• PLEASE NEED HELP WITH QUESTION 4 AND 5 REGARDING THE GRAPH

• You have been asked by the owner of a new consultancy called Voyager to prepare the master budget. The consultancy consists of the owner who charges out at $68 per hour and the junior staff who are charged out at $42 per hour. The owner has advised you that the following hours are forecast for each quarter.

  The consultancy has a credit system of payments with 60% of payment received the quarter in which they are earned and the remaining 40% earned the following month. The opening accounts receivable is $13,200 incl GST. The GST is accounted for on an accrual basis.

• 1

  Part 1

  Prepare a quarterly revenue receipts forecast and cash collections forecast for the next financial year.

  Hours	September	December	March	June
  Senior	250	230	230	230
  Junior	210	220	210	220

  Voyager Co Revenue Receipts Forecast 30 June
  	Hours			Receivables
  Quarter	Junior	Senior	Total	Junior @ $42/hr	Senior @ $68/hr	Total	GST	Total GST inc
  September	210	250	460	8,820	17,000	25,820	2,582	28,402
  December	220	230	450	9,240	15,640	24,880	2,488	27,368
  March	210	230	440	8,820	15,640	24,460	2,446	26,906
  June	220	230	450	9,240	15,640	24,880	2,488	27,368
  Total	860	940	1,800	36,120	63,920	100,040	10,004	110,044

  Voyager Co Cash Collections Forecast 30 June
  Quarter	Receivables	September	December	March	June
  Opening		13,200
  September	28,402	17,041	11,361
  December	27,368		16,421	10,947
  March	26,906			16,144	10,762
  June	27,368				16,412
  Closing	110,044
  		30,241	27,782	27,091	27,183
  *28,402 = September Cash (28,402 x 60%) + December Cash (28,402 x 40%)

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  2. The owner will purchase a new vehicle in the September quarter for $27,500. In December they will purchase photocopiers for $5,500 and a computer system for $5,500 with an upgrade in March for a further $2,750. Each item is inclusive of GST. Prepare the Capital Expense Budget for the financial year.

  Voyager Co. Capital Expenditure Budget 30 June
  	September	December	March	June	Total GST
  Car	27,500				27,500
  Photocopier		5,500			5,500
  Computer		5,500	2,750		8,250
  Total (net GST)	25,000	10,000	2,500		37,500
  GST	2,500	1,000	250		3,750

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  3. The information in the table is based on source documentation from the companys previous operations. GST Expenses are shown.

  	September	December	March	June
  Motor vehicle	1,300	1,495	300	450
  Printing	200	50	200	50
  Electricity	600	555	500	500
  Rent	4,500	4,500	4,500	4,500

  Depreciation is $700 per quarter and tax payable at 30% of net profit per quarter. Wages for the senior staff are $8,000 per quarter and junior $5,000.

  Complete the expense budget, budgeted statement of financial performance; you will need to add the non GST items to the expense budget, and the cash flow budget which has an opening cash balance of $42,000. The opening GST liability is 2,000 and the opening PAYG tax instalment is 2,500.

  Voyager Co. Expense Budget 30 June
  	September	December	March	June
  Cash Expenses
  Motor vehicle	1,300	1,495	300	450
  Printing	200	50	200	50
  Electricity	600	555	500	500
  Rent	4,500	4,500	4,500	4,500
  Sub Total GST inclusive	6,600	6,600	5,500	5,500
  GST	600	600	500	500
  Net of GST	6,000	6,000	5,000	5,000
  Wages Senior	8,000	8,000	8,000	8,000
  Wages Junior	5,000	5,000	5,000	5,000
  Sub Total Cash Items	19,000	19,000	18,000	18,000
  Depreciation	700	700	700	700
  Total	19,700	19,700	18,700	18,700

  Voyager Co. Budget statement of financial performance 30 June
  	September	December	March	June	Liability
  Service revenue	25,820	24,880	24,460	24,880
  Less Expenses	19,700	19,700	18,700	18,700
  Subtotal	6,120	5,180	5,760	6,180
  Income tax 30%	2500	1836	1554	1728	1854
  Net Profit	4,284	3,626	4,032	4,326

  Voyager Co GST Budget 30 June
  	September	December	March	June	Liability
  GST Collected on Sales	2,582	2,488	2,446	2,488
  GST Paid on Expenses	600	600	500	500
  GST Paid on Capital Acquisitions	2500	1000	250
  Net GST	2000	-518	888	1696	1988

  Voyager Co. Budget statement of cash flows 30 June
  	September	December	March	June
  Opening Cash	42,000	23,741	20,687	23,354
  Add Collections from revenues	30,241	27,782	27,091	27,183
  Total cash available	72,241	51,523	47,778	52,537
  Less estimated cash payments
  Cash Payments in expense budget	19,000	19,000	18,000	18,000
  Capital Expenditures	25,000	10,000	2,500
  GST Payments*	2,000		370	1696
  Tax payments	2,500	1,836	1,554	1,728
  Total	48,500	30,836	22,424	21,424
  Closing cash balance	23,741	20,687	25,354	31,113
  *Includes GST from capital expenditure and GST items in expense budget

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  4. Use the cash budget to prepare a graph of quarterly revenue received, payments made and closing cash position.
  budget statemenot of cash flows, collections revenues , using total payments and closing cash balance

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  5. Explain the graph by answering:
     1. Which month has the highest payments, what causes this?
     2. What advice would you give about the purchase of capital items?
     3. Approximately what effect would not purchasing the capital items have?
     4. Which month has the highest revenue received?
     5. Describe the position of closing cash throughout the year. The owner realises that there will be significant expenses in this first year of operations. Identify in which quarter the milestone of revenues exceeding expenditures occurs. What effect does this have on cash?
     6. What advice would you give about the paying of a $1,000 bonus to the junior staff in June promised in the September quarter based on the staffs performance and the financial performance of the business for the year?

     200220 words