Dear Sir/Madam.
I am a beginner at accounting for business but I hope that tutor/s can help me with my questions.
I required help with the following questions and I hope that tutor/s will provide in depth explanation of my question’s answers.
I also required pictures with the answers so that I will be able to understand what is happening.
I have provided all of the information below with all of information that I have got but tutor/s can still comment regarding any part of the information that is unsure to you.
I appreciate a lot of all of the support that tutor/s provided.
So here are the questions.
Questions:
- Question 1. Make a cash budget for Unique Flowers for October to December under normal circumstances. (Use the template provided below.)
- Question 2. Make a second cash budget for Unique Flowers for October to December that considers a 4-weeks lockdown. (Use the template provided below.)
- Question 3. Compare the first budget and second budget and advise on the cash requirements based on your budgets and any other concerns you have about the business. Look at both of the budgets and compare them and written two hundreds and twenty words of the comparison based on the Question 1 and 2.
- Question 4. Based on issues identified in this case, provide advice on managing working capital (cash, inventory, account payable). Make specific references to the budget to support the recommendations. (Based on the issues that were found in the case, provide advice on it, Connect the explanation to the budgets to support the recommendations.) Written eight hundreds words of the recommendations. Put at least 5 reference for the recommendations.
- Question 5: Use the provided template for Question 1 and Question 2
Template: https://gofile.io/d/98IL7Q
Business Information:
Sutea is the owner of Unique Flowers, located at Sunny Bay Queensland (QLD), Australia. Unique Flowers is a family business that she has operated successfully as a sole trader (Business has ABN and registered for GST) since the 1990’s.
Unique Flowers is a successful business and is well known in the local area, due to its high-quality floral arrangements, prompt delivery and friendly service. Sutea is the florist, and she employs four people to work with her in the business. Harry, the delivery driver, is employed full-time; Mel, the bookkeeper, is employed part-time; Oscar the shop assistant is employed full-time; and Josh, the cleaner is employed as a casual. All employees have worked with Sutea since the business opened its doors, except Josh who joined the team on the 1st of January 2021.
After the outbreak of COVID-19 in 2020, which had a large impact on the business, Unique Flowers is looking to rebound in 2021. Sutea learnt during 2020 that a focus on her financial position was the best way to navigate the uncertainty.
Due to forced closures of her business in 2020 (March- June), Sutea went through a period of problems with her cash flow. She did not have enough money to meet her financial obligations, including paying the employees, the rent, and the other business outgoings. Going forward, she is looking to put those problems behind her but will be cautious in her financial planning.
Sutea is planning to change the way she operates her business with the addition of online ordering and no-contact deliveries.
Sutea has asked Mel for some financial information and was presented with the following:
The cash balance at the end of September is $12,000 (This is the opening cash balance for October)
The projected sales revenue (all sales are cash) for October to December is as follows:
The emergence of the Delta variant worldwide has put significant risk to people and businesses. The Delta variant is more transmissible than the original strain of the virus and is more likely to cause severe illness. “The first sign of trouble for the world came in late March when there was a sudden uptick in new Covid-19 cases in India. Over little more than a month, infections rose from about 20,000 daily cases to more than 400,000 a day”. (University of Western Australia 1 July 2021, News Article).
Australia is lagging behind world vaccination rates. Australian states (Victoria, South Australia and New South Wales (NSW)) went in lockdown in June and July 2021 due to the spread of the Delta variant. Sutea is concerned that short or medium-term lockdowns will occur in Queensland and affect her business. Sutea is very cautious in managing cash (Budgeting) and concerned about the survival of her business.
- The cash balance at the end of September is $12,000 (This is the opening cash balance for October)
- If Queensland locks down for four weeks in October, Sutea estimates that projected revenue would reduce by 50% in October, 40% in November and 10% in December.
Additional information:
If Queensland locks down for four weeks Sutea expects the business to be eligible for the following grants and support (based on the grants and support that were offered in NSW):
- Queensland Small Business COVID-19 Adaption Grant $10,000 in November
- Job Saver payment from the government for October and November only ( The Job saver payment must be calculated as per the assumption given under Job Saver Policy.
- The landlord will offer 50% rent reduction/relief in October and November
- The bank will waive bank fees for October and November
Job Saver:
Fortnightly payments to help maintain employee headcount (as at 13 July) and provide cashflow support to businesses
How much:
- Employing businesses: 40% of their weekly Salary/Wages, with payments between $1,500 and $100,000 per week
Eligibility:
- A revenue decline of 30% or more
- Annual Turnover (Sales Revenue) between $75,000 and $250 million
Information Extracted from NSW government Webpage ( https://www.nsw.gov.au/covid-19/2021-covid-19-support-package/businesses-sole-traders-and-small-not-for-profits#covid-19-business-grants)
QLD Small Business COVID-19 Adaption Grant
Eligibility criteria:
To be eligible, the business must:
- have been subject to closure or otherwise highly impacted by current shutdown restrictions announced by Queensland’s Chief Health Officer on 23 March 2020
- have experienced a minimum 30% decline since 23 March 2020, over a minimum 1-month period due to the onset and management of COVID-19
- employ staff and have fewer than 20 employees at the time of applying for the grant (employees must be on your payroll and does not include the business owner(s))
- have a valid Australian Business Number (ABN) active as at 23 March 2020
- be registered for GST
- have a Queensland headquarters
- have an annual turnover over $75,000 for the 2018-19 or 2019-20 financial year, or you can provide financial records that show this will be met for recently started small businesses
- have a payroll of less than $1.3 million
- not be insolvent or have owners or directors that are an undischarged bankrupt.
Only 1 application per round will be accepted from an individual ABN or a financial beneficiary of a business.
Small Business COVID-19 Adaption Grant Program extracted from Queensland government webpage https://www.business.qld.gov.au/starting-business/advice-support/grants/adaption.