CHAPTER 4

1 Evelyn is owner of happy restaurant purchase fish and spice from supplier on credit, but pays
for other purchases in cash. Some supplier offer discount terms and because invoice are sent
with the purchases some payment involving discount are made in the month following the
purchase. The following payment trends have been established for several years
20% purchases are for cash
80% of credit purchases , 50% are paid in the month of current sales and 20% are paid at the
beginning of the following month
30% of other credit purchases are usually paid for in the month following the second month
of sale.

and evelyn's cost purchase are

Jun Jul Aug
cost purchase 6000 7000 8000

calculate Evelyn's estimated cash payments for purchases for jun jul and aug and show input
tax credit separately (10%)

HAPPY RESTAURANT
PUCHASES
FOR JUN JUL AND AUG

JUNE JULY AUG

6000 7000 8000
CASH PURCHASES
20% 1200 1400 1600

CREDIT PURCHASES
80% 4800 5600 6400
50% 2400 2800 3200
20% 960 1120
30% 1440
SUB TOTAL 3600 5160 7360
GST 360 516 736
TOTAL 3960 5676 8096
2 Jasmin operates a bakery shop business from her home . She requires a 40% deposit to be
paid at start of the month in which the bread is to be completed. All customers pay the
balance owing at the time the bread is collected. for each job is collected in the month in
which the job is completed. jasmin prepares cash budget and is not registered for GST
because her annual turnover is below the limit
sept oct nov
Number of bread
Raisin bread 50 80 100
Dinner rolls 60 70 40

jasmin charges $5 for raisin bread and $10 for dinner rolls

how much estimated cash will jasmin collect from sept to nov (each month)

ANSWER
JASMIN
ESTIMATED CASH COLLECTIONS FROM CUSTOMER
FOR SEP, OCT , NOV

SEP OCT NOV

Raisin Bread ($5) $ 250 $ 400 $ 500
Dinner Rolls ($10) $ 600 $ 700 $ 400
Total From Sales $ 850 $ 1,100 $ 900
3 Maria Rena, is decorator requires his customer to pay deposit of 30% when the work is
contracted which has to be during the month before the month is to be carried out maria
prepares a cash budget because she wants to be aware of any major cash short falls. her
budgeted revenue for jan to mar is
Jan feb mar
Party Decoration $1,000 $800 $1,200
Birthday Decoration $700 $700 $1,000

total revenue $1,700 $1,500 $2,200

how much cash will he collected from clients each month for jan till mar? GST should be
shown separately Maria Rena has estimated that her revenue for April is $5000 the deposit
will be receive are caculated at 30% of the next month's revenue the balance will be receive
are caculated at 70% of the current month's revenue

ANSWER
Maria Rena
Estimated Cash Collections From Clients
for Jan, Feb, Mar

Jan Feb Mar

Deposits Receive $450 $660 $1,500
Balance Receive $1,190 $1,050 $1,540
Sub Total $1,640 $1,710 $3,040
GST $164 $171 $304
Total $1,804 $1,881 $3,344