Mr Norman set up a new business on 1 January 20X8. He invested £50,000 in the new business on that date. The following information is available.

Required:

(a) A purchases budget for each of the first six months.

(b) A cash flow statement for the first six months.

(c) A statement of operating cash flows and financial position as at 30 June 20X8.

(d) Write a brief letter to the bank supporting a request for an overdraft.

Transcribed Image Text:

I Gross profit was 20% of sales. Monthly sales were as follows: Month January Sales Month Sales 15,000 May 40,000 February 20,000 June 45,000 March April 35,000 40,000 July 50,000 2 50% of sales were for cash. Credit customers (50% of sales) pay in month following sale. 3 The supplier allowed one month's credit. 4 Monthly payments were made for rent and rates 2,200 and wages 600. 5 On 1 January 20X8 the following payments were made: 80,000 for a five-year lease of business premises and 3,500 for insurances on the premises for the year. The realisable value of the lease was estimated to be 76,000 on 30 June 20X8 and 70,000 on 31 December 20X8. 6 Staff sales commission of 2% of sales was paid in the month following the sale.