts from customers are to be calculated by students
Wages paid are to be calculated by students (refer to Projected Profit/Loss figures)
All other payments: Cash expenses for July should be equal to cash spent on the Cash Flow Forecast

Projected Profit/Loss figures for 3 months ended 30 September:

*Variable costs*	*Amount*	*Incurred* *unless it states otherwise*
Equipment rental	$1,500.00	July
Electrical supplies	$3,000.00 per month	August & September
Fuel and oil	$600.00 per month	July, August, September
Plans and permits	$1,200.00	July
Safety fencing	$1,600.00	July
Site costs	$3,000.00	July
Travelling costs	$450 per month	July, August, September
Toilet hire	$600.00 per month	July, August, September
Tipping fees	$600.00 per month	July, August, September
Concrete slab	$15,000	July
Subcontractors	$80.00 per hr	150 hrs in July 187.50 hrs in August 125 hrs in September
Cabinetry	$20,000	September
Plumbing supplies	$5,000 per month	August & September
Painting costs	$13,500	$13,500 incurred in September. Only 90% was paid in September
Tiling & flooring	$5,000.00 per month	August & September
Frames and trusses	$4,000	August
Bricks & tiles	$10,000	August
*Fixed costs*
Postage	$50.00 per month	July, August, September
Office supplies	$200.00	July, August, September
Motor vehicles expenses	$400.00 per month	July, August, September
Depreciation of vehicles	$416.67 for July, thereafter $713.33
Depreciation of equipment	10% of cost p.a.	Equipment at cost $40,000
Depreciation of furniture & fittings	5% of cost p.a.	Furniture & fittings at cost $20,000
Telephone	$300.00	July, August, September
Freight	$7,000	$2,000 for months of July & August; $3,000 for September
Staff amenities	$280	July, August, September
Superannuation	9.5% on wages each month	July, August, September but paid in October for the 3 months
Wages	$3,846.15 per week (average of 4 weeks/month)	July, August, September, paid each week
Rent	$1,800 per month	July, August, September
Insurance	$3,200 p.a.	July, August, September
Electricity	$325.00 per month	July, August, September
Interest	$460.00 per month	July, August, September

Note: Students are to calculate income earned each month Additional information to complete the Balance Sheet:

Cash at bank as at 30 September is $450,339.78
Inventory on hand is $8,250.00
2 Hi Lux UTEs with a total value of $85,600 (accumulated depreciation $1,843.33)
Equipment valued at $40,000 (Accumulated depreciation $1,000)
Furniture and fittings valued at $20,000 (accumulated depreciation $250.00)
Amounts owing on credit cards $4,350.00
Amounts owing to suppliers $20,324 as at 30 September
GST collected balance as at 30 September $12,921.18
GST paid balance as at 30 September $7,607.50
PAYG withholding payable as at 30 September $2,978
Bank loan $250,000 (payable in 10 years)
Both partners contributed $150,000 each to the business at start-up
Both partners withdraw $2,000 each per month
Students are to calculate amounts owing by customers (October)
Students are to calculate superannuation payable
Retained Profit (Equity) is the amount of total profit as per projected Profit & Loss

Break-even sales point and profit Information Fixed Costs: $34,970.45 Variable Costs: $139,550.00 Total Costs: $174,520.45 Total Income July-Sept: $289,209.95 Total wages for Jim & John each / house: $50,000.00 Price of House: $340,247.00

Using the figures above, calculate

the break-even point.
profit for Jimmon Constructions to build the house.

Based on a 26 week building time and a 35 hour week each for Jim and John, calculate the hourly rate they will need to charge to earn $50,000 wages each.
Include a Reference page for all research you have conducted during this activity.

Appendix A Statement of Cash Flow for month of July

Cash flow from operating activities
Receipts from customers
Payments to suppliers
Payments to employees
Interest payments
Interest received
Taxes paid
General expenses
GST paid GST collected
*Net cash flow from operating activities*
Cash flow from investing activities
Purchases of equipment
Other new vehicle purchase
Other
*Net cash flow from investing activities*
Cash flow from financing activities
Proceeds from borrowings
Drawings from business investment
Drawings by partner Jim
Drawings by partner John
*Net cash flow from financing activities*
Net increase (decrease) in cash held
Cash at beginning of period
Cash at end of period

Note: Receipts from customers and payments to employees are to be calculated by students Appendix B Projected Profit and Loss for the 3 months ending 30 September

Jimmon Constructions	July	August	September	Total
Income




Cost of Sales






















Gross Profit
Expenses


















Net Profit/Loss

Appendix C Balance Sheet as at 30 September

BALANCE SHEET - JIMMON CONSTRUCTIONS September
Assets
Current Assets




Total Current Assets
Non-Current Assets








Total Non-current assets

Total Assets

Liabilities
Current Liabilities




Non-current liabilities



Total Liabilities

Net Assets

Owners Equity
Owners capital Jim
Owners capital John
Drawings Jim
Drawings John
Total owners equity

Checklist for Assessment 2 Activity 1 Report on Financial Reports

Case study
Completed report
Financial plans using the templates provided complete the financial reports and ensure that you have included: Appendix A: Cash Flow
Appendix B: Projected Profit Statement
Appendix C: Balance Sheet
profit margins
the break-even sales point for the business
Include a Reference page for all research you have conducted during this activity.