The major shareholder/director of Esrever Ltd has obtained average data for the industr y as a whole.

He wishes to see what the forecast results and position of Esrever Ltd would be if in the ensuing year its per formance were to coincide with the industr y averages.

At 1 July 20X0, actual figures for Esrever Ltd included:

£

Land and buildings (at written-down value) 132,000 Fixtures, fittings and equipment (at written-down value) 96,750 Stock inventor y 22,040 12% loan (repayable in 20X5) 50,000 Ordinar y share capital (50p shares) 100,000 For the year ended 30 June 20X1 the following forecast information is available:

1 Depreciation of non-current assets (on reducing balance)

Land and buildings 2%

Fixtures, fittings and equipment 20%

2 Net current assets will be financed by a bank overdraft to the extent necessar y.

3 At 30 June 20X0 total assets minus current liabilities will be £231,808.

4 Profit after tax for the year will be 23.32% of gross profit and 11.16% of total assets minus all external liabilities, both long-term and shor t-term.

5 Tax will be at an effective rate of 20% of profit before tax.

6 Cost of sales will be 68% of turnover (excluding VAT).

7 Closing inventor y will represent 61.9 days’ average cost of sales (excluding VAT).

8 Any difference between total expenses and the aggregate of expenses ascer tained from this given information will represent credit purchases and other credit expenses, in each case excluding VAT input tax.

9 A dividend of 2.5p per share will be proposed.

10 The collection period for the VAT-exclusive amount of trade receivables will be an average of 42.6 days of the annual turnover. All the company’s supplies are subject to VAT output tax at 15%.

11 The payment period for the VAT-exclusive amount of trade payables (purchases and other credit expenses) will be an average of 29.7 days. All these items are subject to (reclaimable) VAT input tax at 15%. This VAT rate has been increased to 17.5% and may be subject to future changes, but for the purpose of this question the theor y and workings remain the same irrespective of the rate.

12 Payables, other than trade payables, will comprise tax due, proposed dividends and VAT payable equal to one-quar ter of the net amount due for the year.
13 Calculations are based on a year of 365 days.
Required:
Construct a forecast profit and loss account for Esrever Ltd for the year ended 30 June 20X1 and a forecast balance sheet at that date in as much detail as possible. (All calculations should be made to the nearest £1.)
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