Provide a letter of advice: • discuss the key results of the income statement and cash budget • make one suggestion on how the client could improve the financial success of the cost management strategy • identify and discuss one non-financial factor that might affect the client’s decision to proceed with the chosen proposal • clearly state whether the client should proceed with the chosen proposal and why
Provide a letter of advice: • discuss the key results of the income statement and cash budget • make one suggestion on how the client could improve the financial success of the cost management strategy • identify and discuss one non-financial factor that might affect the client’s decision to proceed with the chosen proposal • clearly state whether the client should proceed with the chosen proposal and why
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Provide a letter of advice:
• discuss the key results of the income statement and
• make one suggestion on how the client could improve the financial success of the cost management strategy
• identify and discuss one non-financial factor that might affect the client’s decision to proceed with
the chosen proposal
• clearly state whether the client should proceed with the chosen proposal and why
Transcribed Image Text:CASH BUDGET
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
ТОTAL
OPENING CASH BALANCE
405,340.0
405,340.0
CASH INFLOWS:
0.0
280,430.0
110,007.0
247,110.0
113,064.0
377,300.0
235,850.0
102,360.0
Cash Collection Sales
272,050.0
285,980.0
274,880.0
278,340.0
370,800.0
305,670.0
337,500.0
345,890.0
3,611,800.0
Cash Collection Credit
53,445.0
88,257.0
109,425.0
2,569,848.0
128,232.0
138,762.0
133,131.0
114,483.0
126,393.0
3,787,407.0
0.0
TOTAL CASH AVAILABLE:
325,495.0
374,237.0
390,437.0
384,305.0
2,848,188.0
505,532.0
509,562.0
438,801.0
360,174.0
338,210.0
451,983.0
472,283.0
7,399,207.0
CASH OUTFLOWS
Marketing Expense
Council Rates (Store)
Rent (Store)
Salary Expense (Store)
Utility Expense
Salary Expense (Store)
Depreciation Shop Fittings
Depreciation Expense (Equipment)
114.1
114.1
114.1
114.1
114.1
114.1
114.1
114.1
114.1
114.1
114.1
114.1
1,369.2
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
604.8
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
5,788.8
264,000.0
1,384.3
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
115.4
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
183,600.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
8,676.0
4,416.0
1,200.0
71,400.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
Bank Loan
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Salary Expense (Office)
Office Supplies
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
1,620.0
Insurance
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
3,036.0
Rent (Office)
Utility Expense (Office)
Depreciation Office Equipment
Council Rates (Office)
120.6
120.6
120.6
120.6
120.6
120.6
120.6
120.6
120.6
120.6
120.6
120.6
1,447.2
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
593.3
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
3,720.0
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
403.2
CLOSING CASH BALANCE
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
45,761.3
552,855.6
Transcribed Image Text:BUDGETED INCOME STATEMENT
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
ТОTAL
492.600.0
371,550,0
864,150.0
330300.0
366,100.0
276,100.0
642,200.0
Sales Revenue
360,000.0
363,800.0
484,000.0
320,100,0
448.300.0
374,600.0
280,350.0
654,950.0
356.300.0
400,100.0
437,000.0
4,733,200.0
269,550.0
266,650.0
622,950.0
299,900.0
700,000.0
336,150.0
773,150.0
[Less Cost of Goods Sold
273,700.0
365,200.0
245,950.0
251,050,0
343,950.0
3,580,100.0
Gross Profit
629,550.0
637,500.0
849,200.0
566,050.0
581,350.0
792,250.0
8,313,300.0
0.0
Other Income:
0.0
Service Revenue
22,640.0
23,760.0
24,160.0
22,880,0
23,680.0
32,480.0
32,000.0
25,600.0
23,040.0
22,640.0
31,600.0
32,080.0
316,560.0
0.0
Operating Expenses:
0.0
Selling Expenses:
Cost of Project
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Marketing Expense
114.1
114.1
50.4
114.1
50.4
114.1
50.4
114.1
114.1
114.1
114.1
114.1
114.1
114.1
50.4
114.1
1,369.2
General Council rates (store)
50.4
50.4
50.4
50.4
50.4
50.4
50.4
50.4
604.8
Rent (store)
482.4
5,788.8
482.4
22,000.0
482.4
482,4
482.4
482.4
482.4
482.4
482.4
482.4
482.4
482,4
22,000.0
22,000.0
Salary Expense (technician)
Utility Expense (store)
22,000.0
115.4
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
22,000.0
264,000.0
115.4
115.4
115.4
1,384.3
183,600.0
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
Salary Expense (store)
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
15,300.0
Depreciation shop fittings
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
723.0
8,676.0
depreciation ex pense (repair equipment)
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
368.0
4,416.0
0.0
0.0
0.0
General & Administrative Expenses:
0.0
Bank Loan
100.0
100.0
5,950.0
100.0
100.0
100.0
100.0
100.0
5,950.0
100.0
100.0
100.0
100.0
100.0
1,200.0
Salary Expense (office)
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
5,950.0
71400.0
Office Supplies
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
135.0
1,620.0
253.0
120.6
49.4
Insurance
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
253.0
3,036.0
Rent(office)
1447.2
593.3
120.6
120.6
49.4
120.6
120.6
49.4
120.6
120.6
120.6
120.6
120.6
120.6
120.6
Utilitv Expense (office)
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
49.4
Depreciation office equipment
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
310.0
3,720.0
Generalcouncil rates (office)
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
33.6
403.2
0.0
0.0
0.0
0.0
46,104.9
0.0
553,258.8
Total Operating Expense
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
46,104.9
0.0
Net Operating Profit
599,485.1
632,605.1
620,255.1
606.325.1
615,075.1
850,525.1
835,095.1
679,495.1
542,985.1
557,885.1
758,645.1
8,076,601.2
0.0
778,225.1
Non-Operating Income and Expenses
0.0
0.0
0.0
0.0
Profit (Loss) before income tax
599,485.1
632,605.1
620,255.1
606,325.1
615,075.1
850,525.1
835,095.1
679,495.1
542,985.1
557,885.1
758,645.1
778,225.1
8,076,601.2
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