Alpacahats Ltd$.$

A graduate has returned from a gap year to South America with an exclusive licence to import alpaca hats. She plans to sell them at farmers markets starting next January, after gaining experience in a friend$$s market stall.

She and her father will invest $30,000$ of their own money $(15,000$ each$)$ and they have approached you, a family friend, with an offer to sell $40\%$ of their company to you for $20,000.$

They have a conditional offer from their bank of a $5-$year loan of $10,000$ which has to be repaid in $5$ equal instalments $(1$ instalment each year$)$ with $8\mathrm{.}4\%$ annual interest, secured by the family home.

To get the business started a second$-$hand van and a trailer will be acquired next January for $6,000$ in total plus SR VAT $($assume $20\%$ SR VAT for convenience$).$ The business will depreciate the vehicles over three years in their books.

A computer and peripherals will be purchased next January for $2000$ plus SR VAT $($depreciation at $50\%$ per year$).$

The graduate will be employed at a basic salary of $20,000$ plus $10\%$ employer$$s PRSI in total a year. Employee taxes will amount to $20\%$ of gross pay $($before employer$$s PRSI$).$ Employment taxes are paid monthly in arrears.

She expects to spend half her time selling and half her time in administration.

The business plan assumes no seasonality in sales. $6,500$ adults at $5\mathrm{.}00$ each and $6,500$ child hats at $2\mathrm{.}50$ each will be purchased over the year with SR VAT paid on adult hats only $($children$$s hats attract zero VAT$).$ The supplier$$s terms are cash in advance by bank transfer and the orders are fulfilled within a week by air freight. Monthly order sizes are not expected to vary significantly over the year.

Annual sales for the year are projected at $6,000$ adult hats at $12\mathrm{.}00$ plus SR VAT each and $6,000$ children$$s hats at $6\mathrm{.}00$ each $($zero rated$).$ Hats will sell for cash.

$2,500$ plus SR VAT will be spent over the year on renting pitches for her market stall.

$4,000$ plus SR VAT will be spent over the year on other administrative expenses.

$2,260$ will be spent over the year on insurance. Insurance services are VAT exempt.

Corporation tax rate is $12\mathrm{.}5\%$ and is paid in the following year. Depreciation is not an allowable cost for tax purposes, instead, under current Capital Allowance Rules $12\mathrm{.}5\%$ the cost of the fixed assets can be deducted from pre$-$tax profits.

If the company makes a profit the founders propose that $50\%$ of the profit will be retained in the business, and $50\%$ of the profit will be distributed between the investors in the form of dividends in the following financial year.

VAT is paid $($net of VAT repayable$)$ every two months in arrears. Show net VAT payable $($or repayable$)$ in the presentational format of the balance sheet for the first year under Liabilities $($or Assets$).$

Assuming you invest, for the end of the first operational year calculate:

$1.$ The total amount of cost of sales:

$2.$ The total administrative expenses:

$3.$ Gross margin:

$4.$ The value of current assets:

$5.$ The value of shareholders$$ funds

$6.$ Net profit before interest and tax:

$7.$ Net profit after tax:

$8.$ Balance for cash account:

$9.$ Balance for fixed assets account:

$10.$ Balance for stock account: