The following information relates to The Rural Art Gallery, which Gina Bruin has established to help rural craftspeople to sell their products to the tourist trade. Gina is submitting a business plan to Shire Bank plc. She has saved £4,000 as initial equity, which she would pay into the Gallery’s bank account on 1 July 2015, which will be the effective starting date of the enterprise. Forecast information for the six months to 31 December 2015 is as follows:

???? The landlord requires a deposit of £3,000, and rent of £1,000 per month, payable quarterly in arrears. The deposit will be paid on 1 July 2015, the first quarter’s rent on 2 October 2015, the second quarter on 3 January 2016.

???? Income will be generated from commissions on works of art sold through the gallery.

The commission taken by the gallery will be 40%, and sales of artworks (before commission) are forecast as follows:

July August September October November December

£8,000 £4,000 £7,000 £12,000 £18,000 £24,000

???? All sales are for cash, and are banked immediately. Amounts due to artists are paid one month after the relevant sales are made.

???? The Gallery will receive a one-off grant of £5,000 from the UK Tourist Board in August.

???? The cost of redecorating the building will be £7,000, payable in two instalments:

£4,000 in August, the balance in September.

???? General overheads (including any bank interest payable) are expected to be £2,000 per month, payable one month in arrears.

???? Wages to assistants will be £750 per month and are payable at the end of the month.

???? Gina Bruin will draw £600 per month until December, when she will draw £900.

???? Various items of equipment will be purchased for £3,000 in July, payable two months later. Depreciation for the six months will be £150.

???? Initial advertising will cost £500, payable in August.

(a) Prepare a cash flow forecast (there is no need to include ‘actual’ columns) for The Rural Art Gallery for the six months to 31 December 2015.

(b) Comment on the forecast, and state whether you think that the project appears feasible.