On 1 January, AB Limited will be formed with a share capital of £150,000. You are asked to use the following information to produce: ◆ A forecast income statement for the first six months. ◆ A cash forecast for each of the first six months. ◆ A forecast balance sheet as at 30 June Year 1.

(a) £ 95,000 will be invested immediately in non-current assets.

(b) Sales will be generated as follows:

Included in the January payment is an insurance bill for £20,000 which will provide cover for the whole of the year ending 31 December. Furthermore the rent bill of £ 8,000 for the period 1 April to 30 June will be outstanding at the end of June and is not included in the above figures. (h) Depreciation on the non-current assets will be £ 3,000 for the six months

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January 120,000 February 130,000 March 135,000 April 180,000 May 200,000 June 200,000 965,000 (c) All sales will be made on one month's credit. (d) Purchases of materials for which one month's credit will be allowed: f January 80,000 February 75,000 March 60,000 April 70,000 May 70,000 June 70,000 425,000 (e) It is expected that 75,000 of this material will still be in inventory at the end of June, but that there will be no work-in-progress or finished goods inventory. (f) Labour costs will be paid as incurred, amounting to 270,000 incurred in even amounts over the six-month period. (g) Cash will be paid for overhead costs as follows: