on_your_bike by stariya

VIEWS: 8 PAGES: 5

									Modelling a Small Business

Fitness and road safety have been major themes of the year at Bandiwallop
High School so the students in the Business Management class have decided
to run a business over the period of May and June 2006 selling accessories
for bike riding. They consider that this will contribute to the school’s program
and at the same time be very topical. Their business is to be called On Your
Bike.

To raise the capital needed to buy the stock, it has been decided by the
students that everyone in the class (24 students) should contribute $60 each.
This will be repaid at the end of the venture, with a maximum dividend of $20
each. Any profits over and above this will be donated to a charity, to be
decided on by the class.

The structure of the management of On Your Bike has been worked out, with
a managing director, sales and marketing manager and finance manager, all
elected by the students. Each management position is to be supported by a
committee. The executive will make recommendations to the board (the
whole class). The financial recording is to be done using QuickBooks.

The stock for On Your Bike will be limited to 4 items: helmets, gloves, water
bottles and pumps. These will all be bought from a wholesaler and marked up
at 100%.

       Stock line                                    Cost price        Selling price
       Helmet (BH)                                      20                   40
       Gloves (BG)                                      10                   20
       Water bottle (WB)                                12                   24
       Pump (BP)                                         3                    6

There are 1000 students at the school so the estimate is made that 150 items
can be sold in each month.

The sales budget is as follows

Month                      Helmet       Gloves           W/Bottle    Pump       Total
May                       20 x 40      40 x 20           50 x 24    40 x 6      $3040
June                      20 x 40      40 x 20           50 x 24    40 x 6      $3040

The purchases budget is as follows:

Month                  Helmet      Gloves      W/Bottle      Pump          Total
May                   20 x 20    40 x 10       50 x 12     40 x 3         $1520
June                  20 x 20    40 x 10       50 x 12     40 x 3         $1520
Advertising will be in the student daily at a cost of $6 daily (21 school days per
month), and in the parents’ association newsletter at a cost of $150 per
month.




Task written by Suzanne Collings, Education Consultant                                  1
A trestle table will be hired from the school each Thursday lunchtime ($18 per
week) to sell goods in the area outside the canteen. There are 4 Thursdays in
May and 5 in June. Paper bags will be purchased from the local supermarket
to be used as wrappings at a cost of 10 cents each.
A cheque account is to be opened at the Community Bank with the capital
contributions. The cheques will be signed by any two of the managing
director, sales manager and finance manager.

It has been decided by the executive to publicise the venture by offering a free
copy of Safe Cycling magazine to one customer each Thursday (cost $3
each) – to be drawn from a hat


The transactions for May and June are:

Date Transaction                                                            Total
May1 Deposit capital into bank account 24 x $60                             1440

     1 Purchase of 150 paper bags for May, Woolworths         Chq 1001         15
       Supermarket
     1 Bought stock – 10 BH, 10 BG, 15 WB, 15 BP from         Chq 1002        525
       Yamoto Cycle Imports
     1 Purchase of 3 copies of Safe Cycling from              Chq 1003             9
       Bandiwallop Newsagency
     1 Paid for advertising in student daily 21 days – $6     Chq 1004        126
       per day
     2 Paid for May advertising in Newsletter to Parent’s     Chq 1005        150
       Association
     4 Paid for 4 weeks hire of trestle table to              Chq 1006         72
       Bandiwallop High School
     4 Sold 3 BH, 5 BG, 8 WB, 10 BP. Banked takings                           572

    11 Sold 6 BH, 5 BG, 7 WB, 5 BP. Banked takings                            534

    16 Bought stock – 20 BH, 20 BG, 20 WB, 20 BP from         Chq 1007        900
       Yamoto Cycle Imports
    17 Purchase of 4 copies of Safe Cycling from              Chq 1008         12
       Bandiwallop Newsagency
    18 Sold 10 BH, 12 BG, 16 WB, 15 BP. Banked                               1114
       takings.
    23 Bought stock - 20 BH, 20 BG, 20 WB, 10 BP from         Chq 1009        870
       Yamoto Cycle Imports.
    25 Sold 6 BH, 12 BG, 12 WB, 6 BP. Banked takings                          804

    26 Bought 160 paper bags from Woolworths                  Chq 1010         16
       Supermarket for June
    28 Sold 4 BH, 3 BG, 8 WB, 2 BP. Banked takings                           1124

    30 Bought stock – 10 BG, 20 WB, 10 BP from                Chq 1011        370



Task written by Suzanne Collings, Education Consultant                         2
         Yamoto Cycle Imports
 June    Paid for advertising in student daily (21 days) to    Chq 1012     126
    1    Bandiwallop High School
    1    Paid for June advertising in Newsletter to Parent’s   Chq 1013     150
         Association for Bandiwallop High School
     1   Sold 6 BH, 8 BG, 10 WB, 6 BP. Banked takings                       676

     3 Bought stock – 5 BH, 10 BG, 6 WB, 20 BP from            Chq 1014     332
       Yamoto Cycle Imports
     4 Sold 1 BH, 6 BG, 7 WB, 12 BP. Banked takings                         400

     7 Paid for 5 weeks hire of trestle table to               Chq 1015      90
       Bandiwallop High School
     8 Sold 7 BH, 12 BG, 11 WB, 10 BP. Banked takings                       844

     9 Bought stock – 10 BH, 20 BG, 20 WB, 15 BP from          Chq 1016     685
       Yamoto Cycle Imports
    15 Sold 5 BH, 6 BG, 11 WB, 3 BP. Banked takings.                        602

    18 Sold 3 BG, 1 WB, 3 BP. Banked takings.                               102

    20 Purchase of 50 additional bags for June                 Chq 1017          5

    22 Sold 6 BH, 8 BG, 7 WB, 8 BP. Banked takings                          308

    23 Purchase of 2 copies of Safe Cycling from               Chq 1018          6
       Bandiwallop Newsagency
    27 Bought stock – 5 WB from Yamoto Cycle Imports           Chq 1019      60

    29 Sold 10 BH, 7 BG, 8 WB, 7 BP. Banked takings                         774

    30 Repayment of student capital                            Chq 1020     1440

    30 Payment of dividends $20 x 24                           Chq 1021     480



REQUIRED

    1. Establish the budget for May and June 2006.
    2. Record the transactions for May and June
    3. Prepare the profit and loss statement for the two months, showing
       separate months, and the total for the business.
    4. Compare the actual transactions against the budget for the period,
       showing the variances, and the total for the business.




Task written by Suzanne Collings, Education Consultant                       3
GUIDE NOTES

TO SET UP DATAFILE

    1. Open QuickBooks, on menu bar, click on File, New
    2. Use Welcome to enter details of name of business and start date.
       Click on Leave (don’t enter any other details here)
    3. On menu bar, click on Lists, Chart of Accounts. Use Account button
       (at the bottom of the screen), New, to open accounts required. Be
       careful of the TYPE of account

                Account name                      Type
                Community Bank                    Bank
                Sales                             Income
                Stock purchases                   Expense
                Advertising                       Expense
                Hire of trestle table             Expense
                Promotion                         Expense
                Wrappings                         Expense

    (Edit the name of the Opening Bal. Equity account to Capital)


TO SET UP BUDGET

    1. On menu bar, click on Company, Planning & Budgeting, Set up
       budget
    2. Select the year required (2005-2006)
    3. Enter the amounts in the months required (these can be entered in the
       first month and copied across, then edit any amounts as necessary)
    4. To check the budget, on the menu bar, click on Reports, Budgets &
       Forecasts, Budget Overview.
    5. Use the pull down list for Columns to select Months
    6. Set the dates required (beginning and end of period) and click on
       Refresh




Task written by Suzanne Collings, Education Consultant                         4
TO ENTER TRANSACTIONS

    1. On the menu bar, click on Lists, Chart of Accounts.
    2. Double click on the Bank account
    3. Enter the details of the transactions.
          Make sure the date is correct for each one.
          The cheque numbers will update automatically and will need to be
          overwritten if the transaction is a deposit.
          The details of the Payee will be added to a list as the exercise is
          completed (you must use Quick Add – this appears as you try to
          access the next field). The next time that name is used it will
          automatically fill for you as you start to key in the name. The name
          can also be selected from the pull down list.
          Enter the amount into the Payment or Deposit column.
          Use the pull down list to select the account which is to be used for
          the transaction.
          Click on Record and the balance will be updated.


TO ACCESS THE REPORTS

    1. On the menu bar, click on Reports, Company & Financial, Profit and
       Loss.
    2. Set the dates for the required report (beginning and end of the period).
       Click on Refresh.
    3. Use the pull down list for Column to select Month, click on Refresh
    4. To compare the budget to the actual, on the menu bar, click on
       Reports, Budgets & Forecasts, Budget v Actual
    5. Set the dates, click on Refresh.
    6. Move left and right to see the months required and the total for the
       period.




Task written by Suzanne Collings, Education Consultant                           5

								
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