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

Forecast income statements (abridged) for the three quarters ending 30 September 2007:

Additional information:
1 Sales of tangible non-current 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 2007.

Required:

(a) Calculate Baker Limited’s forecast net cash position at 31 March, 30 June and 30 September 2007 respectively.

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

Transcribed Image Text:

March June Sept 2007 2007 2007 000 000 000 Sales Cost of goods sold 250 300 350 (200) (240) (280) Gross profit 50 60 70 Depreciation Administration, selling and distribution expenses (3) (20) (4) (37) (40) (42) Forecast net profit Forecast balances at 10 24 31 31 30 30 Dec March June Sept 2006 2007 2007 2007 000 000 000 000 Debit balances Tangible non-current assets at cost 360 240 480 480 90-day deposit at cost 15 5 5 10 Inventory at cost 40 30 40 55 Trade accounts receivable 50 65 75 80 80 Cash at bank and in hand Credit balances Loan notes (10%) Trade accounts payable Taxation 80 120 140 150 550 8