You are presented with the following forecast information relating to Baker Limited for the nine months to 30 September 2007.

Forecast profit and loss accounts (abridged) for the three quarters to 30 September 2007:

Additional information:
1. Sales of tangible fixed assets in March 2007 were expected to realise £12,000 in cash.
2. Administration, selling and distribution expenses were expected to be settled in cash during the month in which they were incurred.
3. Baker Limited includes as liquid resources term deposits of less than one year.
4. The directors have proposed that a dividend of £15,000 be paid on 28 February.

Required:

(a) calculate Baker Limited's forecast net cash position at 31 March, 30 June and 30 September 2007 respectively; and

(b) prepare a forecast statement of cash flow for the nine months ending 30 September 2007.

Transcribed Image Text:

March June Sept 2007 2007 2007 000 000 000 Sales 250 300 350 Cost of goods sold Gross profit Depreciation (200) (240) (280) 50 60 70 (3) (20) ( 4) Administration, selling and distribution expenses Forecast net profit Forecast balances at (37) (40) (42) 10 24 31 31 30 30 Dec March June Sept 2006 2007 2007 2007 000 000 000 000 Debit balances Tangible fixed assets at cost 360 240 480 480 90 day deposit at cost 15 5 5 10 Stocks at cost 40 30 40 55 Trade debtors 50 65 75 80 Cash at bank and in hand 80 Credit balances Debentures (10%) Trade creditors Taxation 80 120 140 8 - 50 150 555'