Task 12 - Cash Flow Management

Apollo Sales P/L is registered for GST as a cash payer and has chosen the option to report and calculate GST every quarter. The following is the Summary of the Business Activity Statement for the Quarter ended 31 December.

Summary of the Business Activity Statement 1 October to 31 December

Amounts you owe the ATO

GST on sales or GST instalment 1A 50,300

PAYG tax withheld 4 12,600

PAYG income tax instalment 5A 4,007

8A 66,907

Amounts the ATO owes you

GST on purchases 1B 30,280

Fuel tax credits 7D 11,654

8B 41,934

Payment due 9 24,973

A Cash Budget of Apollo Sales P/L has been prepared for the period 1 January to 30 April. This Cash Budget does not include any GST/BAS payments for the December or March Business Activity Statements.

CASH BUDGET January February March April

Opening Cash Balance $16,000 $18,600 $37,250 $47,850

Cash receipts $57,200 $59,200 $63,000 $42,000

Cash Payments -$54,600 -$40,550 -$52,400 -$67,550

CLOSING CASH BALANCE $18,600 $37,250 $47,850 $22,300

a)Analyse Apollo Sales P/L cash budget for the period 1 January to 30 April and the December Business Activity Statement. Discuss these documents and the payment schedule of Business Activity Statements if Apollo Sales will have any cash flow issues during this period. Your answer should be between 80 and 120 words.

b)As the accountant, construct an email addressed to the Manager of the company initiating discussions and providing recommendations to ensure sufficient funds are available to meet statutory requirements e.g. BAS due dates, records retention, valid invoices, ABN checking, cash management. Your answer should be between 100 and 130 words.