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Houzit Pty Ltd is located in Brisbane and they are running retail chain of 15 stores. They are the leader in the retail sector of home ware and provide the new and renovated furnishing all over the Greater Brisbane area. over the past five years they have grown from a single store to the 15 chain store. They are well known for their superior after sales service and this is the crucial reason behind their growth in sales and increase in profit.
Particulars | 2015/16 | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
Sales | $ 16,814,136.02 | $ 3,362,827.63 | $ 4,035,392.73 | $ 4,371,675.28 | $ 5,044,240.38 |
(-) Cost of Goods Sold | $ 9,151,896.00 | $ 1,830,379.43 | $ 2,196,455.09 | $ 2,379,492.91 | $ 2,745,568.57 |
Gross Profit | $ 7,662,240.02 | $ 1,532,448.20 | $ 1,838,937.64 | $ 1,992,182.37 | $ 2,298,671.81 |
Gross Profit % | 46% | 46% | 46% | 46% | 46% |
Accounting Fees | $ 10,000.00 | $ 2,500.00 | $ 2,500.00 | $ 2,500.00 | $ 2,500.00 |
Interest Expenses | $ 84,508.00 | $ 21,127.00 | $ 21,127.00 | $ 21,127.00 | $ 21,127.00 |
Bank Charges | $ 1,200.00 | $ 300.00 | $ 300.00 | $ 300.00 | $ 300.00 |
Depreciation | $ 170,000.00 | $ 42,500.00 | $ 42,500.00 | $ 42,500.00 | $ 42,500.00 |
Insurance | $ 13,390.00 | $ 3,347.50 | $ 3,347.50 | $ 3,347.50 | $ 3,347.50 |
Store Supplies | $ 3,749.20 | $ 749.84 | $ 899.81 | $ 974.79 | $ 1,124.76 |
Advertising | $ 350,000.00 | $ 200,000.00 | $ 50,000.00 | $ 50,000.00 | $ 50,000.00 |
Cleaning | $ 16,282.24 | $ 3,256.45 | $ 3,907.74 | $ 4,233.38 | $ 4,884.67 |
Repairs & Maintenance | $ 64,272.00 | $ 16,068.00 | $ 16,068.00 | $ 16,068.00 | $ 16,068.00 |
Rent | $ 2,640,508.00 | $ 660,127.00 | $ 660,127.00 | $ 660,127.00 | $ 660,127.00 |
Telephone | $ 14,996.80 | $ 2,999.36 | $ 3,599.23 | $ 3,899.17 | $ 4,499.04 |
Electricity Expenses | $ 26,780.00 | $ 5,356.00 | $ 6,427.20 | $ 6,962.80 | $ 8,034.00 |
Fringe Benefits Tax | $ 28,000.00 | $ 7,000.00 | $ 7,000.00 | $ 7,000.00 | $ 7,000.00 |
Superannuation | $ 187,020.00 | $ 37,404.00 | $ 44,884.80 | $ 48,625.20 | $ 56,106.00 |
Wages & Salaries | $ 2,078,000.00 | $ 415,600.05 | $ 498,720.01 | $ 540,279.99 | $ 623,399.95 |
Payroll Tax | $ 93,510.00 | $ 18,702.00 | $ 22,442.40 | $ 24,312.60 | $ 28,053.00 |
Workers Compensation | $ 41,560.00 | $ 8,312.00 | $ 9,974.40 | $ 10,805.60 | $ 12,468.00 |
Total Expenses | $ 5,830,358.24 | $ 1,451,931.21 | $ 1,393,825.09 | $ 1,443,063.03 | $ 1,541,538.91 |
Net Profit (Before Tax) | $ 1,831,881.78 | $ 80,516.99 | $ 445,112.55 | $ 549,119.34 | $ 757,132.90 |
Income Tax | $ 549,564.53 | $ 24,155.10 | $ 133,533.77 | $ 164,735.80 | $ 227,139.87 |
Net Profit | $ 1,282,317.25 | $ 56,361.89 | $ 311,578.79 | $ 384,383.54 | $ 529,993.03 |
Cash Flow Analysis - GST | 2015/16 | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
GST Collected | $ 1,681,413.60 | $ 336,282.76 | $ 403,539.27 | $ 437,167.53 | $ 504,424.04 |
Accounting Fees | $ 1,000.00 | $ 250.00 | $ 250.00 | $ 250.00 | $ 250.00 |
Insurance | $ 1,339.00 | $ 334.75 | $ 334.75 | $ 334.75 | $ 334.75 |
Store supplies | $ 374.92 | $ 74.98 | $ 89.98 | $ 97.48 | $ 112.48 |
Advertise | $ 35,000.00 | $ 20,000.00 | $ 5,000.00 | $ 5,000.00 | $ 5,000.00 |
Cleaning | $ 1,628.22 | $ 325.64 | $ 390.77 | $ 423.34 | $ 488.47 |
Repair & Maintenance | $ 6,427.20 | $ 1,606.80 | $ 1,606.80 | $ 1,606.80 | $ 1,606.80 |
Rent | $ 264,050.80 | $ 66,012.70 | $ 66,012.70 | $ 66,012.70 | $ 66,012.70 |
Telephone | $ 1,499.68 | $ 299.94 | $ 359.92 | $ 389.92 | $ 449.90 |
Electricity Expense | $ 2,678.00 | $ 535.60 | $ 642.72 | $ 696.28 | $ 803.40 |
(-) Total GST Paid | $ 314,656.02 | $ 90,098.61 | $ 74,687.65 | $ 74,811.26 | $ 75,058.50 |
GST Payable | $ 1,366,757.58 | $ 246,184.15 | $ 328,851.63 | $ 362,356.26 | $ 429,365.54 |
Particulars | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
Sales | $3,362,827.63 | $ 4,035,392.73 | $ 4,371,675.28 | $ 5,044,240.38 |
% Debtors Sales | 20% | 20% | 20% | 20% |
Total Debtors | $ 672,565.53 | $ 807,078.55 | $ 874,335.06 | $ 1,008,848.08 |
Current | $ 564,955.04 | $ 677,945.98 | $ 734,441.45 | $ 847,432.38 |
30 Days | $ 67,256.55 | $ 80,707.85 | $ 87,433.51 | $ 100,884.81 |
60 Days | $ 33,628.28 | $ 40,353.93 | $ 43,716.75 | $ 50,442.40 |
90 Days | $ 6,725.66 | $ 8,070.79 | $ 8,743.35 | $ 10,088.48 |
The main issue related to the budget is that the performance of Houzit greatly depended on their gross margin viability and maintenance of finance. The impact on the retail segment is biggest as the company is going through the recession period. however, the revenue from sales are in a growing trend and that is visible from the budget. To achieve the level of sales the company is spending a big amount towards discounts. The fluctuating interest rate is also affecting the company adversely. Moreover, the payment term of debtors also working as a barrier for the cash flow.
Houzit is liable to pay 4.75% on the the total wages as the payroll tax if the amount exceeds $850,000. Moreover, the organization is liable to pay a fringe benefit tax and luxury car tax that are charged by the Australian government to minimize the dishonest activities taken up by the firm. The tax rate applicable on the luxury car is 33% as prescribed by the Australian government.
Particulars | 2015/16 | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
Wages & Salaries | $ 342,500.00 | $ 415,600.05 | $ 498,720.01 | $ 540,289.99 | $ 623,399.95 |
Superannuation tax | $ 30,825.00 | $ 37,404.00 | $ 44,884.80 | $ 48,626.10 | $ 56,106.00 |
Payroll tax | $ 16,268.75 | $ 19,741.00 | $ 23,689.20 | $ 25,663.77 | $ 29,611.50 |
company tax | $ 1,055,116.73 | $ 16,908.57 | $ 93,473.64 | $ 115,315.06 | $ 158,997.91 |
Total tax | $ 1,102,210.48 | $ 74,053.57 | $ 162,047.64 | $ 189,604.94 | $ 244,715.40 |
Under the Corporation Act 2001, the Australian firms are required to comply with the following regulations:
The current software that are used by the firm are not able to provide the sufficient analysis of expenses and revenues and made the estimation of profits tough for the company. Therefore they want to use any other software or upgrade the existing software for better management of the accounts over the long run. One option is to use the MYOB software as Houzit is a small business firm. This is a cheap and easy to install in simple situations. Moreover, it has low risk of failure and back-up is easy.
The most appropriate time for preparing the budget for next financial year is just after the publication of previous year’s financial year. It will give an idea about the income and expenses from the last year’s record. The proposal could be as follows:
Audit trail is the system through which the transactions related to the items of accounting records are traced. To maintain the internal control, the following things are recommended:
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