Reference no: EM132880820

BUS106 Accounting for Business - University of the Sunshine Coast

Jess and her partner Jill are planning to commence business operations in July 2021. JJ Hotwater Systems (JJHS)will supply and install solar hotwater systems. They have come to you for advice.

• In June 2021, prior to commencing business, both Jess and Jill have contributed tools and a vehicle to the partnership. They have also obtained a personal loan ($31 250 each at 9% interest, any additional necessary financing would also be at this rate). With this money they haveordered and paid for the first shipment of 50 hotwater systems. The shipment will arrive on June 30th. They have some personal savings that they will contribute to the business' bank account
• The target market for JJHS is older areas where the existing hot water systems are reaching the end of their useful lives. The solar systems they provide have an expected useful life of 30 years and JJHS provides a 20 year warranty on parts and labour. Customers usually want their system installed as soon as possible and so JJHS promises to install within 2 weeks of a sales contract being signed. The selling price is $5500 per unit.
• JJHS have two salespeople (Kim and Keith) who will go door to door looking for sales. These two salespeople are paid a commission of 2% per unit sold (based on the sales price). To encourage the salespeople there is a bonus of 10% (also of sales price) for each unit sold that exceeds the individual's sales target. The salespeople set rolling targets for two years of sales that provide the basis for the various budgets.
• The solar systems are sourced from a company in Germany. JJHS has negotiated a deal for the purchase of solar systems in bulk (by the container load, i.e., in multiples of 50). The discounted price is $1250 per unit.
• The supplier starts production as soon as the order and full payment is received. It then takes12 weeks for production and shipping. JJHS has an inventory policy to start each quarter with enough units to meet all projected sales for that quarter plus half of the following quarter's sales.
• Jess and Jill are expecting significant accounting profits each quarter. The termsof the partnership agreement provide for Jess to receive a profit distribution of $3 000 per quarterand Jill toreceive 5% of the contribution margin for the quarter.
• Payments from customers are received in equal quarterly instalments over 10 years. The first instalment is received when the customer signs the contract for the installation of the system.

Note: this information is limited and may be problematicor incomplete (Jess and Jill do not really understand the budget process). Do your best with what you have, note in your submission document any assumptions and any important information which you feel is lacking.

Requirements
• Application of analytical processes in a business context.
o Prepare the sales budget based on Kim and Keith's sales estimates for the eight quarters starting July 2021.
o Prepare the purchases budget for the first four quarters based on the information provided.
o Prepare the cash budget for the first four quartersbased on the information provided (July 2021 to June 2022) (round to nearest dollar, rounding errors will not be penalised).
• Identification and critical analysis of pertinent issues in a business context.
o Provide advice on the cash requirements based on your budgets and any other concerns you have.(100 words)
• Demonstrate critical thinking to develop and evaluate appropriate solutions to business problems
o Provide advice on managing working capital based on the information provided(make specific reference to your budget to support your recommendations and provide references where appropriate). (600 words)
• Critical analysis of existing sources of secondary data and literature in the field.
o For your chosen field of study(i.e., marketing, HRM, management...) consider the role of people in the budgeting process and make one recommendation for making budgets more effective.Use at least two references to support your arguments.(300 words)
• Referencing of sources of information used within the body of the document and in a reference list using Harvard referencing style.
• Accuracy and presentation of written work including English expression, discipline-based vocabulary, grammar, spelling, and punctuation.

Attachment:- Accounting for Business.rar