Mock Exam 2 — Question 1
Sunrise Athletics | Complete on paper
✎ Work on paper. No notes. No phone. Set a 120-minute timer (VCAA allows 15 minutes reading time beforehand). Do not open model answers until every question is complete.
Sunrise Athletics | Owner: Liam Chen | Trading / sports equipment | GST 10% | Perpetual FIFO, monthly reporting
Budgeted Income Statement for April 2026Liam has prepared the following budgeted Income Statement.
| Item |
Amount $ |
| Sales |
88,000 |
| Less Cost of Sales |
(44,000) |
| Gross Profit |
44,000 |
| Wages |
(18,000) |
| Depreciation – Equipment |
(2,400) |
| Rent |
(4,200) |
| Bad Debts Expense |
(1,100) |
| Net Profit |
18,300 |
Balance Sheet ExtractsThe accountant has provided the following relevant Balance Sheet extracts.
| Account |
31 March (Actual) $ |
30 April (Budget) $ |
| Accounts Receivable |
24,200 |
28,600 |
| Allowance for Doubtful Debts |
(1,800) |
(2,200) |
| Prepaid Rent |
4,200 |
0 |
Additional: Inventory purchases for April (cash): $48,400 incl. GST. No other prepaid or accrued items apart from those shown.
Question 1 (14 marks) — Budgeted Cash Flow Statement Derivation
(a)3 marks
Calculate the GST expected to be settled in April 2026.
Tip: GST collected on Sales = $88,000 × 10% = $8,800. GST paid on purchases = $48,400 ÷ 11 = $4,400. Net GST payable = $8,800 − $4,400 = $4,400.
(b)7 marks
Prepare the Accounts Receivable and Allowance for Doubtful Debts General Ledger accounts to determine the cash to be received from Accounts Receivable in April 2026.
Tip: AR: Dr = opening $24,200 + sales $88,000 (or $96,800 incl. GST depending on treatment). Cr = bad debts written off (via Allowance) + closing $28,600. Missing Cr = cash received. Allowance: Cr = opening $1,800 + bad debts expense $1,100. Dr = bad debts written off + closing $2,200.
(c)4 marks
Prepare the Operating Activities section of the Budgeted Cash Flow Statement for April 2026. Clearly label all items.
Tip: Include: cash from customers, cash to suppliers, wages, rent (Prepaid Rent fully used = $4,200 cash), GST settlement. EXCLUDE: depreciation $2,400 and bad debts expense $1,100 – both non-cash.
