2. Wendy owns a music shop. This morning she
realized that all the Maroon 5 CDs were sold
out. She wants to know if she has enough cash
to buy more Maroon 5 CDs.
3. Her supplier will only deliver the new CDs
when he receives the payment by cash.
Wendy needs the CDs urgently because Julia
Gillard just rang her shop and said that all the
asylum seekers need Maroon 5 CDs or else the
human rights activists will cause Julia lots of
trouble.
4. What should Wendy do?
Wendy has some cash at hand ($1000)
Cash outflow
Wendy has lots of other bills that need to be paid today:
• Cash wages for a causal staff from Taminmin College
[$500]
• Cash payment for supplies of Lady Gaga CDs [$2000].
Cash inflow
She received some cash sales from selling Rihanna and
Coldplay CDs ($3000).
5. Activity : Work in pairs to brainstorm
how much (amount $$) Maroon 5
CDs Wendy can purchase today.
6. Wendy’s Music Shop
Cash-flow Statement for the period ending 30 June 2011
Opening cash balance $1000
Add Cash coming in:
Cash sales (Rihanna and Coldplay CDs) +$3000
Less Cash going out:
Cash wages for causal staff -$500
Cash payment for supplies of Lady Gaga CDs -$2000
Closing cash balance $1500
Opening cash balance + Cash inflows – Cash outflows =
Closing cash balance
Wendy could only afford $1500 of Maroon 5 CDs.
7. Assessment
Wendy’s music business has grown bigger. She is
employing all the students in this class to help as
causal staff for a week (except Sunday). She will be
paying each student $100 a day. Prepare your
personal daily cash-flow statement.
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Opening cash
$20.00 $110.00 $200.00 $283.00 $366.00 $449.00 $409.00
balance:
Cash coming in:
Cash wages $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $0.00
Cash going out:
Lunch -$10.00 -$10.00 -$10.00 -$10.00 -$10.00 -$10.00 -$10.00
Hire videos $0.00 $0.00 -$7.00 -$7.00 -$7.00 $0.00 -$7.00
Shopping for clothes $0.00 $0.00 $0.00 $0.00 $0.00 -$100.00 $0.00
Bought a CD $0.00 $0.00 $0.00 $0.00 $0.00 -$30.00 $0.00
Closing cash
$110.00 $200.00 $283.00 $366.00 $449.00 $409.00 $392.00
balance:
Editor's Notes
Cash flow statement will help a biz predict if when cash shortages are likely to occur. Regular cash flow statements allow such needs for finance to be recognised and acted upon.
