BB104: One Of Your Friends Sammy Is About To Prepare The 31 March Balance Sheet: Introductory Accounting Assignment, MU, Australia

SECTION A: Case Study A                                                                                 

Background and Content:

One of your friends Sammy is about to prepare the 31 March balance sheet for her new business, Tasty Cookie shop. This is Tasty Cookie’s first month of operation, and Sammy is also going to calculate the first month’s net income. She needs to prepare the balance sheet and calculate net income so she can pass the information along to her parents. They loaned her $5000 so that she could start the business.

Although Sammy thinks that business is booming, she has a big problem. She does not know enough about accounting to prepare the balance sheet to calculate March’s net income. As a matter of fact, Sammy had never heard the words “balance sheet” and “net income” until her parents asked her to promise to give them these statements every month before they would agree to loan Sammy the $5000.

Luckily, Sammy saves every piece of paper associated with Tasty Cookie. She kept copies of all of the business agreements she signed. She deposited all of the money Tasty Cookie earned in the company’s bank account and retained copies of every deposit slip. Sammy also paid every company bill with a cheque and saved all of the related documents.

 Answer all three questions below.

1. Assume Sammy wants to prepare Tasty Cookie’s 31 March balance sheet and March’s income statement according to AASB. Describe to Sammy, in your own words, how she should organize the information about Tasty Cookie’s March transactions so that she can prepare a balance sheet and an income statement and keep her promise to her parents.

2. After a week, Sammy still struggling with all the statements. She has come to you for help (with her parent’s permission). She says, “list five stakeholders of accounting information and briefly describe the information requirements for each in assisting decision-making”. Prepare a written response to Sammy’s request.

3. After a year later, Sammy saved some money from her Tasty Cookie business. She has $3800 to invest in the Australian Securities Exchange. But Sammy is confused about the basic business structures and she asked for your help. Please define four types of business structure and list two key advantages and two key disadvantages of each.

SECTION B: Case Study B 

Background and Content:

Sunshine Travel Agency specializes in tour tickets between Perth and Fiji. It books passengers on Virgin Blue. Sunshine Travel’s fixed costs are $23 500 per month. Virgin Blue charges passengers

$1 500 per round-trip ticket.

Calculate the number of tickets Sunshine Travel must sell each month to (a) break even and (b) make a target profit of $10 000 per month in each of the following independent cases:

1. Sunshine Travel’s variable costs are $43 per ticket. Virgin Blue pays Sunshine Travel a 6% commission on ticket price.

2. Sunshine Travel’s variable costs are $40 per ticket. Virgin Blue pays Sunshine Travel a 6% commission on ticket price.

3. Sunshine Travel’s variable costs are $40 per ticket. Virgin Blue pays a $60 fixed commission per ticket to Sunshine Travel. Comment on the results.

4. Sunshine Travel’s variable costs are $40 per ticket. It receives a $60 commission per ticket from Virgin Blue. It charges its customers a delivery fee of $5 per ticket. Comment on the results.