Using a Business activity statement from ATO, You are required to apply to correct GST code against the following business balances for the period January to March; the company uses the accrual basis when accounting for GST. All of these amounts include GST if applicable.
Account Total amount
$ BAS code
Sales invoiced (inc. GST)
Sales 370,000
Exports 65,000
Other GST-free sales 16,800
Purchase invoices (inc. GST)
Assets purchased 60,700
Purchase of materials 115,200
General journal bills
Advertising 800
Electricity 1,200
Freight 580
Petrol for company vehicle 2,200
Salaries 45,000
Wages 120,000
PAYG withheld from salaries and wages 33,400
ATO-assessed income rate 3.60%
It is important that bookkeepers are able to calculate GST amounts accurately.
Calculate GST on an invoice received for payment of education fees; total invoice amount is $2,200

Following are the accounts and Balance of Sunmoon Sunglasses Shop as on January 31 2010, following a clear and appropriate structure and format and conform to organisation requirement to ensure that statements and data are error free and comprehensive, Prepare:
• A Trial balance. (5 Marks)
• A statement of Financial Performance (profit and Loss account). (5 Marks)
• A statement of Financial Position (balance sheet.) (5 Mars)
Make the report that you have prepared is cross checked against original data and accounting standard.
Accounts $
Cash 41,150
Accounts Receivable 4,806
Allowance for Doubtful Accounts 58
Inventory 2,670
Prepaid Insurance 2,200
Land 20,000
Accounts Payable 1,500
Interest Payable 90
Payroll Taxes Payable 113
Wages Payable 817
Mortgage Payable 18,000
Owner's Investment 50,000
Sales 11,680
Repair Revenue 20
Cost of Goods Sold 3,504
Advertising 200
Bad Debt Expense 58
Bank Charges 50
Insurance Expense 200
Payroll Taxes 603
Rent 2,240
Supplies 150
Wages 4,357
Interest Expense 90

Question 5 (4 marks)
Following a clear and appropriate structure and format and conform to organisation requirement to ensure that statements and data are error free and comprehensive, From the following information prepare a cash flow statement. (4 Marks)
Jan Feb Mar Apr May Jun
Cash Sales 600 1200 1750 2300 2600 3000
Debtors Payments 0 600 850 1300 1490 1430
Total Revenue 600 1800 2600 3600 4090 4430
Raw Materials 970 1200 1350 1380 1670 1500
Wages 800 800 800 900 900 900
Interest 220 220 220 220 220 220
Rates 40 40 40 40 40 40
Electricity 60 60 60 100 100 100
Travelling 80 80 150 150 150 150
Sundries 130 80 80 80 80 80
Exhibition Charges 150 150 250 250 300 300
Opening Cash Balance for the company is $750

Question 6 (7 marks)
In the year ended 30 April 2005, the bookkeeper of V R Cross, wholesaler, made the following errors.
a) He wrote off as a bad debt the amount owing by N Ever ($400). He credited $400 to the N Ever account, but debited the bad debts account with $40.
b) A payment of $200 made to Julie Andrews was credited to the account of Janet Andrews.
c) A credit note for $160 in respect of goods returned to Asif Iqbal, a supplier, was lost and no entries made in the books.
d) On 1 January 2005, an insurance premium of $1 200 for the period 1 January to 31 December 2005 was paid; no adjustment was made for the amount paid in advance at 30 April 2005.
e) The total of the purchase returns book was undercast by $100.
f) The total of the discount allowed column in the cash book, $250, was posted to the credit side of the discount received account.
g) A cheque for $ 195 received from A N Other on 16 April 2005, in full settlement of her account, was entered correctly. No cash discount was involved. The cheque was dishonoured on 27 April 2005, but no entry for this was made in the books.
You are asked to do the following:
Show the effect of each error on the trial balance and the net profit for the year ended 30 April 2005.Draw up the table, in your answer book and complete it for each of the items (a) to (g) above. Ensure that discrepancies, unusual features or queries are identified, resolved or referred to the appropriate authority. (7 Marks)

Question 7 (12 Marks)
Assessing Martin Manufacturing's current financial position
Tom, an experienced budget analyst at Martin Manufacturing Company, has been charged with assessing the firm's financial performance during 2007 and its financial position at year end 2007. To complete this assignment, he gathered the firm's 2007 financial statements, which follow. In addition, he obtained the firm's ratio values for 2005 and 2006, along with the 2007 industry average ratio (also applicable to 2005 and 2006).
Income statement Martin Manufacturing Company for the year ended 31 December 2007
Sales revenue
Less Cost of goods sold Gross profits
Less Operating expenses Selling expense
General and administrative expenses Depreciation expense
Total operating expenses Operating profits
Less Interest expense Net profits before taxes Less Taxes (rate = 40%) Net profits after taxes
Less Preference dividends
Earnings available for ordinary shareholders EPS
$650 000
416 000
152 000 S5 075 000
3 704 000
$1 371 000
1 218 000
$153 000
93 000
$60 000
24 000
$36 000
3 000
33 000
$0.33

Balance sheets Martin Manufacturing Company 31 December
2007 2006
Assets Current assets Cash
Accounts receivable Inventories
Total current assets
Gross non-current assets (at cost) Less Accumulated depreciation Net non-current assets
Total assets
Liabilities and shareholders' equity Current liabilities
Accounts payable Notes payable Accruals
Total current liabilities Non-current debt Total liabilities Shareholders' equity Preference shares Ordinary shares Retained earnings
Total shareholders' equity
Total liabilities and shareholders' equity
$25 000
805 556
700 625
$1 531 181
S2 093 819
500 000
$1 593 819
S3 125 000
$230 000
311 000
75 000
$616 000
$1 165 250
$1 781 250
$50 000
293 750
1 000 000
1 343 750
$3 125 000
$24100 763 900
763 445
$1 551 445
$1 691 707
348 000
$1 343 707
$2 895 152
$400 500
370 000
100 902
$871 402
5700 000
$1 571 402
$50 000
293 750
980 000
$1 323 750
$2 895 152
The firm's 100 000 issued ordinary shares closed 2007 at a price of $11.38 per share.

Historical ratios - Martin Manufacturing Company
Ratio Actual 2005 Actual 2006 Actual 2007 Industry average 2007
Current ratio 1.7 1.8 1.5
Quick ratio 1.0 0.9 1.2
Inventory turnover (times) 5.2 5.0 10.2
Average collection period 50 days 55 days 46 days
Total asset turnover (times) 1.5 1.5 2.0
Debt ratio 45.8% 54.3% 24.5%
Times interest earned ratio 2.2 1.9 2.5
Gross profit margin 27.5% 28.0% 26.0%
Net profit margin 1.1% 1.0 1.2%
Return on total assets (ROA) 1.7% 1.5% 2.4%
Return on equity (ROE) 3.1% 3.3 3.2%
Price/earnings ratio 33.5 38. 43.4
Market/book ratio 1.0 1.1 1.2
Required
a) Calculate the firm's 2007 financial ratios and fill in the table above. (5 Marks)
b) Analyse the firm's current financial position from both a cross-sectional and time-series viewpoint. Break down your analysis into an evaluation of the firm's liquidity, activity, debt, profitability and market.
(5 Marks)
c) Provide recommendations and summarise the firm's overall financial position based on your findings in question b. Ensure recommendations are clearly structured, concise and facilitate direction and control of organisation's operations (2 Marks)
*** End of Assessment ***

Marking Summary
Course Name Certificate IV In Business
Code BSB40207
Subject BM106 - Financial Management Principles
Evidence Technique Group Assignment
Assessment No.: 1
Weighting 35%
Trainer Name Era Nayeem
Competency Titles:
BSBFIA402A – Report on Financial Activity
Group 1
Student Name Student No: Final Mark

0

Item Allocated Marks Achieved Marks
Question No. 1 7
Question No. 2 5
Question No. 3 10
Question No. 4 15
Question No. 5 4
Question No. 6 7
Question No. 7 12
Total Marks 60
Feedback and Trainer’s Comment:
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